I wanted to put this together because employee retention is becoming a real issue in a tight labor market. I’ve seen it firsthand. Good people are getting offers, and if you’re not paying attention, they’ll leave.
This isn’t complicated, but it does require you to be proactive. If you take the right steps early, you can keep your team together and avoid the disruption that turnover causes.
The Quick Answer
What actually keeps employees from leaving
You retain your people by doing a few key things consistently:
- Pay competitive wages
- Offer competitive benefits
- Do small, meaningful things that matter to each employee
- Monitor your turnover and fix issues early
If you ignore any of these, someone else will step in with a better offer.
Start with Competitive Pay
The first thing I always look at is compensation.
If your wages are not competitive, nothing else you do will fully make up for it. People have bills to pay, and if someone offers them more money, they’re going to listen.
You can figure out what competitive pay looks like by getting involved with your local business community. Chambers of Commerce and business councils are very useful for this. In my experience, manufacturers councils and SBA-related groups also provide good benchmarks.
If you’re not sure where you stand, you need to find out.
Make Benefits Competitive Too
Compensation doesn’t stop at wages. Benefits matter just as much.
You should periodically check your benefits against the market. Talk to your insurance providers. Get quotes. Compare plans.
If your benefits fall behind, your employees will notice. And again, it only takes one better offer to pull them away.
Do Small Things That Matter to Your People
This is the part most business owners overlook.
You don’t need a big program. You need awareness.
If you have a manageable number of employees, you should know what matters to each one of them.
For example, if someone has a long commute, help them with gas money. I’ve done this myself. I’ve recommended it to clients. It works.
Another example is giving someone an extra day off after a stretch of long hours. It doesn’t have to be formal. Just recognize the effort and respond to it.
These small actions build loyalty. And loyalty is what keeps people from taking the next offer that comes along.
Watch Your Turnover Rate Closely
You should always know your turnover number.
As a general guideline, if your turnover is over 10%, you need to take a closer look at what’s going on.
When turnover starts climbing, it’s usually tied to one of the basics:
- Pay
- Benefits
- Lack of recognition or flexibility
If you address those early, you can stabilize your team before it becomes a bigger problem.
Leadership and Retention Go Together
Retention is not just about compensation. It’s also about how you lead.
If you want to go deeper into that side of it, I recommend reviewing some of the principles covered in small business leadership.
Strong leadership reinforces everything else you’re doing. Weak leadership cancels it out.
Hiring Still Matters
Retention starts before someone even joins your company.
If you bring in the wrong person, they’re more likely to leave or create issues that affect others.
I’ve talked about this in detail here:
Hiring Right the First Time
The better your hiring process, the easier retention becomes.
Choosing the Right Supervisors Helps Retention
Supervisors have a direct impact on whether employees stay or leave.
If you want to improve retention, you need to make sure you’re selecting the right people to lead your teams.
You can learn more about that here:
Techniques for Selecting a Supervisor
Build a Business That People Want to Stay In
At the end of the day, retention is about creating an environment where people feel it’s worth staying.
That includes:
- Fair pay
- Good benefits
- Practical support
- Respect for their time and effort
If you stay consistent with those, you’ll keep more of your people.
Mini FAQ
What is a healthy employee turnover rate?
Around 10% or less is a reasonable target. If you’re above that, it’s time to review your pay, benefits, and employee experience.
Do small incentives really make a difference?
Yes. Small, thoughtful actions often matter more than large, infrequent gestures because they show you’re paying attention.
How often should I review pay and benefits?
Regularly. At least once a year, and more often if the labor market is tight.
Final Wrap
Retaining your people comes down to doing the basics well and staying proactive.
Pay competitively. Keep your benefits in line. Pay attention to what matters to your employees. And act before someone else makes them a better offer.
Everything I’ve shared here comes directly from the video below, where I walk through these ideas in a straightforward way.
Transcript
0:01
Good morning, this is John Heinrich. I wanted to share some thoughts on retaining your people. It’s a lot in the news about the labor market, at least here in Arizona, and I think a lot of other cities are tight. So what you wanna do is try and retain your people to the maximum extent you possibly can.
0:22
Of course, they’re gonna get better offers from somebody else, and when they do, or even before they do, you have to be proactive. So there are about three or four tips for retaining your people. First of all, you have to pay a competitive wage or salary. And you can find that out usually through the Chamber of Commerce.
0:44
I usually have a business council, and you can be part of that, and that’s very useful. Here in Arizona and also in Nevada, we had a manufacturers council, and we met about quarterly to share various things that were going on in the state. It still goes on here in Arizona. It’s frequently part of the SBA.
1:07
So seek it out. So that’s the first thing. Make sure your wages are competitive. The second thing is, and this is not generally known or even spoken about, but do little things for your employees that are important to them. And unless you’ve got thousands of employees, you should know what’s important to every employee.
1:33
For example, if your employee commutes from a distance, say from Chandler to Phoenix, which is about 25 miles, five days a week, pay ’em a hundred dollars in cash for gas, money, and gas is expensive here, as it is in other cities. So give ’em a little spiff. I did that, I’ve done that, and I recommended my clients do that, and they’ve all done it.
1:58
And it’s helped. Another thing is to make sure your benefits are competitive. Can, those, you can check through the insurance company, or even take quotes from other insurance companies. On the spiff idea, employees might also like a little extra time off. They work long hours occasionally, give ’em a day off that isn’t necessarily scheduled to pay it for ‘em.
2:18
You’ll be rewarded in loyalty. So here are just some ideas, try to retain your people. Your turnover ratio shouldn’t be more than about 10%, and if it is more than 10%, then you probably need to look at any of those items that I listed. Pay benefits, spiffs, anything else you can think of.
2:41
So I just wanted to offer those thoughts and. Good luck. We don’t like to see people leave their employment, but it happens. It’s obstructing a company, so stay with it. And don’t forget to call us. (480) 200-5678. If you have any questions about your situation, it’s free of charge. Thanks a lot.