Why is employee retention so important for SMEs?

Keeping hold of your best talent should be a top priority for every Chinese business, but it’s absolutely crucial for small and medium sized businesses.

Every time someone leaves, you have to go through the process of sourcing and hiring their replacement, training them up and then waiting for that new hire to make an impact to your bottom line. In short – it costs time and it costs money.

To fully understand why small and medium businesses should work on their retention strategies, it’s also important to know what makes staff move on.

Why do employees leave their company?

While many Michael Page candidates are simply looking for a new challenge, every week uninspired, demotivated and sometimes angry job seekers come to us for help with their job search, desperate to find new employment.

You might not realise it, but your staff could be wanting to get out for a number of reasons. Perhaps the company culture isn’t what they thought it would be, or the job doesn’t have enough flexibility for their desired lifestyle – so don’t assume it’s about money every time. In particular, millennials in China don’t actually rank salary as their top priority. Here are six of the top reasons we have found why companies lose top talent.

Ask yourself whether you can be absolutely certain your staff are happy in their current roles. Is it time to get a solid retention strategy in place?

How can you keep your best staff?

There are numerous ways of motivating employees, including small, free work perks and longer term staff engagement methods, but your retention strategy must be ingrained in absolutely everything you do as a business.

This means starting from the beginning – are you selling your business and the role honestly in interviews? If you make a job sound like something it’s not, don’t be surprised when your new hire quickly becomes dissatisfied at work.

Also think about day-to-day work-life – are you praising someone when they’ve achieved great results? Don’t leave positive feedback and rewards to yearly reviews, get in the practice of incorporating this into your company culture and encourage other managers to do the same.

What can you do when your best employee leaves?

This is the trickiest part to deal with. Generally we recommend that you accept someone’s resignation with grace and ensure you conduct a full and formal exit interview process so you can learn from their feedback. But many employers are tempted to offer buy-backs when their best people want out.

The trouble with this is as follows: if someone’s only issue with their current situation is monetary, chances are they will speak to you about remuneration and put forward a case for a salary increase, or better employee benefits. When someone has got to the stage of resignation, the issue is probably a deeper and more serious one. Chances are that giving them more money at this stage will only abate their feelings temporarily, unless you have identified the issue and can make a serious commitment to eradicating it altogether.

It is often wiser to accept an employee’s resignation and work towards improving your retention strategy going forward, to eliminate the same thing happening with other members of your team.

What are the effects of poor staff retention?

This is the crux of it – the negative impacts of high turnover in small and medium businesses are numerous and can be devastating. Word of mouth is a powerful tool in the world of SMEs and you could be harming your chances of hiring future great talent, as well as damaging your brand reputation.

You also risk affecting the motivation of your remaining employees. When a team is constantly changing it is more challenging for them to work together and ‘the grass is greener on the other side’ thoughts start to sink in.

New perspectives and fresh ideas can be one of the best ways of growing your business, but this must be balanced out by a strong and well gelled team, with experience and knowledge of your business and industry.

If your best staff keep leaving you, now’s the time to do something about it. Get in touch with your local Michael Page office to kick off your hiring process.