Employee Retention: Simple Steps Small Business Owners Can Take to Keep Top Talent
Whether you’re a small business owner or a broker helping one, you may have felt the sting of a great employee leaving. The hassle isn’t just limited to finding a replacement. It’s the time it takes to train someone new, the hit to productivity and the strain it puts on your remaining team. Employee retention matters as much for small businesses as it does for large companies.
Fortunately, small business owners can tailor solutions that actually suit their business and people, leading to higher customer and employee satisfaction.
This article will discuss what employee retention means, why it may be worth SMEs’ time and effort, and what practical steps you or your client can take—starting today—to improve employee retention and keep the best team members around.
Employee Retention Defined
Employee retention refers to the business’s ability to keep employees over time and reduce voluntary turnover. It’s about creating an environment where people want to stay and have a positive employee experience.
Brokers and small business owners alike know that a great work environment and company culture motivate them to do their best while with you.
Retention doesn’t mean forcing someone to stay. It means giving them reasons not to leave—whether that’s meaningful work, a respectful culture, mental health programs or opportunities to grow. In practice, it’s about consistency, trust and a workplace people can count on.
By contrast, high employee turnover—where staff frequently leave and need to be replaced—can be a sign of deeper problems.
That level of disruption can be especially damaging for small businesses. A high employee retention rate is not just an HR metric to achieve; it’s a business stability strategy.
Why It’s Worth Reducing Employee Turnover
High turnover comes with accompanying costs. The obvious things include advertising the role, interviewing, onboarding and training. But that’s the beginning when you consider the turnover costs and the lost institutional knowledge involved.
In Australia, studies have estimated that replacing an employee can cost businesses between 16% and 200% of that employee’s annual salary. That includes direct expenses, productivity loss, stress on existing staff and institutional knowledge gaps.
Every team member plays a critical role, especially in a small business. When someone walks out, their tasks land on someone else’s desk. That often means longer hours, rushed work and delays that can affect your customers due to employee attrition.
And then there’s morale. When people see co-workers leave frequently, it can create instability and negatively impact employee morale.
Even your most loyal team members might start looking for better work environments or competitive compensation. Keeping people in their roles—and happy to be there—can make a difference for your bottom line, brand and team dynamic.
Employee Retention Benefits
When your business clients focus on retaining employees, they’re not just avoiding the cost of hiring—they’re building the kind of workplace where people thrive.
That brings a potential range of long-term benefits:
- Stronger workplace culture: Long-term staff can help set and reinforce workplace norms and company culture. They become cultural anchors that can help onboard and train new hires.
- Better productivity: Experienced employees typically work more efficiently, need less supervision and understand your customers and systems.
- Increased trust and collaboration: Teams that stay together longer tend to develop a deep understanding of people’s working style, communicate better and solve problems faster.
- Improved customer service: Clients appreciate continuity. Seeing the same familiar faces may help with building trust and loyalty.
- Internal mobility: Staff who stay can grow into leadership roles, helping you build a pipeline of talent from within.
Increased employee retention done the right way can lead to better work, stronger loyalty and a business that people genuinely want to be part of.
Potential Employee Retention Strategies
Whether you’re a broker advising a client or a small business owner, the key is to be proactive, not reactive.
Below are a few strategies that small business owners across industries may want to consider using to improve retention rates and lower employee turnover.
Offer Top Performers Opportunities To Grow
High-performing employees often share one thing: they prefer constant growth and don’t mind some challenges. If they feel like they are stagnating or stuck in a routine, they may start looking for their next opportunity elsewhere.
That doesn’t mean you need to promote them straight away. But you can stretch their skills with strategies that provide a competitive advantage.
- Special projects to increase job satisfaction
- Leadership tasks (e.g., training new hires)
- Input into business strategy or process improvements
- Opportunities to test new tools, services and workflows
- Employee engagement programs for upskilling
Even simply asking, “What would you like to do more of?” can open the door to growth. Engaging your top performers makes employees feel more motivated—and can show you’re paying attention.
Realistic Job Previews (RJPs)
Retention starts before someone even joins your business. Setting clear expectations during the hiring process can help avoid quick exits caused by a mismatched understanding of the role.
A Realistic Job Preview (RJP) gives candidates an honest view of their day-to-day life. This could include:
- Spending a few hours shadowing a current team member
- Reading a detailed task breakdown
- Watching a short behind-the-scenes video
- Having an open conversation about challenges, not just perks
When people walk in with a clear understanding of the role and see their expectations being met, they’re more likely to commit to the long term. New employees can be more effective if they’re fully informed from the time they are chosen as job candidates to their first day on the job.
