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High employee turnover not only impacts workplace morale, it also hurts a company’s bottom line. According to an article in The Wall Street Journal, it can cost your small business more than twice an employee’s salary to find and train a replacement. The process requires valuable time and staff resources that can result in lost productivity and revenue.

One of the best ways to deal with employee turnover is to prevent it. Reducing turnover can be addressed during the hiring process, onboarding new hires, and by developing on-going efforts to retain key employees. Here are six strategies for keeping employees happy and reducing turnover in your small business.

1 – Develop an Effective Hiring Strategy

Hiring the right people from the start is the single most effective way to reduce employee turnover. Creating and implementing a hiring strategy that evaluates the whole candidate will help ensure they will be a match for the job and your work environment.

Interview and vet candidates carefully. Before you bring in a candidate for an in-person interview, screen them for skills and fit. Focus on their job competency and whether or not they may be comfortable with your company’s culture, managers, and co-workers. Make sure that your business is a good fit for the future employee. No matter how hard you try to integrate a new employee into your business, the relationship will fail without the right chemistry.

2 – Offer Competitive Compensation and Benefits

Setting compensation and benefits that are aligned with industry standards is critical to recruiting and retaining employees. Work with a human resources expert or invest time in researching current industry trends, and review your compensation and benefits packages annually to ensure that you are maintaining a competitive edge in your niche.

Remember that compensation is about more than money. Salary is certainly important, but employees often choose a job that pays less and offers better benefits.

Provide as many benefits as your small business can afford. Health insurance, flexible schedules, bonuses, paid vacation days, maternity and paternity leave are often deal breakers for potential employees and vital for current employees and their families. Consider low-cost perks such as telecommuting or a pet-friendly environment that will set your company apart and give your employees benefits they truly value.

3 – Foster Employee Engagement

Provide new employees with ample support to become proficient as quickly as possible. This will help them feel engaged and motivated in addition to ensuring that they are positively impacting your company’s bottom line. Continue to foster engagement with new and current employees, bringing them together through social and team-building activities. Make sure your managers and you pay attention to employees’ professional and personal needs and offer support where you can. Your team will flourish in a rewarding workplace that gives them respect and recognition.

4 – Show Appreciation and Reward Accomplishments

Employers often overlook the power of a positive work environment and the importance of showing appreciation to their staff. Employees often leave their jobs because they sense a lack of gratitude for their hard work. Providing meaningful recognition and praise is one of the most cost-effective ways to maintain your workforce.

Thank-you emails, recognition in the company newsletter, monthly memos outlining team or individual achievements to the wider organization, peer recognition programs, and bonus systems are all ways to show employees that they are vital to your success. Make it easy to identify a job well done by implementing a simple system for staff to provide weekly or monthly updates of their achievements. Money spent on rewards in the short term is an investment that can pay dividends in the long run.

5 – Invest in Future Success

Investing in your employees means spending the time to train, mentor, and advance their careers. Communicate with your staff about their aspirations and how you or the company can help them achieve their goals. Conduct annual reviews or midyear progress check-ins to provide feedback and advice, and encourage staff to ask questions and discuss opportunities throughout the year.

It’s important to outline clear career paths for key employees who want to grow with your company. Let them know what positions they can aspire to and be specific about exactly what they need to do to get ahead. Create an environment where productive work is rewarded and managers support their staff in developing the skills necessary to take on new roles and responsibilities.

6 – Value Feedback

Let your employees know that their opinions and suggestions matter. Focus on developing a company culture where employees are asked for and feel comfortable sharing feedback about their jobs, the company, and what they value. Start a culture committee and give its members autonomy to make decisions. Assure them that you will support their ideas and recommendations as your business grows.

Consider scheduling regular feedback sessions with individual staff to review performance and discuss whether or not their job is meeting expectations. Employees appreciate information and advice that can help them improve or advance their careers and the opportunity to contribute to the company’s purpose and future.

While every small business owner should expect a certain amount of employee turnover, implementing these strategies can go a long way toward creating and maintaining a positive, loyal, and productive workplace.

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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.