How Can Small Businesses Attract and Retain Employees?

One of the biggest problems that small businesses face is to retain top talent as the industry grows more and more competitive.

Did you know that around 70% of small businesses struggle to attract and retain skilled talent? This makes it very difficult for them to sail smoothly and plan for the long-run and also hampers their growth significantly. In a fast-changing world, the hiring landscape is changing which in turn puts increasing pressure on smaller companies to keep up. One of the biggest problems that small businesses face is to retain employees as the industry grows more and more competitive. This could act as good news for employees but it certainly creates new challenges for employers. One of the key ways to ensure that employees stick for longer is talent engagement at all stages of the employment life cycle. That means right from the hiring stage to succession, employee engagement is key.

What leaves small businesses at a disadvantage when it comes to the aspect of how to retain employees is the fact that they can’t afford to invest in endless resources to lure their employees. And because employees can find better options, they don’t generally stick for too long. But there are still many ways to attract and retain employees. Let’s take a look at some of them.


It is important to hire someone who aligns with the company’s goals.

Flexible work schedules can Retain Employees

Flexibility is something that every traditional company can’t offer. It is also something that new-age employees value a lot. They want to work freely and value efficiency more than a strict office culture or protocol. This is why remote working is now the new normal and everybody’s loving it – well, more or less. Flexible work schedules give them an opportunity to create a work-life balance, another feat that is highly appreciated by the employees looking for a new job. Unlike before, employees have realised the importance of mental wellbeing and being able to have a balance in working hours.

Not everybody likes to juggle in traffic in horrid weather to make it to work and then go all the way back feeling unproductive and exhausted. A growing number of people would happily work from home. These flexible benefits go a long way in attracting employees to a small business. It is in fact doubly beneficial for them because of the fact that they cost lesser to the company and what is better than saving a few lakhs for a small business owner? It’s a win-win for all.

Maintain Positive Office Culture to Retain Employees

Who doesn’t like a positive office culture when you know that most of the day is going to be at work? Employees love to work for companies that have a positive work culture even if the salary is a little less and there is limited flexibility. Work culture is something that affects everyone directly in a more psychological way than any of the other factors and it doesn’t cost too much for an employer to ensure that there is a positive work culture in office for employees to thrive and stay focussed. It is very important to make sure that there is no toxicity at work in order to retain employees. For this, immediate bosses can have regular informal chats with their juniors and try to make them comfortable.

There is enough research to support the fact that positive work cultures lead to more productive employees. One of the ways to do it is to acknowledge and reward good work. Recognition is the only way an employee can feel motivated to support the company. There are many ways to reward employees like mere words of praise, recognition in front of peers, bonuses, awards, promotions, etc. Employers can also engage in various team-building activities.

Career Advancement Opportunities

When someone joins a small business, one can’t be expected to go on with no hope or motivation for an exciting career opportunity ahead. If an employer is able to give some kind of a promise of a better career, it can go a long way in ensuring a long-lasting employee-employer relationship. It is a compelling offer both for new hires and current employees. If small businesses want to retain employees, they have to consider offering them a better designation, newer opportunities and a pay hike. Until and unless they don’t see a growth or an incentive to stay in their current company, they will be tempted to look for better opportunities outside.

Most millennials today feel that a job has to give them ample growth opportunities for them to stick and companies have to reimagine work for millennials because ultimately they are going to be their future employees. It is essential to understand their needs and requirements from a job. It is obviously true that more often than not, small businesses are short on funds and they can’t afford to go all out on cash spending to retain employees. They have to find a fine balance between the two.

Treat Talent Well and Retain Employees

There are many companies where employees are not treated badly and they tend to leave at the drop of a hat. One of the leadership lessons is to humanise your relationships with your employees. And even the employees, when they feel that they are being treated well in their present company, tend to stick longer. The long and short of it is that employees respect companies that respect them. And they would mentally, emotionally and psychologically invest in a company that they feel is investing in them and has an interest in keeping them well.

