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Small Businesses & Employee Retention

Posted on Thu 26 Feb 2015

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I’m sure many of you have watched Seinfeld or Friends and dreamt of having your own restaurant business, where all the interesting action and conversation takes place. If you have already realized your dream and started your own Restaurant, then ‘Congrats’, your interesting journey has just begun!

For any business to succeed, the foremost requirement is to have the best employees. Did you say, “I already have got the best employees”? That’s good and let’s hope it continues that way, the operating word being –‘Employee Retention’. This is especially true of small brands competing with bigger ones – who have a much bigger budget.

Keeping Employees Happy for Business Growth

If the employees leave your restaurant on a regular basis, it has a negative effect on the morale of the remaining staff and leads to additional stress due to the sudden workload. Recruiting and training a freshly recruited employee can easily cost more than twice the employee’s monthly salary.

Sometimes the costs incurred are much higher than stated above. So we come down to the question – ‘How do we retain our employees?’ Obviously, we can conclude from the above argument that a well planned retention strategy is as important as recruitment.

So let’s give you some tips for employee retention.

Here are seven tips for small business employee retention.

1. Does it really matter?

One might say, ‘Nobody is indispensible – we can get better employees – we will manage till we find a new one’. If so, hold back right there - It’s not so easy. The knowledge gap left behind will create more work – while the remaining employees learn to pick the pieces and move on. As mentioned before, the cost of getting and training a new employee can cost from more than 2 to 9 months of his salary. So having a retention strategy will cut your costs in the long run.

2. What is your retention Rate?

So, how do you calculate the employee retention rate at your company or restaurant? It’s simple; just divide the number of employees who left in the past 12 months by the number of remaining employees to get the percentage. By industry standards, 85% or above is considered to be a good retention rate.

3. Utilize Proven Retention Strategies, Keep Guesswork Aside.

We present before you, four common theories: Positive Organizational Behavior –as defined by Fred Luthans: This is described as “The study and application of positively oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed for performance improvement in today’s workplace"

Valence – a term used in human psychology, in Victor Vroom's Expectancy Theory, is the extent to which an employee's goals match the company's goals. The more aligned these are, the higher the employee retention rate.

Abraham Maslow's “Hierarchy of Needs” theorizes that companies should first take care of an employee's basic needs, such as job security, payment, and health benefits, and then advance to bigger aspirations, like his or her place in the company.

How important is it that employees feel they are being treated fairly? According to John Stacey Abrams' Equity Theory, if a worker feels he is getting what he considers to be fair for the job he is doing in return, he will be happy and remain in the position.

4. Don't Assume Employees Are Happy

This is one of the biggest mistakes companies make – “He is still there with us, it means he is happy – and why shouldn’t he be; after all he is paid for what he does, right?” Have a one on one review with the employee, so he/she can get your constructive feedback. This feedback is important, and even the most productive employees must be given this feedback as part of retention strategy. Studies have shown that employees not only want appraisal of the work well done, but also constructive criticism and a review of their goals and company’s expectations. That will keep the employee happy and boost his morale. Regular formal evaluation sessions can also be taken as an opportunity to get a feedback from employees regarding what keeps them happy. So having a proper retention strategy will strike a balance regarding what’s best for your business and the employee expectations.

5. Health Benefits -An important part of Employee Retention

Health benefits form an important part of your retention strategy. Work with an insurance agent and formulate a good employee health policy. If your business is small and cannot afford it, then you can work with a broker and have a premium re-imbursement plan – which allows healthcare allowances for the employee’s personal health insurance policy. This is a good alternative to company sponsored health insurance plans.

6. Have Exit Interviews

By conducting Exit Interviews, businesses can retrieve important information about why a particular employee left the company. During course of this interview, the employee must be asked for his feedback about the work environment, employee benefits, training, areas for improvement, and last but not the least ->workload. Evaluate these exit-interview surveys and incorporate the feedback into your small business’s employee retention strategies.

As discussed, having a Business Retention Strategy can go a long way towards your restaurant or business success!

Source: “Small Business Retention Ideas” Retrieved 2015-02-26

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