By Rieva Lesonsky
This post brought to you by MetLife Small Business. The content and opinions expressed below are that of Small Biz Daily.
Unlike a large corporation, which can absorb the loss of almost any employee smoothly, small business owners rely on each and every employee to help keep the business functioning. The cost of replacing an employee weighs more heavily on small businesses and their smaller budgets, too.
This is a white-paper snippet from MetLife.
“How small businesses can ensure they keep their best and brightest
Great employees are the lifeblood of any small business. However, as the job market accelerates, even happy workers may be tempted to explore whether the grass is greener at another company.
Losing employees is a concern for most small businesses, not least because of the cost: a study from the Center for American Progress estimated that replacing an employee costs, on average, 20 percent of the employee’s annual salary. So if a worker making $50,000 a year quits, you’ll pay roughly $10,000 to cover the lost productivity costs and then recruit and train someone new.
“At a small business, everyone is that much more important; you’re a bigger piece of the pie,” says Dawn Fay, New York-based district president for staffing firm Robert Half. “There’s the cost of losing someone, but you also run the risk of losing other employees or burning people out as they carry a larger workload, which can affect your client service and product and ultimately impact your revenue.”
For small companies, keeping the right people in the right seats is paramount. Here are five ways to improve your employee retention and ensure your best and brightest stick around.”
- Employer helps enable work-life balance for employees
- Employer understands and helps relieve employees’ financial pressures
- Satisfaction with employee benefits
Let’s take a closer look at how you can improve on these and other drivers.
Work-life balance: Our always-on Internet culture makes it easy to work almost 24/7—which has created even more demand for work-life balance. Millennials feel the need especially strongly: According to an MTV survey, 81 percent of Millennials think they should be allowed to set their own hours at work. And with the Millennial generation entering the parenting years, their need for flexibility will become even greater. If you don’t already do so, consider how you can offer flexible hours and/or the ability to work from home at least part of the time. You can also prevent work-life overload by setting rules such as prohibiting work-related emails before 7 a.m. or after 8 p.m.
Understanding financial pressures: The cost of medical care is skyrocketing, which has made basic medical insurance an essential offering if you hope to retain your current employees. However, expenses such as dental and vision care can quickly add up, too, especially for older employees or employees with families. Consider offering voluntary medical benefits, such as dental and vision insurance, if you are not already doing so. The cost is typically minimal, making this a great value in terms of the employee loyalty you can derive from a relatively small outlay. Also consider ways to ease financial pressures in worst-case scenarios–death or disability—by offering employees disability insurance and life insurance.
Satisfaction with employee benefits: The more benefits you offer, the more satisfied your employees will be, the MetLife study found. In fact, offering a wide range of voluntary employee benefits can help convince employees who are considering leaving to stay with your company. When companies offer fewer than five benefits, MetLife reports, the percentage of employees who do not intend to stay with their employer outweighs those who do (32 percent vs. 18 percent). But when employees are offered 11 or more benefits to choose from, the proportions reverse, with more employees intending to stay than intending to leave (30 percent vs. 21 percent).
Of course, with that many benefits to choose from, employees can get confused and overwhelmed. A group meeting with your benefits provider is the best starting point to ensure employees fully understand their choices. The provider can fully explain each benefit, the situations where it might be helpful and how to use it, as well as answering any questions.
Once employees know their options, it’s also important to help them make good choices and maximize the value of the benefits they select. MetLife found that employers tend to think their benefits education is more effective than employees do. If you’re just passing out benefits handbooks and leaving it at that, step up your efforts.
One-on-one discussions with benefits advisors, group meetings with benefits advisors, interactive benefits provider websites and benefits fairs are all valuable tools to supplement benefits handbooks and educate your workers about their benefits. MetLife found that making benefits information easy to understand and helping employees understand the costs of specific services under the benefits plan are the two most important factors making employees confident in their choice of voluntary benefits.
Value your employees: As the economy continues to recover, your employees will be tempted to leave FOR “greener pastures”. In addition to offering them a great benefits package, it’s important to make sure your employees feel they’re a valued part of your company. Employees want to know you respect their opinions and value their insights. They want to be acknowledged for their contributions. Sometimes a simple (but public) “thanks for your hard work on the project” will do. Or spontaneously give a $25 or $50 gift card to a local store or restaurant to someone who has worked particularly hard that week.
Invest in your team: Another way to retain your staff is to invest in their future. Many employees would love to take classes and learn new skills. Send staff members to conferences, classes or training sessions. Not only will this make them feel you value them enough to spend money on them, but you, in turn, will get the benefits of their new knowledge and skills. It’s a true win-win situation.
MetLife has some other helpful tips for retaining your current employees.
If you want to find out more—or if you have some questions, please join me and other small business experts on June 29 at 2 pm ET.