Why Employees Stay at Small Businesses

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Want to learn more about how you can retain your best workers? Check out the companion piece to this article: “Why Employees Quit Their Jobs at Small Businesses.”

“How do we keep our best employees?” is a question plaguing the minds of small business leaders and HR practitioners. With talent pools shrinking, job hopping becoming more common, and recruiting costs rising, the need for answers has grown only more urgent.

Businesses with high retention can focus more on what ultimately matters: cultivating an attractive company culture, building a great product, and achieving growth and profitability.

Those with a revolving door, meanwhile, are constantly playing catch-up.

That’s why we decided to ask employees with above-average tenures at small businesses why they’ve stayed.

Our findings, presented below, are based on a survey of nearly 500 U.S. employees who have worked at the same small business (with 100 employees or fewer) for five or more years (the median job tenure at the same employer in the U.S. is only 4.2 years).

Some results may be obvious, others surprising, but all will help inform your strategy to retain your best and brightest.

Let’s dive in.

A good work-life balance is the top reason employees stay at small businesses

If you want employees to stay at your small business, you need to let them have a life outside of work.

Fifty percent of survey respondents cite a good work-life balance as a reason they’ve stayed with the same small business for five or more years. That was the top response, above things like doing interesting or challenging work (35%) and receiving good compensation and benefits (30%).

Bar chart showing the top reasons why employees stay at small businesses

There’s no way around it: Workers are stressed out.

A recent Gallup study found that 2 out of 3 full-time employees are experiencing burnout on the job. Those experiencing the most burnout take more sick days, lose confidence in their performance, and are 260%(!) more likely to leave their current employer.

The problem has become so pervasive that a majority of employees say they’re unable to disconnect from work, even while on vacation.

It’s time for small businesses to address these issues, not only for short-term employee health and productivity but also for long-term retention and growth.

How to give your employees a better work-life balance

Giving your employees a healthy work-life balance doesn’t necessarily mean taking responsibilities off their plate (though that’s definitely a tactic you should consider). Burnout is caused by a variety of factors that small businesses should identify, and address.

Here are some suggestions on how to give your employees a better work-life balance:

  • Consider a four-day work week. The four-day work week has its fair share of advocates and opponents, but it could be just the thing to give your workers more time to decompress. It could also help you stand out to job seekers.
  • Implement flexible work arrangements. Do your workers really need to be in the office the entire time? If not, consider letting them work from home under certain conditions. You can also implement flextime or job-sharing policies that allow employees more control over their hours.
  • Eliminate unreasonable goals or deadlines. The line between a challenging goal or deadline and an impossible one is thin. Use performance data to identify areas where you can scale back requirements so employees aren’t constantly behind on their workload.
  • Set a good example at the top. If the executives and managers at your company act like workaholics, the rest of your employees will follow. Talk to your leaders and reinforce the importance of going home at a reasonable time and not sending emails late at night.

Loyal employees are more than twice as likely to cite the company’s mission and values as a reason for staying

Despite being employed by the same small business for half a decade or more, only 14% of respondents strongly disagree with the statement: “If presented with an attractive job offer from another company, I would leave my current employer.”

We’ll call this our loyal group. Comparing the reasons employees stay between this loyal group and the overall sample, one difference sticks out from the rest:

In our overall sample, only 16% cite a strong connection to the company’s mission and values as a reason for staying. In the loyal group, that number jumps to 34%.

Bar chart showing the top reasons loyal employees stay at small businesses compared to average workers

LinkedIn estimates that up to 70% of the global workforce can be considered passive candidates: employees who aren’t actively looking for a new job, but wouldn’t pass up a good opportunity if it was presented to them.

To prevent your best workers from accepting that attractive offer from a competitor, you need to have something they can’t find anywhere else. A lot of businesses can offer similar pay and perks or an attractive culture, but no one can replicate your unique mission and values.

How to ensure your mission and values actually resonate with workers

It’s not enough to come up with a corporate cliché, slap it on your website, and call it a day.

Here are some tips for making your mission statement and company values stick:

  • Make them incredibly visible. If you bury your mission and values in the back of the employee handbook, no one will follow them, let alone remember what they are. Paint them on a wall, hang them on a banner, and give out awards to workers that embody them to increase their visibility.
  • Become socially responsible. Nine out of 10 Millennials—now the largest generation in the workforce—believe that working for a socially responsible company is important. Think of ways you can carry out your mission and values in your community to make them more visible and impactful.
  • Walk the walk. Wells Fargo says that they place customers at the center of everything they do. Wells Fargo also created fraudulent bank accounts without customer consent. Make sure your actions don’t contradict your values, or they’ll ring hollow.

Doing interesting or challenging work becomes more important as workers age

When we analyzed our survey results by role, seniority, location, and even gender, nothing stuck out. The reasons for staying at a small business remained the same.

When we looked at age though, we discovered something interesting.

As employees age, they become more likely to cite having interesting or challenging work as a reason for staying at the same small business.

Percent of workers citing doing interesting or challenging work as a reason for staying at a small business, by age

Between 2005 and 2015, unstable or low-wage jobs accounted for more than half of older workers’ job growth in the United States. As automation becomes more prevalent, many of these jobs will be eliminated. Until that happens though, many older employees will find themselves relegated to performing simple, tedious, or repetitive tasks.

Simply put, if your workers feel stuck in boring, meaningless jobs, they won’t stay to become the next leaders of your small business.

How to keep employees interested in their work

Keeping employees engaged in their day-to-day isn’t just an older worker challenge, or even just a small business challenge. Gallup found that less than one-third of the entire U.S. workforce is involved in, enthusiastic about, and committed to their work.

Here are some things you can do to ensure your employees stay interested in their work:

  • Create individual development plans. Have your managers sit down with their direct reports to learn what they’d like to improve on in their role. Together they can come up with three or four next steps for workers to learn and develop interesting and important skills.
  • Give workers feedback more often. Having no idea if you’re doing a good or bad job is a quick way to become bored in any role. If your company is saving feedback for annual performance reviews, consider implementing tools to deliver more continuous feedback.
  • Communicate clear paths and criteria for promotion. If workers think there’s no hope for advancement, they’ll become disengaged and go elsewhere. For every role in your organization, draw a clear career path for advancement, and establish specific criteria for being considered.
  • Reskill if necessary. Sometimes your best workers want to go a completely different direction in their career. Look around your organization and see if there are any open positions that are a good fit for their desired shift. Reskilling such workers can often be cheaper than recruiting externally.

Retaining your best workers is critical to small business success

Eighty-seven percent of HR leaders are calling improved retention a critical or high priority for their business over the next five years. At small businesses, where any single worker has that much more of an impact, the need to address retention issues is even more urgent.

But what if you’re already giving employees a great work-life balance? Maybe your mission and values are motivating, and workers already take an interest in their day-to-day. Yet, people keep walking out the door.

If that’s the case, conduct an anonymous survey of your employees to discover the specific problems causing high turnover within your organization. Employees aren’t always eager to bring up issues/concerns for fear of retaliation, so you may discover factors you’ve never considered before.

Looking for Talent Management software? Check out Capterra's list of the best Talent Management software solutions.

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About the Author

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Brian Westfall

Brian Westfall is a Senior HR and Talent Management Analyst for Capterra. His research has been cited in various publications, including TIME, Entrepreneur, Fast Company, and Undercover Recruiter.

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