Blog Candidate Experience Employee Retention Strategies for Small Businesses
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Whether you’re a large or small business, retaining your best employees is crucial for success. This article covers the most effective employee retention strategies for small businesses, and how you can start implementing them today. 


One of the most common challenges discussed in recruitment is hiring the best talent for your business. With the job market being so candidate-driven, attracting and hiring the right people is harder than ever.


Luckily, there’s plenty of information and recruitment technology to help you make the right hires, but what about once you’ve made those hires? We all know how vital it is to have talented people working for you, and you want to keep those people on board for the highest chance of business success.


Your employees are ultimately your most valuable asset, and care must be taken to retain them just as much as generating sales or managing finances. Employee retention strategies for small businesses are particularly important, as here every member of your team really will make or break the business.


Why is employee retention important?

When you don’t retain your employees, the outcome is of course a higher turnover rate. A high turnover is bad for any business, but the cost of it can be highly damaging to smaller companies.



Turnover can cost employers 33% of an employee’s annual salary, a loss that can significantly impact a smaller business. But why exactly is the cost so high?


Recruitment costs

When you lose an employee, it’s not cheap to advertise a new role, particularly if you want the right candidate to apply.


Whether you’re advertising your roles through a recruitment agency or hiring directly, the costs add up. Recruitment agencies can take between 15 – 20% of the candidates’ first annual salary, even going up to 30% for harder-to-fill roles. Posting jobs directly on job boards and other advertising channels can also become an expensive option if you’re doing it frequently.


And let’s not forget the more indirect costs like your recruitment team’s time and resources and the consequences of making a bad hire.


If you’re having to go through these processes frequently, the loss to your business is staggering. So it’s best to make sure you’re making the right hire in the first place and then retaining them.


Loss of productivity

It’s only natural for a new employee to take some time to get familiar with the business and get to grips with their new role. This means they may not produce the same level of work as their predecessor for a while, creating a loss of productivity.


A loss of productivity can come at a great cost, particularly for small businesses where the environment is fast-paced. The amount lost depends on the role, however; for example, replacement staff at a restaurant may not need as much time to get up to speed as a senior lawyer position.


Onboarding and training

Once you hire the right candidate, you need to properly onboard and train them. Tasks like putting together a welcome book with their offer letter, contract, details on the company, and an employee handbook will be necessary.



Inductions with new employees will take time – even if it’s just a few hours this is a valuable time within your business. If you are making new hires frequently, this time will add up, and lead to a significant loss.


Training for new employees depends on the role, but this could range from a quick chat to hours spent training on how to sell your product. If this employee leaves soon after, this is essentially wasted time and money.


Employee retention strategies

So what exactly can you do as a small business to ensure your staff are less likely to leave and save on the cost of a high turnover? Here are employee retention strategies for small businesses to help.


1. Avoid making bad hires

This one might seem pretty obvious, but avoiding making bad hires for your business in the first place is essential for employee retention.


Hiring the wrong candidate can cost your business at least 30% of the employee’s first-year earnings, and can go up to as much as double this. This is because either the bad hire will realise they aren’t right for the business and leave, or the company decides to let them go.


The two most common factors that create a bad hire are poor cultural fit and underperformance. Ensuring you get these two aspects right throughout the hiring process is essential, and there are a few ways you can do this.


Write effective job adverts

How you write your job adverts is a vital part of attracting the right talent online. Your advert should be as clear and focused as possible, whilst engaging and exciting a prospective candidate.


A simple job description isn’t going to cut it. The most talented candidates are often already employed and passively searching for roles online – if you want to have any chance of hiring these people, you need to stand out, and sell the role and opportunity to them.


Some good practices for this are:

  • Use the right job title
  • Avoid too many ‘essential’ bullet points
  • Outline the role responsibilities accurately
  • Include information on career progression, working environment and culture, and potential rewards
  • Use a question in your opening paragraph


For more tips on writing effective job adverts, download our Job Advert Writing Checklist.


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Advertise in the right places 

In order to reach the right people, you need to select the right job advertising channels that they will be searching on.


A simple Google Search of the job title and location you’re advertising for will reveal the top results of where candidates are most likely to be searching. Simply select the top channels displayed.


You also want to make sure your advert is shown across and large enough number of these channels. There are now tools that can help you do this, such as job board multi-posters.


These increase your job’s visibility by posting across numerous relevant job advertising channels at a reduced fee. This saves your recruitment team both time and money that would be spent researching and posting on each channel individually. This is great if you’re a small business with limited resources.


2. Create a positive candidate experience

Attracting the right talent is one thing, but retaining them throughout the recruitment process is key. In-demand employees are less likely to accept a job offer if they’ve had a negative candidate experience.


