Why Employee Retention is Important for SMB Owners

Even before the Great Resignation of 2021, about 3 to 4.5 million people were quitting their job a month in the United States. That might not sound like a lot in a country of over 330 million people, but when you’re a small business owner, those stats can sting.

Now, during what has been deemed the Great Resignation, people are quitting in droves and it’s all due to a few main factors. Namely, people are exhausted from the pandemic and the working conditions we’ve all been put through. Working from home is difficult for most and simply unsustainable for a few. Along with that, workers are requesting more benefits such as paid time off and retirement plan options.

Simply put, the landscape is changing, and if you’re a small business owner, you’ll need to work to keep up. If you don’t think focusing on employee retention is important, then just check this stat out: entry-level employees typically cost 50% of their salary to replace

Employee retention is important for small business owners now, in 2022, and beyond. Here’s what to know about the employee landscape currently and how you can work to retain top employees in 2022.

What’s Happening During the Great Resignation?

Over 4 million American workers quit in September 2021 alone. In an interview with CNBC,  Barclays deputy chief US economist Jonathan Millar said that “the true cause is a hesitation of workers to return to the labor force, due to influences tied to the pandemic such as infection risks, infection-related illness, and a lack of affordable childcare.”

Along with that, though, the same article reported that 55% of workers were wondering if their pay was high enough. That, coupled with the ongoing stress and trauma of what has been the past two years for everybody around the world, means that workers are leaving to look for better opportunities where they feel safe, valued, and like they’re earning what they deserve.

Financial analysts note that this could actually be positive as it’s usually a sign that workers have confidence in the way in which the economy is headed. It’s why they feel so comfortable quitting; they know they’re likely to find something better out there. That’s great as a citizen. But, as a business owner, what does that mean for you?

The Cost of Employee Turnover for SMBs

You obviously don’t want to spend time and money hiring top new talent just to have them leave in three months because they found a better salary elsewhere. But, just what is the cost to your small business if you experience high rates of employee turnover? And, what happens if you don’t have the cash to pay even higher salaries than you already are? Well, the good news is that it’s not all about salary (although, yes, you should be paying fair wages). First, though, let’s talk about the cost of employee turnover.

As mentioned above, entry-level employees typically cost 50% of their salary to replace. However, a report from Gallup paints an even grimmer picture. According to them, the cost of replacing an individual employee can range from 50% to two times the employee's annual salary.

This means that, within a 100-person company, if your business follows similar trends in terms of turnover and average salaries, you could be losing $660,000 to $2.6 million per year! However, as Gallup points out, it’s about more than just the money. “Losing your best people means losing your reliable winners, your constant innovators and your most effective problem solvers.”

It’s hard to grow a business long-term without innovators and problem solvers. So, what are you left to do in order to attract and retain top employees in 2022? Here’s how.

How to Retain Top Employees in 2022

Offer Competitive Wages

It goes without saying that you’re going to have to pay competitive wages if you want the best of the best. At the very least, your wages should be fair if you’re willing to be more flexible on other benefits such as time off, remote work, and an investment in their continued education so that they can excel at their job.

If you’re not sure what competitive pay looks like in your industry, Indeed has developed a helpful guide that can make starting that process a whole lot easier.

Provide Retirement Benefits

Can’t offer the same salary that your competitor offers? Show your employees you care by offering them a great retirement plan to show them that you care about their financial well–being now and in the future.

Offering simple retirement solutions that will help them grow their wealth actually doesn’t cost you much, either, if you’re on a tight budget.

Don’t think retirement is that important? Think again.

  • 92% of employees at small to mid-sized companies ranked “workplace savings and retirement plans” as an important factor in remaining with their employer.
  • 40% of employees working for small businesses say that they would leave their current company for another that offers a 401(k) plan. 
  • On top of that, a survey by Willis Tower Watson showed that 75% of new hires at a company offering a 401(k) say that a retirement plan provides a compelling reason to stay.

Aside from offering retirement solutions as a way to take care of your employees, it’s actually a requirement in certain states depending on how large your business is! Read more about that here.

Create Opportunities for Growth

In a recent study, 22% of employees stated that they left a company for professional development. Workers of today, particularly millennials and Gen Z, don’t want to just clock in, work, and clock out. They want to grow throughout their career and to be a part of building something interesting and worthwhile. To do this, they need to be constantly learning and evolving on the job.

When you create opportunities for growth, whether that’s within the company or by investing in their personal development via paid courses and other activities, you show your employees that you care about them as individuals, not just as another cog in the wheel.

Give Employees Autonomy

HR Executive published an article with interesting statistics that show that 88% of workers surveyed said they’re seeking flexibility in their working hours. Why? Because they crave autonomy. 

Long gone are the days when you needed to micromanage everyone in a central hub within their cubicles just to keep an eye on what they’re doing. Nah. That’s not where business is headed in 2022 and beyond. Instead, workers want to know that you trust them to use their skills and creativity to help you and the company solve problems. 

After all, if you’re hiring top talent, you need to let them show off their talent. This often means giving them the autonomy they need and crave to work their magic. It’s okay to let go and trust that they’ll do their job right.

Retain Employees, Increase the Value of Your Business with Wealth Stack

Ready to take the next step in increasing the value of your business? It starts with investing in your employees. And, we’re here to help you with all of that. How? Via the Wealth Stack Growth Pack, we offer to main pillars of support:

  • We offer fully-managed IRA plans for small businesses like yours that are designed to help you attract and retain top talent.
  • We also offer digital advisory services via the Wealth Stack platform that facilitates access to alternative sources of capital.

We’ve done a lot of research into what small business owners need, what employees are looking for, and what current trends indicate are important. We’ve found that these two services work really well in helping you:

  • Access the funding you need at the terms you want
  • Learn how to use that cash to increase the value of your business
  • Attract top talent
  • Increase business productivity
  • Retain your best employees

We’re here to help you access the funding and financial services you need to increase the value of your business. To chat about our managed IRA plans or the Wealth Stack Growth Pack’s other benefits, click here to learn more and to schedule a time with our financial advisor (that consultation is free!).