Assign Them To The Right Manager
Personal dynamics matter a lot in a small business. A good manager can help a team member thrive.
Great managers enable employees to perform better when they:
- Give regular, helpful and constructive feedback
- Support work-life balance with flexible work schedules
- Recognise achievements
- Handle conflict and stress management with care and fairness
- Listen to employee feedback
- Create an anonymous employee survey for honest feedback
If you manage staff directly, consider taking stock of how you show up as a leader.
If others are in that role, it can help to ensure they’re trained, supported and held to high standards.
People don’t expect perfection, but they do expect to be treated with respect. No HR-led employee retention program will work if employees don’t feel needed and respected within the team.
Provide Career Development Opportunities
Many employees may leave their jobs because they feel they’ve hit a wall in their career progression.
But in a small business, advancement doesn’t always mean moving up the ladder or getting an increased salary.
Advancement can also mean advancing skills, improving confidence and contributing to better process efficiency.
Helping employees grow can be crucial to companies’ retention strategies.
To support employees, managers and small business owners can try offering:
- Online learning stipends
- Time each month to pursue training or a personal project
- Access to free government courses or industry webinars
- Mentorship opportunities, even informally
- Cross-training development programs to learn other roles in your business
These types of developments can make staff feel invested in your business and more likely to invest in it with loyalty and enthusiasm.
Some employers seek short-term loans to cover employees’ training costs. Lumi offers various loans that can cater to small businesses’ specific needs.
Address Potential Concerns Regarding Slow Periods
Seasonality can be tricky. Whether you’re in tourism, retail or hospitality, slow months can lead to uncertainty among your team.
Employee retention strategies can get ahead of the problem rather than letting people stress about job cuts or reduced hours. To reduce turnover, try to:
- Talk openly about your plans for quiet periods
- Offer part-time work, project-based roles or upskilling opportunities for employees to develop instead of using cutbacks
- Use slower times to get your employees involved in cleaning up systems, testing new products and improving processes
- Make space for brainstorming sessions and planning for the next busy season
Stability matters. Even if you can’t control the market, you can control how you communicate and manage uncertainty.
Invest In Employee Recognition Programs
Recognition isn’t just about saying “good job”—it’s about showing that you notice and appreciate effort. The best part is that it doesn’t have to cost anything.
Both new and current employees can benefit from feeling that their work matters and meaningfully contributes to the company’s success.
Ideas for recognition include:
- A shout-out during team meetings
- A “Star of the Week” chalkboard or Slack post
- A handwritten thank-you note
- Letting a performing employee choose the following employee engagement venue
- An extra-long lunch break for someone who went above and beyond
- Letting staff nominate peers for monthly appreciation awards
These gestures build a culture of appreciation. They can help people feel seen, which is especially important in small businesses where one person’s effort can have a bigger impact.
Offer Perks And Benefits
While a small company might not have the same budget as a larger employer, SMEs can still offer perks that improve quality of life other than competitive pay.
Some perks include ideas like financial wellness programs. These programs, perks and benefits can go a long way in boosting retention.
Some ideas include:
- Flexible hours: Start late, finish early on special days or work from home once a week.
- Extra time off: Offer birthday leave, well-being days or summer hours.
- Team events: A casual lunch or after-work activity builds connection.
- Discounts or local partnerships: Small discounts on food, fitness or transport can be a win.
- Wellness support: Subsidised counselling, gym memberships or meditation apps.
Ask your team what they value. Often, it’s not about fancy benefits but thoughtful ones that genuinely benefit employees.
Conclusion
Retaining great employees doesn’t have to be complicated—or expensive. Reducing employee departures is about listening, adapting and showing your team that they matter.
Small business owners are in unique, powerful positions to create a workplace that people actually want to work in. Small business owners have a big influence on every step of the process, from the recruitment process to the employee experience.
Consider starting with one or two of these strategies. Focus on communication. Pay attention to what motivates your team. And remember: keeping great people is less about holding on tight and more about giving them a reason to stay.
Lumi can provide small business loans to help grow small businesses and improve employee retention. SMEs can begin the loan application process today!
As a fintech, non-bank lender that specialises in flexible business funding, Lumi offers small businesses with the best Business Line Of Credit in the market, as awarded by WeMoney Awards 2024. This revolving finance solution provides ultimate flexibility with no ongoing fees. Our facility is considered one of the more cost-effective financing option for small business owners. This year, we’ve extended our lending limit to $750,000, providing business owners with same-day outcomes.