A disappointed candidate may also share their experiences, with a CareerArc Survey revealing that 72% of candidates who have a bad experience will openly tell others about it. This can give you a bad employer reputation, and discourage talent from joining your company in the future.


An efficient hiring process 

Keep your hiring process as simple and efficient as possible. Research has shown that candidates quit job applications when they’re too long or complex, so make sure you’re doing the following:


  • Avoid lengthy candidate screening
  • Use recruitment automation tools where you can
  • Keep track of your candidates with an applicant tracking system
  • Avoid redirecting applicants between platforms in the initial application process


Candidate communication 

Poor communication with candidates is one of the biggest reasons for talented people dropping out of your recruitment process. Communicating properly increases your chance of winning over the best and retaining their interest.

  • Communicate at vital points in the recruitment process using automated emails and SMS messages
  • Communicate as quickly as possible from the point of application
  • Be courteous in all your communications
  • Ensure you provide adequate information on your company, opportunity, team, and the steps in your recruitment process


The interview 

Once you have shortlisted your best candidates for an interview, follow through with a carefully prepared and organised meeting. It’s amazing how many companies invest time and effort into recruiting candidates, yet blow their chances on the day. A good candidate will know if they’re being fobbed off with an ad hoc interview.


You are selling your company, so you should put your best people in front of the candidates that you want to impress. Confident, ambitious job seekers will have plenty of other opportunities on the table, so do your best to woo them.


  • Make sure your interviewer is properly trained
  • Avoid interviewer fatigue by not booking too many interviews in one time period
  • Ensure you follow best practices when conducting remote interviews
  • During on-site interviews give a tour of the facility & introductions to members of staff


3. Enhance your benefits package

Before you start thinking about hiring new employees, ask yourself – are you offering attractive benefits as part of working with you? While providing adequate pay is a vital employee retention strategy for small businesses, offering a superior benefits package is another sure-fire way to keep top talent (and attract new hires!).



Benefits are important because they make your employees feel valued, and give them what they may not be able to otherwise afford. In fact, research has found that 80% of employees would choose additional benefits over a pay rise. In a job seekers’ market, it’s not just job seekers who are being harder to please. Your existing staff may consider changing jobs if they feel more valued elsewhere.


Not only does an attractive benefits package keep talent in your business, it also contributes to increased productivity in the workplace. Keeping your employees productive is one of the most important parts of keeping your business profitable, so this is vital.


Some key benefits to consider are:

  • Private healthcare
  • Flexible hours
  • Remote working
  • Training and development
  • Wellness packages
  • Professional financial advice
  • Time off for mental health
  • Rewards for performance


4. Training and development

Are you providing ongoing staff training and development as part of your business? According to a LinkedIn Workplace Learning Report, a huge 93% of employees would stay at a company longer if it invested in their careers.


Training and development have become an expectation by talented employees. It shows that the business values them and their career progression.


Here are just some of the ways you can develop talent from within your business.


Use of micro-learning 

Traditional skill-developing techniques like seminars and in-person courses can eat up employee time and productivity. As a result, e-learning has become increasingly popular, as it can be done flexibly in a micro-learning format at the employee’s own convenience.


Offering learning opportunities in bite-sized time periods can be easily weaved into the normal workday. This may include:

  • Social media learning
  • Video learning e.g. webinars or training videos
  • Learning Experience Platforms (LXPs) that create a personalised, online learning experience for employees from a singular platform that they can revisit at any time


Internal training 

Experienced members on your teams can help get new and existing hires up to speed through internal training programmes. There are a few ways to boost your internal training processes, which may include:

  • Mentorships with senior staff
  • Creating a talent development programme that focuses on certain skills staff lack in
  • Performance reviews to monitor staff training progress


Upskilling & reskilling programmes

Upskilling and reskilling programmes are a great way to improve your employee engagement and help retain talent within your small business. They’re also effective for attracting new talent and speeding up the adoption of new trends in the business.


These programmes may require more investment from you, but the payoff is huge. Some examples of techniques to use are:

  • Job shadowing or swapping between teams
  • Investment in industry courses and qualifications
  • Time away to attend relevant seminars and events
  • Group sessions with external training providers


5. Rewards and recognition

A study from Office Team found that 66% of employees would quit a job if they felt unappreciated. Giving your employees rewards and recognition is a great employee retention strategy for small businesses, but what can you do to give them this?


Written & verbal praise 

Praising your employees can boost their self-esteem, and motivate them to continue to do good work. It also has the potential to motivate other employees to work just as hard to get the same level of recognition.


A simple thank you card or email can have more of an impact than you’d think and is tangible proof of an employee’s contribution.


