Is career development good for employee retention in SMBs?

One of the most challenging aspects of hiring employees is retaining them. In today’s fast-paced business environment with options to work remotely, employees are not keen on sticking around if they find a better opportunity, higher salary, work environment, and perks.

How then can employers retain them? Most employers veer towards career planning and development but is it an effective practice?

Let’s explore the different challenges, and why (or why not) it is good to have career development strategies in place.

In a traditional setting, employee retention is often associated with better salaries, bonuses, and paid time off. Not so for the current generation of employees. The Great Resignation of 2021 has shown us employees no longer feel they need to be shackled to jobs with low pay, no opportunities for career advancement, and work-life balance. 

As much as 38% of employees will quit in the first year of employment if employers do not have anything tangible to offer on the table. It has become more and more challenging to hire and retain employees nowadays. 

Why employee retention is challenging

Whether you own a small business or a large enterprise, the hard reality is that employers can’t tie down employees anymore.  

The fast-paced technological advancement; the changing economic conditions; and the corresponding business needs, have given rise to the dynamic workplace where multi-skilled employees are in great demand, salaries are competitive, and well-connected workplaces are the norm. 

As a result, a 9-to-5 job is a thing of the past. Better salaries, paid time off, health insurance, and such benefits may have retained employees a decade ago but today they want more. 

Businesses with smaller HR budgets, find the cost of replacement as high as 33% of an employee’s salary, quite challenging to meet. This calls for the need to study and understand what today’s employees look for when they evaluate job options. 

Factors that impact employee retention

Let’s get this straight: there is no one-size-fits-all approach to retention. It is relative to industry, company size, mode of operation, and workplace culture. In this article, we’ll focus on some of the major factors that impact retention in small businesses. 

Global factors  

The COVID-19 pandemic was one of the main reasons that small businesses were forced to cut down on human resources, cost of operations, and go into remote mode. Today, global remote teams have become a common denominator for companies with smaller budgets looking for rapid business growth. 

Remote work, in particular in the technology sector where it is easy to plug into the workplace, has caused employees to re-evaluate the necessity of in-person office when they already have tools, processes, and virtual team mechanisms in place. 

It also makes sense to cut down on “going to the office costs” as global inflation sets in. 

Work culture 

According to a Forbes article, some of the main factors that employees cited that led to the Great Resignation were feelings of disrespect, dismissive behavior of employers, and lack of transparency. 

Inclusivity, diversity, accountability have become the benchmarks for employees to choose a company to work with.

As more and more employees think beyond the tangible benefits, aspects like inclusivity, diversity, accountability, etc. have become the benchmarks for employees to choose a company to work with. 

The changing attitudes do not stop there. Today’s employees have high expectations from their employers. They are attracted to organizations that have: 

• Culture of innovation 
• Job goals and purpose
• Engaged employers
• Work-life balance
• Environmentally conscious, to name a few

Employers need to really prove to employees that their organizations are worth pursuing, and not the other way around.  

Competitive hiring strategies

Despite the prevailing rate of 3.8% unemployment in the United States, hiring remains robust generally. In the technology sector, some of the driving forces for hiring are the rapid rate of innovations like the development of artificial intelligence (AI), and startup unicorns entering the market with Y combinator accelerator programs. 

In order to attract top technical talents in a shorter time frame, companies are adopting competitive hiring strategies. 

In order to attract top technical talents in a shorter time frame, companies are adopting competitive hiring strategies. 

Apart from high salaries, it’s common for employers to offer WFH, flexible hours, and four-day work week options. Throw in perks like company gadgets, paid vacation, airfare, food allowance, etc. then consider the deal done. 

What can employers do about it?

Given the rapidly changing status quo of the job marketplace, employers need to adapt and adopt effective hiring strategies with retention mechanisms in place. 

Having a career development strategy is a good start. Employees prefer to work for employers who plan their career paths for growth and development for the long term. This shows that the company is committed and has a clear vision for their roles in the organization. 

However, career development is not enough. What employers need to do is go the extra mile if they are concerned about retaining valuable human resources for business continuity. 

Planning resources and strategies

Having worked with startups with limited resources, and now at Logo Design, a SaaS small business, I understand the importance of budgets and hiring constraints. My take on this is that retention strategies do not necessarily have to be expensive. You just need creativity and commitment. 

So, let’s explore the options.

1. Set clear career goals

You don’t have to be a genius to know that every person, young or old, needs a sense of purpose, and a goal in life. A personalized career plan is part of it and it starts right from the moment of the interview. 

In my view, finding the right person for the right job isn’t effective anymore, after all, you can train them to the skill level that you want them to be at. A couple of years ago we engaged an intern with no skills in Adobe Illustrator or Photoshop. We trained him so thoroughly that today he’s a senior graphic designer who not only creates logos, mockups, and brand identities but also designs infographics. 

My point is, finding someone with the right attitude and aspirations goes a long way. I ask myself: Can they fit in with the company culture? Will their career goals fit in with the company’s goals? Are they willing to learn on the job? Are they committed?  

2. Build mentorship programs 

Establishing a mentorship program is a great strategy that forces employees to work together to achieve a common goal. Mentoring not only helps the mentored but also the mentor as well.

At BalanceOne.com for example, James Wilkinson shares, “We provide job shadowing opportunities for our employees to gain valuable insights into various roles within the company. This allows them to expand their skill set and fosters a sense of camaraderie and understanding among teams.”

