Small businesses traditionally have smaller margins for error than larger organizations. While big-box stores might have enough capital in reserve to survive a period of poor sales, your independently run company might never be able to recover from falling just a few steps behind your competitors.
In fact, this razor-thin line between solvency and bankruptcy is affected by more than just the volume of product you push. While your customers might value the products and services that you sell, your employees are the real drivers of economic growth within your small business. If you’ve been struggling with high employee turnover and can’t seem to figure out how to get your top talent to stick around, you might want to consider just how much this is costing your business in the first place.
A hefty price tag
Hiring new employees can be a time-consuming process that saps most of the energy you could otherwise pour into your existing workers and customers. The hidden costs behind searching for and training new candidates can be even more disruptive for some small businesses.
According to a survey conducted by labor research firm Corter Consulting, the average cost to replace an employee is roughly 21 percent of his or her annual salary. For an $8-per-hour worker, companies may suffer about $3,630 in lost revenue and expenses onboarding another employee. As the workers become more skilled and are compensated with higher salaries, the replacement figures rise as well. A $50,000-per-year employee will leave a $9,850-hole in his or her wake, while a $75,000-per-year worker can cost $15,300 to replace.
Save employees, save money
It goes without saying that business that keep their workers happy are more productive and waste fewer resources on rehiring and training replacements. However, successful employee retention strategies need more than the occasional kind word or pat on the back from the boss.
“Retention starts from the application process to screening applicants to choosing who to interview,” Dan Pickett, chief executive officer of network services firm Nfrastructure, told CIO magazine. “It starts with identifying what aspects of culture and strategy you want to emphasize, and then seeking those out in your candidates.”
Once you’ve found employees who fit your small business’ culture, it’s also important show them that you notice when they’re performing well. Occasional promotional giveaways like Myron’s Wood Base Desk Clock that reward the employees with the best numbers can be effective ways of letting the whole office know you view them as meaningful individual members of a much larger team.