3 min read

A Better (and Cheaper) Way to Improve Employee Retention

Small businesses can motivate employees with tangible or intangible incentives to encourage retention. One is much more effective than the other.
A Better (and Cheaper) Way to Improve Employee Retention

Employee turnover costs money. There’s recruitment costs, investments in training, lower short-term productivity and reduced service quality. This is money you could keep if you could keep good people longer.

Higher employee motivation means lower employee turnover and higher profit. If you don’t agree with this, I have many other actionable business improvement ideas for you.

People stay with you and perform at their best when they are motivated.

Motivation is that drive within people that incites them to action. It is an internal process. You cannot motivate someone, people motivate themselves. However, it is possible to modify behavior with the right kind of incentives.

Let’s explore how.

Tangible Incentives are Short-Term Solutions

Many small business owners think that money is the only way to get someone to perform. While it is true that money will motivate a good majority of your people, it is short term because there is never enough of it.

There’s a lot of research that shows the feeling of a pay rise only lasts a short amount of time anyway. So it’s a temporary solution at best.

There are other tangible incentives like:

  • Promotions
  • Health insurance
  • Achievement awards
  • Contests with prizes
  • Educational opportunities
  • Tuition assistance
  • Transportation allowances
  • Company cars
  • Day care facilities
  • Stock options
  • Percentage ownership.

But all of these come off the bottom line and that is not always easy to do for most small business owners.

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Intangible Incentives Have Long Lasting Impacts

Intangible incentives are just as motivating if not more so and they only require the investment of your time. Here are three of the most powerful:

Be appreciative

Praise and recognition for a job well done is a great behavior modifier. How often do you reprimand or correct your staff as opposed to praising them?

Catch your people doing things right. Let them know how much you appreciate them and how you couldn't do without them. Tell your people how you feel and you’ll reap the rewards.

Delegate responsibility

Delegation is not about giving up your power and control. It is about giving yourself less stress, which in turn will create a more positive environment.

Leaders delegate responsibility and allow their staff to be part of the decision-making process. People will motivate themselves when they are valued and have a say in their jobs.

Have fun

It is OK to have fun while you’re making money. Your attitude and behavior set the tone and have an impact on everyone around you. When you are having fun in your work, you allow your people to have fun in theirs. The more people enjoy their jobs, the better they will perform, the higher level of service they will provide and the longer they will stay.

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Key Takeaway

So in addition to supplying employees with the knowledge and tools to do their jobs well, express your gratitude to your staff, get them involved and provide them with the opportunity and encouragement to have fun.

They will be happier and more productive on the job, stay with you longer and make you more money in the long run.

Before you go...

We all know that small business is about doing the little things right.

The little optimisations, the high-impact tweaks and the 1% gains you can make to your business to make it a little better, a little more profitable and even a little bit more pleasant to run.

I have interviewed 500+ business owners, surveyed thousands more, and I am always probing for their best tips, tricks and hacks to improve their business. There are three that stand out above the rest and I want to share them with you.

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