Small business best practice: Employee Retention and Incentives

Running a business is a balancing act. You're in charge of handling every aspect of the company, hiring the right people, and keeping everything on the right side of the law.

One of your most important roles as the company's founder is managing the money. Capital is the lifeblood of a business, and if you don't learn to manage your money, your company will most likely die.

Properly handling finances can extend your runway and give you more time to work on your business.

As a small business accountant who have worked with over 10,000 SMEs throughout the last four years, the team at Accounts and Legal have a knowledge of succeeding, and we are ready to share that with you.

As part of our new “Best Practice” series, we will be talking you through a range of topics, all designed to help you fully understand your business, evaluate it against our views on best practice, and ultimately arm you with the knowledge you need to take your business to the next level.

In the series, we will take you through the likes of budgeting, forecasting, management reporting, debtor control, project evaluation, stock control and fixed assets, to name a few. This week we focus on Employee Retention and Incentives.

What is Employee Retention?

Employee retention matters. Failing to retain a key employee is costly to the bottom line, in addition to organisational issues such as training time and investment, lost knowledge, insecure coworkers and a costly candidate search aside.

Various estimates suggest that losing a middle manager costs an organization up to 100 percent of their salary. The loss of a senior executive is, as you would assume, even more costly.

Employee retention is critically important for a second societal reason too. Over the next few decades years while Baby Boomers (age 40-58) retire, the upcoming Generation X population (ages 25-34) are a little over half the size of the Baby Boomers population. Simply put, there are a lot fewer people available to work.

Employee retention is one of the primary measures of the health of your organisation. If you are losing critical staff members, you can safely bet that other people in their departments are looking to fill positions as well.

Exit interviews with departing employees provide valuable information you can use to retain remaining staff. Heed their results. You'll never have a more significant source of data about the health of your organization.

What are Employee Incentives?

In Globoforce’s 2016 survey ‘Employee Experience as a Business Driver’, 46% of HR professionals claimed retention and turnover as one of the major issues within their business.

By using an employee incentive scheme, many businesses can combat this issue by improving morale, keeping productivity high and retaining employees.

However, the most common misconception is that employees are driven solely by money. In a bid to bust this myth, we discuss what really drives employees.

What is really essential are the needs found on the higher levels, and they are not associated with money.

Flexibility

It is a mandate for employees to follow their bosses, but if supervisors get all the say, they will immediately feel limited. Workers still require a room where they can voice out their opinion and ideas, as well as the liberty to be versatile on their approaches to conflicts and problems.

You can also emphasize flexibility in terms of work hours. Most of the career people these days are moms and dads who have greater personal responsibilities. To be able to work at their own pace will permit them to take care of all their obligations (both at home and at the office).

Recognition

Who does not want to be recognized? Yet many employees are not given even a pat in the back or a handshake by their bosses. If they give employers the privilege to criticize, it is only right for the managers to give away praises.

Recognition can come in different forms. A simple email blast can already do wonders. You may also hold an informal appreciation ceremony for all those who have excelled expectations for a given month.

Training

When you train your employees, it means there is plenty of room for them to grow. They don’t have to feel stuck to a routine job. They can look forward to much bigger challenges.

Trainings give good types of stress, something that motivates employees to push themselves to the limit. Personally, it gives them a good idea of their own strengths and weaknesses.

Trainings, however, should be in line with the career path the employee wants to take. Otherwise, they cannot use the learning to the fullest. It is best to conduct skill assessment before creating training programs.

Belongingness

Sickness is just one of the least causes of absenteeism. It is actually conflict and politics in the workplace that makes workers hate coming to the office. Though most employees understand the employee-manager relationship, it is also important to them that they can sense a feeling of friendship and belongingness.

Take time to come up with team-building activities. It does not have to be very long or tedious. Your team simply has to strengthen trust, respect, and accountability with each other.

Chance to Contribute

You can greatly motivate your employees if you can make them feel that the success of your organization also depends on them. You can do this by allowing them to head projects as well as getting their consensus on major decisions that can affect your business and organization.

Fringe Benefits

Fringe benefits include additional allowances, leaves, health insurance plans, and other perks that they can enjoy alone or with their loved ones.

Keep an eye out for our "Best Practice" series as it comes online every week, filled with information specifically tailored to help your business perform at its greatest level.

In the meantime, if you'd like to learn more about how our London accountant can help you, please get in touch.

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