With the current labor shortage, every business owner needs to focus on retaining their current employees. Even in normal times, it makes more sense to retain employees than hire new ones, as you don’t have to spend time hiring or training them. This is especially important now with a shortage of people applying for jobs.

This is especially a concern for local businesses like restaurants and retailers, where working remotely is not an option. Many other small businesses, including offices, also simply don’t have the infrastructure to offer remote work.

To retain your employees, start by understanding why employees are quitting. This will help you address their concerns when possible and encourage them to stay. From there, learn other employee retention strategies that will encourage employees to stay at your company.

Herzberg’s two-factor theory

As you look at employee retention strategies, you will want to keep Herzberg’s two-factor theory in mind. It is also called Herzberg’s motivation-hygiene theory.

Herzberg’s theory contrasts with the traditional theory that job satisfaction and dissatisfaction are related to and interdependent on each other. Instead, he argues that they are two separate continua. The theory states that job satisfaction and job dissatisfaction are not interconnected; they each have their own factors.

The theory highlights “motivators” as factors for job satisfaction and “hygiene factors” as those for dissatisfaction.

Motivators and hygiene factors

Motivators or factors for satisfaction include:

Responsibility
The work itself
Personal growth
Opportunities for advancement
Job status
Performance and achievement
Recognition

Hygiene factors or those that encourage dissatisfaction include:

Policies and rules
Quality of supervisors
Relationship with supervisor
Relationship with coworkers
The physical workspace
Working conditions
Salary

If you want to incorporate Herzberg’s theory into your employee retention strategies, offer employees the positives while avoiding the negatives. For example, professional development and a healthy work-life balance would both be motivators, while a stressful work environment would be a detractor.

Employee life cycle

When creating your employee retention strategies, you will also want to consider the employee life cycle, from the interview and onboarding process to daily interactions to when they decide to leave.

The exact stages of the employee life cycle depend on who you ask. The following are typical stages:

Attracting potential employees
Recruiting the attracted employees
Interviewing potential employees
Onboarding new employees
Developing the employees’ skills
Retaining employees
Recognizing employees and their accomplishments
Offboarding employees
Employees separating from the business
Employees as alumni

Some versions condense this into just five stages: recruiting, onboarding, developing, retaining, and offboarding.

How Covid has affected the employee life cycle

The most significant impact of COVID on this cycle is that more of it now takes place remotely. Even in companies that cannot offer the ability to work remotely, some of the life cycle takes place remotely. For example, the process of attracting, recruiting, and interviewing employees largely takes place virtually. Elements of recognition and retention can be as well.

Additionally, different factors are now at play when it comes to retaining employees and initially attracting them. Simply put, employees have different needs now. They want to know that their work environment will be safe with proper COVID precautions in place. They want to see that it is flexible to some extent and want better compensation than they would previously have settled for.

Why are employees leaving?

There are numerous reasons that employees are leaving their jobs.

For many, there is simply a lack of urgency to work or return to work if they have previously quit. Some people have savings that they can live off for a while until their work preferences are met. Others only want to work remotely and can’t find a position that offers that option.

Childcare is also a significant challenge, especially with the looming threat of school closures. In many cases, childcare is simply unaffordable for employees, if not impossible to find.

Other people have taken the opportunity to switch careers. This includes changing to industries with more benefits, such as working from home. Others simply want more flexibility. While small businesses may not be able to offer remote work, that flexibility may be possible, especially in terms of hours worked.

Of course, many employees who don’t have the option to work from home have pandemic-related concerns, especially for those in roles that interact with the public.

On top of those factors, the pandemic has made many employees realize that they are underpaid or not treated well by customers. Many want to see better compensation or benefits before returning to work.

two employees talking at table

Ten ways to improve employee retention

With all of that background in mind, take a look at some of the best employee retention strategies that you can use to keep your current employees and avoid the need to find replacements.

Create career advancement opportunities

One essential method of retaining employees is to give them opportunities to grow in their careers. If employees see the potential to advance in your company, they won’t feel the need to look anywhere else.

Offering career advancement opportunities will also promote engaged employees, as they will have an incentive to do well.

Training and development

To further those advancement opportunities, be sure to offer your employees training and development. You can use internal resources or outsource resources when necessary. Offer workshops, online courses, access to training videos, and more.

If there is a relevant certificate in your field, consider paying part of the cost for employees to earn it. Small things like this will make a difference in employee engagement and satisfaction. Most importantly, they will make employees want to stay with your company.

Improve the onboarding process

Take the time to evaluate your onboarding process and make sure that it is optimized. You want to prioritize making a good first impression. During the onboarding process, be clear about expectations and help new hires connect with other team members.

Make sure your employees don’t feel overworked and overwhelmed

Part of ensuring your employees don’t feel overworked and overwhelmed comes down to work-life balance. However, a lot of it is also having realistic expectations about what your employees can achieve. If you set unrealistic goals, they will feel overworked and may lose motivation.

Work-life balance

The work-life balance is essential to retaining employees. Without a good balance, your employees are likely to burn out and leave. While there are times that you will need your employees to work long hours, make sure these moments are rare.

Ensure your employees don’t have to sacrifice time with their friends and family or their hobbies to work constantly.

Even if you can’t offer work-from-home, you can support a work-life balance by offering flexible hours. You can also do so by giving employees more input in their schedules. This type of employee retention strategy will help set you apart from the crowd and reduce the urge for employees to look for a new job.

Communication

We will discuss giving employees continuous feedback, but communication should be a two-way street. You also want to encourage your employees to provide you with feedback.

After all, if you get feedback, you can improve upon things that employees would change. This gives you a chance at employee retention early on before you have to fight harder to keep them.

In addition to feedback, just make it a point to keep communication open. Let employees approach you with ideas or suggestions. Make sure you are easy to reach if they need to call in sick or change their hours.

Take this to the next level and ask your departing employees for feedback as well.

Employee compensation

While it should be obvious, employee compensation is essential enough to mention. If you want to keep employees, you need to make sure that you pay them a fair wage. If they can earn double or triple somewhere else, they have no reason to stay with you.

To use this one of the employee retention strategies, research what competitors pay their employees and make sure you are competitive. On top of that, regularly review wages to ensure they remain fair and adjust them for inflation when necessary.

Wellness services

In addition to the regular compensation, don’t forget to consider wellness offerings for your employees. These will be an extra perk that will attract and retain workers. These wellness programs can involve physical, emotional, and financial health. For example, offer or reimburse them for fitness classes or gym memberships, offer stress management programs, or offer retirement planning.

Continuous feedback on performance

Create a company culture that values and includes continuous feedback on the performance of your employees. Providing your employees with feedback regularly is an excellent way to motivate them, especially when you give enough positive feedback.

The use of positivity is crucial, as you want to give more positive than negative feedback. Positivity motivates employees, so you want to aim for at least six positive comments for each negative one.

Make sure your employees are appreciated and recognized

Offering positive feedback goes a long way toward making your employees feel valued and recognized, but you should go beyond this. Create a culture where this recognition is a given. For example, consider some type of recognition program, whether private or public praise or an employee of the month program.

Conclusion: Why employee retention matters for local businesses

Employee retention is always important, as keeping your employees saves the time and money you would have to spend recruiting and training new workers. It is imperative given the current labor shortage, as it is incredibly challenging to find new employees to hire when the need arises.

Simply put, employee retention ensures that you won’t struggle to fill empty roles. As a bonus, many of the same practices that help you retain employees and prevent employee turnover will also help you recruit them.

10 Effective Employee Retention Strategies for Local Businesses

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