Struggling with the Labor Shortage?


Get Employee Retention Strategies that Really Work for Small Business

You have likely felt the ramifications of the record labor shortage currently happening in the United States. Since January 2018, the number of open jobs has been higher than the number of people looking for work for the first time since the US Department of Labor began tracking job turnover two decades ago.Labor Shortage Challenges

For every month this shortage continues, the gap continues to widen. In this climate, employees have the power. That’s why it’s more important than ever for businesses of every size to have a recruitment strategy that attracts talent over their competition—AND that they have a winning employee retention strategy that keeps the current staff from looking for greener pastures.

This is where you, as a small business, may find yourself behind the curve. After all, how can you compete with larger companies with larger salaries?

When it comes to pay, you usually can’t, says ConnectedHR President Mark D’Agostino. But take heart—salary isn’t the only factor influencing today’s labor market.

“If small businesses want to compete for talent with big businesses, they have to stop acting like small businesses, plug-in technology and start focusing on retention with a formal, aggressive talent management action plan,” says D’Agostino.

Here are the top three ways small businesses can compete against recruitment and retention challenges in today’s labor-scarce environment:

1. Answer this: Why in the world would someone want to work for you?

Can you effectively answer that simple question? And no, the answer is not because you have a 401K and health plan, which is what D’Agostino often hears from small business clients.

“Those things aren’t unimportant, but quite honestly, they’re not a differentiating factor either,” he says. “What you really should be saying is that ‘our managers take an active role in how you’re doing when you enter this company,’ and that active role should involve so much more than the basics of typical employment benefits.”

How do you go beyond the basics to ensure employee satisfaction and success?

According to a recent Textio study, beyond the standard salary and benefits offerings, employees most value:

  • Performance-based incentives
  • Flexible work arrangements and telecommuting
  • Caregiver leave
  • Career development and training
  • Adoption leave
  • On-site gym and/or wellness programs

Many small businesses underestimate the value of these largely “work/life balance” offerings, as well as their ability to provide them. Flexible arrangements, training, and wellness initiatives don’t have to be complex or expensive—and they can even compete with salary as a deciding factor when a potential employee is making a hiring decision between you and a larger business.

2. Don’t be an absentee manager

One of the top reasons for low employee morale and high turnover in small businesses is a lack of employee-manager relations at multiple levels, says D’Agostino. This includes day-to-day operations as well as long-term career management in terms of positioning employees for advancement within the organization.

“If someone comes to work in a small-group environment, as they continue to achieve, where do they go from there?” D’Agostino asks. “If you don’t have an answer—if there’s no opportunity for them to grow with you and advance their career—they’re going to look elsewhere.”

Most business owners have the best intentions when it comes to employees, he says. Management shortcomings within small businesses often come down to simple resource limitations, with small—or even solo—leadership staff wearing many hats.

One way to combat this shortcoming is to crowdsource employee recognition within your organization, rather than placing the responsibility solely on a manager. Develop a program where coworkers and even customers can provide recognition or make an award nomination to ensure employees feel seen and appreciated for the work that they do. And while tangible rewards can be great morale boosts and incentivizes, recognition doesn’t always have to come at a cost—such as recognizing employees publicly on social media.

You can also show care and appreciation for your staff simply by remembering important dates—giving out birthday cards or sending a company email recognizing employment milestones.

Longer-term, it’s critical that management takes time to meet with employees regularly to manage their career expectations and progress, as well as identify professional development opportunities to help them advance their careers and grow within the company.

3. Who’s got game? And how do you measure up?

To retain high-quality employees, it is critical that small business leaders do their homework in the marketplace to stay in tune with the times, D’Agostino says.

“Even for a small business, when it comes to market research, you need to look beyond your locale and get yourself out of a reactive position,” he says. “What does the environment look like regionally and nationally now, and where is the market going? You want to get ahead of the game.”

He recommends comparing the answers to your marketplace research findings with the questions below:

  • Are you offering competitive pay and benefits—not just for new hires, but to your existing employees?
  • Do your competitors have progressive policies such as flexible work schedules and remote options? Do you?
  • Do the job responsibilities listed for a particular role match the scope of that title in the greater marketplace?
  • Have you defined clear career paths for internal positions? What do those career paths look like elsewhere?

NOW is the time to formalize your employee retention strategy

If your business doesn’t have a proactive employee retention strategy in place, you’re only going to fall further behind as the labor shortage continues. In fact, D’Agostino expects the US economy’s shortage of workers to continue for another seven years.

So, how do you get started formalizing a plan?About Us

“Many small businesses need someone to come in and give them an outside, unbiased view of their current operation,” D’Agostino says. “Retention is a very hard issue to effectively evaluate internally. A third-party HR expert can help you to evaluate your short- and long-term employment goals, your existing environment, and the greater marketplace—then develop a strategic retention plan to maintain a talented and fulfilled staff.”

For expert human resources assistance in hiring and retention policies, contact the ConnectedHR team at (440) 876-0040 or


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