Job shadowing, cross-training, and buddy systems are all great options for on-the-job training and upskilling.  

3. Establish upskilling and reskilling programs

Speaking of skilling, I find reskilling and upskilling programs superb tools to help team members stay abreast with technological development and industry trends, especially in the tech sector where a lot happens day to day. 

For companies that can afford it, funded courses, training, workshops, seminars, webinars in AI, cybersecurity, and software, can develop a sense of loyalty towards the organization, says Maurizio Petrone of Must Read Quotes. 

For employers with low or no training budgets, reskilling and upskilling can take the form of internal knowledge-sharing, training and team-building sessions.

Encouraging employees to take free online courses through Udemy, Google, Facebook, etc. helps in professional development and growth. Even making an hour a day mandatory skill learning fosters commitment to a company that values their contribution. 

Besides, Sarah Jeffries, Managing Director of First Aid Course Leicester adds, “By working on projects they are genuinely passionate about, employees not only gain valuable experience but also acquire new skills and insights that contribute to their overall professional growth.” 

4. Ensure an inclusive and respectful company culture

People by nature are communal. So, building a community is not that difficult. What matters most is developing a culture of inclusivity, transparency, and accountability in that community. How do you do that?

Anand Krishan of SlidetBazaar tells us, “We openly share our company’s performance and emphasize that their contributions matter in our journey. We position ourselves as underdogs fighting against industry giants, encouraging our team to be the driving force behind our success.”

As we have discovered earlier, one of the most important factors that influence employees to quit is disrespect. Disrespect comes in all forms, ranging from abuse, and bullying to dismissive behavior.

At Logo Design, we maintain a respectful company culture from top to bottom and vice versa. Abusiveness, harassment, and bullying are not tolerated because we’ve seen that news about them tends to spread in the candidate circle and discourages them from applying to the company that harbors such a reputation. 

Moreover, an open-door policy has helped me check on employee motivation levels; address grievances and feedback on the spot; and keep a check on managers as well. 

The bottom line is if you treat employees with respect, trust, and recognition, David Zhang of KateBackDrop emphasizes that you are gearing for a positive work environment that will make employees think twice before leaving such a robust company culture behind.

5. Recognize and reward development

Where there is so much going on, rewards and recognition can’t be that important. Wrong!

Employees are as hungry for recognition and rewards as they are for the above elements for career development.

Employees are as hungry for recognition and rewards as they are for the above elements for career development.

For an employer of a small business, like mine, it is difficult to shell out monetary bonuses for everyone. What we can do is celebrate small achievements with verbal recognition, written notes, time out, books, free redeemable coupons, etc. that can make a difference and encourage healthy competition. 

Having said that, yearly appraisals, performance bonuses, paid vacation including airfare, etc. attached with monetary values have their charm too. 

If you can’t have both then at least have one in place to make employees feel acknowledged and earn satisfaction through rewards. 

6. Prioritize work-life balance, a reduced workweek, and flexible hours

In recent years, work-life balance has gained a great deal of popularity, and rightly so. In countries like Japan, the U.S., and others, where “work is life” devalues personal relationships, quality of life, and purpose of work, employees realized after the pandemic that they can have both work and life balanced out, which has given employers cause for concern.

Hence, strategies for work-life balance with flex hours, reduced workweeks, and ensuring personal needs like maternity and paternity leaves, and childcare are met, have made companies like Google, Apple, Tata, etc. the best places to work. 

According to Phil McParlane of 4dayweek.io over 95% prefer to have 4-day work week but only 0.5% of companies offer this. Any company that offer this perk can have a retention rate as much as 80-90%. Those are staggering numbers.

They have proved that changing the way we work has in fact increased productivity rather than decreasing it. These strategies are not difficult to implement, just need the commitment and processes to accommodate work-life needs.

So, does career development help in employee retention?

The short answer is yes. Career development does help in employee retention. But it can’t be the only strategy. 

Employers need to think beyond this, to help employees envision their personal and career development goals and aspirations. By combining the value of their work, people they associate with, a community, and trust of the organization, employers help their people develop a sense of wellbeing, job satisfaction, and achievement when they commit their lives to the company. 

Developing an engaged and inclusive work culture is critical for retention as well. In a study by Advanced, where Nick Gallimore is Managing Director, reports about 73% of employees are of the view that their organizations could engage more with them.

Instead of the traditional yearly performance appraisals, today’s employees are keen on getting instant feedback for improving skills and personal development.

Instead of the traditional yearly performance appraisals, today’s employees are keen on getting instant feedback for improving skills and personal development.

It fosters a culture of continuous learning which adds value to skilled resources.

Feedback also opens up channels of communication in real-time, and allows employers to resolve grievances as they work together. They are able to recognize and reward deserving employees and acknowledge their roles in contributing to the company’s mission. This way, a sense of trust, loyalty, and community is developed between them, making employees reluctant to leave. 

Finally, retention is about making employees feel they are part of a bigger picture rather than just a peg in the wrong hole.

Janil Jean is the Head of Operations at LogoDesign.net. She loves to write about branding, small business, organizational development, careers, and digital marketing. She is the owner of multiple blogs including BusinessSchoolHub.com, and a contributor for Newsbreak, eLearning, GoSkills. Connect with her on social media: LinkedIn, Twitter or Facebook.