One of the ways to do that is to avoid building toxic work cultures as demonstrated earlier. Employers have to constantly make sure their personal needs are met and they can be available for them, especially in the times of crisis like a medical emergency or death. In those times, an employer can’t come across as selfish who is only concerned about the bottom line. This also includes refraining from micro-managing employees and allowing them enough flexibility to work.

Hire with Caution

One of the biggest mistakes that companies make is hire mindlessly. It is important to hire someone who aligns with the company’s goals. Both employers and employees need to be on the same page before finalising a hire. One of the ways to take care of who you hire is to know them well before hiring. It would help if you find more about their goals, interests and alignments while hiring. This will make it easier for a company to decide whether someone is a good fit for the company and will stick for longer or not.

It is important for human resource managers to invest time in knowing why they want to work for the company. This should not be treated as just a random interview question but in fact taken seriously while deciding whether someone understands the job requirements and profile well enough.


And happier teams result in happier employees more often than not.

Sharing Equity

Sharing ownership or equity/stock in the business can be a key factor in recruiting and retaining key team players. Many start-ups and small businesses use it to retain employees and make them stay for longer. When senior team members see that their shares are growing as the company expands, they feel a sense of contentment and have a greater attachment for the company too. If done successfully, this will encourage staff recruitment and retention significantly. Stock options are typically issued by companies to encourage loyalty in the company. It is mostly done to reward hard-working employees who stick with the company over time. The longer employees stay, the more of their stock options they vest. Equity compensation is non-cash pay that is offered to employees and it may include options, restricted stock, and/ or performance shares. When employees are given away equity, the employer is not just incentivizing them but is giving them real power and leverage. This is something that employees appreciate and aspire for. Having equity, in short, also means an employee is directly invested in the company’s future. That can make a huge difference in how they perceive their work.

Allow Individuality to Prosper

One of the ways smaller companies differentiate themselves is by allowing individuals to craft their own jobs. This is also the reason why young employees join small businesses or start-ups. It provides them an opportunity to be their own boss and carve their own path. Obviously, primary responsibilities need to be determined by the organization, but rest should be left to the employees and they should be allowed to finish the job at hand the way they want to.

The key is to let their individuality come out and not let them rot like they would in a stereotypical 9-5 job. Allowing a person to tweak their role to use their talents and creativity increases employee engagement and productivity.

Retain Employees with In-Office Perks

Another retention tool for employers is to offer perks that employees highly desire. These could be very meaningful and yet cost the company very little. This includes things like installing a coffee machine and some snacks so that employees can take some time off and prevent themselves from burnout. Many offices, for example, have a foosball or air hockey table. These are easy on the pocket and go a long way in creating bonding opportunities. Many other offices do this by offering food coupons or a free gym membership.

A wellness programme not only encourages your employees to think about their well-being, but can also reduce the number of sick days taken, thus enhancing employee focus. Cultivating relationships among employees in office will always be rewarded with loyalty. There is a simple equation at play here: if employees feel a part of a team, they will be more encouraged to come to work and in turn produce better quality work which will eventually lead to better profits.

Creating a Great Team

This is another factor that employers tend to overlook when they’re hiring. People never work in isolation but in teams and getting that right mix of people to build a team is the tough part. It is crucial for both productivity and employee retention. And happier teams result in happier employees more often than not. The secret to forming high-performing teams is to get a right set of people whose skills, talents, desires and goals are balanced against each other. It is essential for a team leader to ensure a perfectly balanced team. People who tend to work in a team effectively are known to stick for longer as there is a sense of belonging which creates a feeling that they are an asset to the organisation rather than a liability.

In contrast, poor team dynamics can push valuable employees to leave an otherwise great business. A good team will eventually lead to better productivity of the company on the whole. A good team can be created by aligning teams around employees’ preferences and skills. It is important for employees to act as a cohesive group and support each other whenever required. Although it’s a skill that takes time to develop, once employees get a hang of it, there’s no looking back for them.

DU Desk
DU Desk
Stories from DU Desk are the collective efforts of our in-house authors, guest authors and subject matter experts who collate and distill their ideas and thoughts to bring out actionable insights for our readers.

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