As a director of an SME, it is essential to recruit and retain talented employees in order to grow your business. Unfortunately, it is not uncommon for these workers to move on to other job opportunities. In fact, approximately 46% of employees in Singapore intended to leave their current job within the next year, higher than any other country in Asia-Pacific. This leaves small business managers wondering: why do employees leave and what can be done to keep them?
Seeking a Higher Salary
A study by Payscale estimates 25% of departures were driven by the motivation of a higher salary. The most straightforward way to address this issue is to give raises to high performing employees. However, this can be difficult for companies operating on tight budgets. For these businesses, may be possible to appease some employees without increasing their salary. For example, some businesses may be able to offer an increased number of vacation days as an alternative form of compensation, or allow their workers increased flexibility by allowing them to working remotely, have flexible hours, or take unplanned time-off.
Additionally, some early-stage startups will be able to offer equity shares to employees. This helps the business to avoid paying its employees more in the short-run and further aligns their workers interests with the company's. However, many founders will be hesitant to share any ownership stake with their employers, making this type of arrangement less than ideal for some companies.
Unhappy at Current Company
While workplace happiness is clearly important in retaining productive employees, there is no silver bullet for promoting happiness in the office. However, it is helpful to consider what prospective employees find attractive from future employers. Typically, increased responsibility and company culture are two important factors that an employer can control to some degree. For example, management can send a strong message about their commitment to their employee's career growth by promoting high achievers. Workplace culture on the other hand, requires a long-term strategy for building an environment in which workers feel comfortable and motivated.
Pursuing a Career More Aligned with Their Values
Finding meaningful work is a common desire for individuals seeking new employment opportunities. While most SMEs do not have the option to make their work "meaningful" overnight, there are some ways they can address this issue for their employees. For example, managers can seek to learn more about their worker's personalities and goals in order to find ways to make their work more engaging. Some bosses can even help their workers build important skills that can be used for finding their dream job one day.
Moving to a New Location
As an employer, it is sad to see a happy and hardworking employee leave because they want to move to a new place. To prevent losing this kind of worker just because they are relocating, many companies consider allowing their employees to work remotely. In fact, teleworking has become feasible given the use of collaboration software and is increasingly commonplace. For example, the Ministry of Manpower's Conditions of Employment Survey found that found that the proportion of employers offering formal teleworking opportunities increased from 5.6% in 2013 to 8.4% in 2018 and that those offering ad-hoc teleworking increased from 17.4% to 18.6%.
Taking a Full-Time Position
The fifth most common reason for seeking a new job was to move from part-time to full-time employment. While some employees are happy to work on a part-time basis, it is understandable that many would prefer a full-time position. Small business may benefit from the flexibility and limited cost of employing part-time workers, but may also not have the resources to hire them as full-time employees. In some cases, this can be feasible through adjusting employee schedules. For example, a business that relies on several part-time employees may be able to employ some of these workers on a full-time basis, providing that the company is able to ensure an appropriate amount of coverage for their business hours.
Additionally, retaining these employees may save time and money that would otherwise be directed towards training their replacements. For example, if a manager must suddenly spend half of his/her time training and supervising a new employee during the first 6 months, we estimate that this will cost about S$33,060 (S$11,020 * 50% * 6). Meanwhile, the cost of making a part-time employee a full-time worker would cost about S$20,304 ((S$4,437 - S$1,053) * 6) over the same period. Of course it is possible to save money with new part-time worker over the long-term, but this can be risky if this employee does not perform as well or if he/she also ends up leaving. While these are clearly rough estimates, they illustrate the financial burden of hiring and training part-time workers to replace existing employees.
How to Address These Issues
Growing a business can be difficult for a variety of reasons. On top of everything else, a good director will have to spend time to ensure that good employees stick around. In certain situations, there are cost-free ways to make this happen. In other circumstances, businesses may seek financing in order to ensure that they have the best employees possible.
Did your small business find a unique way to retain its top talent? We'd love to hear from you! Please feel free to email us at [email protected].