Staffing Management

How to Prevent Top Talent From Leaving Your Small Business

By Chris Rush

Jan. 29, 2016

According to the most recent “ADP National Employment Report,” the U.S. private sector added 257,000 jobs in December. While economic indicators like this are great news for American workers, the strengthened economy’s effect on the jobs market now poses new recruitment and retention challenges for small and midsize businesses across the country. There have been 69 consecutive months of private sector job growth, and that’s led to talent scarcity in some areas — a major trend reversal from the 2007 to 2009 financial crisis and subsequent recession.The Argument logo

This talent challenge is further compounded as small businesses also have fewer resources than larger companies to attract and retain the best employees. Ultimately, an employer’s preference is always first to retain the high-performing talent they currently have rather than competing in the jobs market. A recent internal survey of ADP’s small-business clients indicated that 40 percent of small businesses (those with between one and 49 employees) felt it was more difficult than expected to fill positions, and one third said it took longer than expected.

When considering employee retention best practices, increased wages is the most readily apparent method to improve employee morale and commitment. However, pay raises typically provide a temporary benefit and don’t always address the root cause of why employees decide to leave. Luckily, there are a variety of methods to retain talent that are both more effective than simply increasing salaries.

One principal area employers often overlook is the importance that employees place on retirement planning. According to this year’s retirement confidence survey by the Employee Benefits Research Institute, only 22 percent of Americans feel “very confident” that they will have enough money to live comfortably in retirement. Whether they know it or not, employers play a big role in long-term retirement planning for their employees, and it’s important those employees see their employers as an integral part of their retirement planning. 

Few Small Companies Offer Retirement Benefits

The second annual study of the ADP Research Institute on retirement savings found that 98 percent of companies with more than 5,000 employees offer retirement benefits compared with just 33 percent of companies with fewer than 20 employees. (Editor's note: The author works for ADP.) The majority of small businesses aren’t offering a retirement plan to their employees because of the perceived cost and complexity of implementing one. However, there are many low-cost, easy-to-manage retirement plans available. It’s important to remember that prospective hires who experienced the financial crisis want retirement security. When implemented correctly, retirement benefits can both foster loyalty and drive employee engagement, which ultimately helps companies retain talent and build a better workforce.

However, before making any fundamental changes to improve employee engagement and retention, it is important to understand the priorities of today’s increasingly younger and more tech-savvy workforce. Pew Research Center recently found that millennials have overtaken other generations as the majority age group in the workforce. Unlike preceding generations, this demographic has an entirely different set of workplace priorities and often demands cutting-edge tools and resources, which are frequently mobile-enabled.

Most companies either already have — or are in the process of implementing — mobile applications and platforms to better reach and serve their customers. So it’s a logical next step for these same companies to use their mobile capabilities to enhance information accessibility and collaboration. Mobile capabilities for applications such as payroll and time and attendance are becoming increasingly popular. By allowing employees to access these applications on a mobile device, organizations can make significant progress in attracting millennial workers while promoting a culture of self-service and flexibility. In fact, it may be easier for small businesses to implement mobile applications since large companies typically need to gain internal alignment before trying new solutions.

The increasingly popular trend of mobile integration remains strong, and presents a ripe opportunity for small businesses to compete directly with larger competitors while targeting millennial employees. Acting on generational trends like these is a key component of keeping your company current while making it a desirable target for the largest segment of U.S. workers.

Along with these actionable drivers to retain talent, there are still a handful of more traditional methods that are quite effective for retaining top employees:

  • Promoting company culture at all levels. Employees who are strongly attached to their company’s culture and values tend to be more engaged in their work and loyal to their employers. Companies that clearly communicate their values to employees, both at the time of hire and throughout their careers, are much more appealing to their employees. Small businesses should continually assess whether their current employee policies and practices reflect their values. In addition, employee policies should accurately reflect the actions and character of the company’s leadership. When leadership “walks the talk,” it often leads to happier employees.
  • Mixing it up. Create challenging and varied work as a core component of the employees’ jobs by offering a range of tasks that allow top performers to tackle new or high-profile projects. Doing so helps employees avoid monotony while cross-training employees on new responsibilities.
  • Don’t be afraid to flex. Greater flexibility in how employees structure their workday is an attractive benefit and can help minimize unscheduled absences while showing employees you value their personal time and work-life balance. Consider implementing flexible work arrangements, such as the option to work from home, alternative start and stop times, compressed work weeks or reduced hours on summer Fridays.

Finally, it’s unavoidable that some employees will choose to leave. Whether it’s to pursue a new opportunity or to follow a family member taking a job in another city. Top talent will inevitably leave your company at one time or another. What’s important is that you capitalize on the opportunity to learn more about what led to their decision and how they view your company. By using the exit interview process to learn more about how employees view their organizations, small businesses can help identify their weaknesses and start addressing them for improvement.

The best way small businesses can limit turnover is by understanding what motivates their employees and then developing programs that address those needs. Investing in your current employees and letting them know you appreciate their contributions is ultimately the most important thing small-business owners can do to protect their company’s bottom line while creating a positive, productive work environment.

Chris Rush is ADP’s division vice president of strategy. Comment below or email Follow Workforce on Twitter at @workforcenews.

Schedule, engage, and pay your staff in one system with


Join over 52,000 of your HR peers

Don't miss out on the latest tactics and insights at the forefront of HR.