Verbal praise is again quite self-explanatory, but ensure you’re making a conscious effort to give it in an ad-hoc format as and when it is necessary.


Employee appreciation events & days 

Calling out your employees in a highlighted event or day is a great step to showing appreciation for them. Some examples include having an employee of the month/quarter/year to identify and celebrate your top performers.


Additionally, celebrating birthdays, new additions to the family or other notable out-of-work events can have a positive impact too.



Employee milestones

Celebrating employee milestones such as work anniversaries, project completions, and quarterly reviews can actually have a big impact on your employee retention.


In fact, research by Harvard Business Review found most workers change jobs in the first year, spiking around work anniversaries. Acknowledging this milestone has the potential to help the employee feel valued, and perhaps reconsider leaving.


These recognitions don’t need to be costly, with something as simple as a thank you card or company-wide announcement. Even the smallest gesture can have the biggest impact.


Bonuses & gifts

Showing your appreciation in the form of a bonus or gift is a good tactic to reward your employees and contribute to retention.


Bonuses and gifts can range from small to large. Monetary bonuses can be given frequently for a job well done, and show employees they are valued and that their hard work is helping the company. Giving this kind of reward for a specific job well done can have the biggest impact, as the action is rewarded almost immediately when it’s top-of-mind.


Gift certificates can have a similar impact, and even something as simple as a free lunch once a week can also go a long way.


6. Career advancement

The opportunity for career advancement is an extremely effective employee retention strategy for small businesses. It may be challenging to develop a clear path for a promotion in a smaller business, as this usually means smaller teams and fewer senior positions available. However, you can still provide alternatives.


More responsibility 

Offering your strongest performing employees more responsibilities as a way to grow their careers is a viable option.


This offers employees the chance to get additional experience, hone new skills, and become more satisfied. Having these new experiences then sets the employee up for a promotion and a better salary in the future.


This is also a good time to get employees doing the extra training and development discussed in this guide.


Promote from within 

If the need does arise to create a new senior position, begin your search from within the business with your existing employees.


Consistently searching for new candidates and promoting from the outside can cause frustrations with your current employees. They may stop trying their best, or even leave your company as they don’t see any opportunity to grow within the business.


Promoting from within your teams is a key employee retention strategy for small businesses, as it shows the time and effort they’ve put into the company is valued.


7. Invest in your company culture

A Deloitte survey found company culture is a big and growing topic you cannot afford to neglect, with 86% of CEOs and HR Leaders seeing it as increasingly important to businesses.


It’s a magic formula that goes like this: Get your business model and your internal culture right, and you’ll be surprised just how quickly word gets around that your company is the place to be.


When your candidates, employees, customers, and the public interact with your business, what’s their experience? The way your company is perceived hinges on its internal culture and how this is managed. Everything follows from here – from team engagement and productivity to employee happiness, staff retention, and business success.


Identifying and developing your company’s brand doesn’t have to be expensive, but it does have to be done. Here are four things you should be doing:


  • Build authentic and meaningful recognition and reward into your company culture to meet your employees’ needs to be recognised for their efforts and achievements, and drive performance, staff retention, and employee engagement.



  • Build strong teams that collaborate eagerly, communicate openly, trust each other’s views, and are motivated to engage in the best performance. Team building shouldn’t be a one-off activity, day-to-day reinforcement may be needed to create a collaborative work culture.


  • Build a flexible work environment, allowing and trusting your staff to choose when, where, and how they work. This freedom coupled with personal accountability strengthens your work culture by encouraging happier, higher-performing teams.


  • Create a caring culture that genuinely looks after its employees and goes beyond the norm. X, Y, Z generations want to know that you will look after their best interests and care for them, especially in their hour of need. Employees now prefer healthy food and access to help and advice over a beer fridge or pool table.


Final thoughts

Retaining top talent is vital for your business’ success. A high turnover is ultimately bad for morale and adds numerous costs to the business. Whilst retaining every employee isn’t always possible, implementing these employee retention strategies for small businesses will create a much more desirable place to work, and your employees are likely to stay for longer.


Ultimately, talented employees who know the ins and outs of your business over time are the ones who will bring the most value. But you need to ensure you’re hiring the right people in the first place. This is where Smart Recruit Online can help. Our talent acquisition platform comes with the latest candidate screening tools and software designed to attract and hire the best talent online.


Interested? Check out our platform yourself, or book a demo with one of our talent acquisition specialists who will show you how we can help.


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Annie Button

April 7, 2022

Annie Button is a Portsmouth based writer and recent graduate. Annie has written for various online and print publications, she specialises in business, recruitment and career development.

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