Why Staff Retention Is So Important for SMEs
In modern industry, SMEs face a whole host of challenges to stay afloat in saturated and highly competitive markets.
Understanding the extent of start-up costs, managing cash flow, getting the right equipment and developing a substantial portfolio are just a few of the key areas a smaller business has to get right. However, recruiting and retaining good staff is becoming an ever-growing focus across industry as an integral factor in a business’s success.
But why does it matter if you lose a key member of your team? Surely there are plenty more fish in the sea?
A Talent Short Market
The reality across most skilled industries is that the appropriate candidate pool is shrinking. This is the result of higher industry demand combined with a lower number of qualified candidates hitting the open market.
SME owners will do well to realise there has been a shift in attitude to recruiting in the past few years. Gone are the days of asking a good candidate why you should hire them, instead it’s now about why they should choose you.
The lack of awareness to this shift means businesses are regularly losing out on top talent. This might be through offering below market value remuneration packages, drawn out recruitment processes or generally underestimating the level of competition out in the market.
Thus, getting the next version of the person you’ve just lost will offer a significant challenge.
The Cost of Replacing Someone
As it becomes increasingly difficult to replace good staff, more and more SMEs are having to turn to recruitment agencies to find the right people.
Ideally, smaller businesses would recruit directly, thus avoiding the substantial fees attached to agency recruitment. However, most SMEs are simply under-resourced to effectively locate and attract quality candidates in an industry that has been successfully cornered off by recruiters.
With that in mind, to most SMEs, recruiters are considered somewhat of a necessary evil. Recruitment rates don’t discriminate between bigger and smaller businesses, and fees typically sit at 15-25% of a candidate’s salary; a financial hit which is felt significantly more by a smaller company.
Beyond the financial cost, losing a key staff member results in a loss of labour, a redirection of resources to a time-consuming replacement process and a significant disruption to the day to day flow of the business.
And if you do manage to find someone, there’s no guarantee they’ll be the right fit or stick at your business for long. New staff only lasting a matter of months is not uncommon, and a bad hire results in damage to the internal processes of the business, coupled with a return to square one and another costly recruitment process ahead.
How You Can Improve Your Retention
With the the great difficulty and cost surrounding successfully replacing staff, good businesses are focusing in on ways to keep hold of their best people. Here’s how they’re doing it:
- Employee engagement: Encouraging open communication and feedback, setting well defined goals and making staff feel as though they are vital to day-to-day operations is key to overall employee satisfaction.
- Progression and development: Whilst this can be difficult in SMEs with linear progression structures, offering learning, training and development opportunities is essential for keeping hold of quality staff who are looking to grow in their careers.
- Perks and incentives: If progression in title isn’t available, financial boosts are an obvious way to keep people on board. Most good modern businesses are also taking a more flexible approach to working, allowing their employees to work from home or during customised hours.
- Matching the competition: Having an awareness of what’s going on around you means you can tailor your offering to make sure it’s the best around.
Overall, the importance of keeping hold of your best employees cannot be underestimated. It’s well documented that good people are the key to driving a business forward, what’s important for businesses, particularly SMEs, to realise is that it’s incredibly difficult, time consuming and costly to adequately replace them.
If you’re lucky enough to have a team that is helping take your operation to the next level, do everything in your power to keep hold of them. If you don’t, a solution may be harder to find than you think.