Attracting and Retaining Employees: Tips for Small Businesses

Attracting and retaining employees is especially hard for small businesses when there's a labor shortage. Here's how to compete for talent.



In an employee-friendly labor market, how do small businesses attract and retain workers when they have limited resources and tight budgets?

That’s the question nearly every business owner has asked since “The Great Resignation” began. While turnover is expensive for all employers, losing even just one employee is particularly costly to small businesses who have fewer workers already.

However, small businesses have the advantage of agility, allowing them to respond to new strategies without layers of red tape. With that in mind, here are tips for your small business to compete with large corporations for talent during this tight labor market.

Tips to Attracting and Retaining Employees

Find Out If You Have a Toxic Manager

Some surveys estimate 50-60% of employees quit because of a bad boss. You can diagnose a manager problem by tracking your turnover metrics and determining if a specific department has a high turnover rate, or perhaps through exit or stay interviews. If you think an anonymous survey would provide you with better information, try a manager assessment survey.

If you’re the boss and are concerned you may have an undiagnosed micromanagement problem, consider taking this self-assessed micromanager quiz.

Offer Better Benefits

Before you say you can’t afford benefits, here are three ways your small business can gain access to large employer benefits at economies-of scale pricing:

  1. Partner with a PEO

    Companies that partner with a Professional Employer Organization (PEO) provide their employees with instant access to all the benefit plans the PEO offers, such as health, dental, vision, life, 401(K), flexible spending, and more. That means that a small business doesn’t have to go out and get bids for their own small group.

  2. Offer a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)

    Another option is to offer employees a QSEHRA, which allows small employers to reimburse employees for their medical expenses when they provide proof of coverage of their own individual health plan. To qualify for this option found in Sec. 9831(d) of the IRS code (“The Cures Act” enacted Dec 13, 2016), your company must have fewer than 50 full-time employees and cannot offer group health insurance.

  3. Join an Association Health Plan

    Small businesses can band together by industry or geography to form an Association Health Plan. Grouping multiple businesses together helps spread the risk, which typically provides better health insurance rates for employees of small businesses.

Consider surveying your employees about the type of benefits they’d prefer prior to making benefits decisions.

Create Flexible Work Options

Employees have been leaving jobs not only for better compensation and benefits, but also for flexible work arrangements or career development opportunities.

If your employees’ survey results indicate a strong preference for flexible work options, discover ways to implement work-from-home arrangements, hybrid work schedules, or other flexible work schedules. In the event remote work options aren’t possible for your company, consider allowing your employees to create flexible scheduling options that work for them individually, where permissible.

Remember Your Remote Employees

If you have administrative or traditional desk positions, remote work arrangements may have already become the norm for some of your workers.

Although it may feel like it’s incentive enough for employees to work remotely, it’s easy for them to feel isolated from the team. Remember to include these employees in your motivation initiatives and company events to help them feel included and engaged.

Use an Applicant Tracking System

Because small businesses have limited resources, it’s important to be as efficient as possible. Leveraging technology through an applicant tracking system (ATS) is a simple way to become more efficient. An ATS collects and stores candidate resumes and automates traditional recruiting tasks while giving candidates a better experience applying for your jobs. This will help you attract a better applicant pool while reducing costs and saving you valuable time.

If it sounds too good to be affordable, there are several feasible options in the market. For example, Stratus HR offers a custom-built ATS through its HR Technology Suite to all clients at no additional cost.

Try Employee Retention Software

To help you gain insight into key drivers of your employee turnover, consider utilizing the best employee retention software. This software provides analytics, communication tools, and recognition programs to implement targeted strategies and enhance employee satisfaction.

Creating personalized development opportunities and a positive work environment from the get-go are some of the most crucial retention factors, even when your company is small.

Attracting and Retaining Employees: Final Thoughts

If you’ve already implemented each of these tips and still feel like you’re behind the curve, try tweaking what you’ve already implemented. When is the last time you looked closely at your turnover and assessed your managers? Are your benefits really attracting and retaining key talent? Do you have room for improvement with creating more flexible work options? Is your ATS working against you?

For more suggestions, please contact your certified HR expert. Not a current Stratus HR client? Request a free consultation and our team will contact you shortly!

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