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How Can Small Business Retain Top Talent? Hint: It’s Not Money

4 Mins read

Good news for small businesses has been notably absent in recent days. Between inflation, rising energy costs, and an uncertain economic future, CEOs and senior executives have a lot on their plates. As if that’s not enough, there’s an equally pressing, evergreen challenge they face—the talent war.

Businesses of all sizes face some level of talent competition, especially as the work-from-home models have widened the global talent pool and pushed potential employees into the driver’s seat. Mature enterprises can lose out to talent eager to hop on board a startup cruising toward an IPO, or struggle with retention when employees feel they’re a cog in a huge wheel.

Meanwhile, small and medium businesses (SMBs) find it difficult to compete with giants that can offer stability, Silicon Valley-type salaries for remote work, or tempting benefits and perks. Plus, SMBs are often so focused on survival that it can be difficult to drive innovation and growth, leaving fresh talent often looking for more forward-thinking companies. And when the stars align and an SMB is able to recruit a superstar but then they cannot retain them, the blow hits much harder than it would at a larger company, which has more cash padding and larger, segmented teams to weather the loss.

Yet, SMBs do themselves a disservice if they think the talent war is only about money. Offering competitive pay is crucial, but it is not the main reason or even a top motivator for leaving a job. More often than not, and according to the World Economic Forum, it’s due to a lack of career development and advancement. So, rather than focusing on the salaries they can’t afford, every SMB has an opportunity to take a hard look at their organization and uncover the ways they can do more with less to attract and retain top talent. Let’s take a look at a few opportunities:

Give your talent tools that inspire innovation. The best and brightest innovators want to be working on the newest iterations of tech tools—a staggering 91% of Gen Z hires want their employer to have the most sophisticated technology. And while the upfront investment might be steep for lean teams, it’s a smart one for SMBs, where employees wear several hats. Your talent will have more opportunity to explore that emerging tech, stretch their brain in new directions, and ultimately challenge themselves to make the most of this investment for the good of the company and their career. It’s a win-win situation.

Be honest about what you can build, or what you could build upon. To build or not to build is a complex question, and it is one that the best small business owners approach with total objectivity. Take an ego-free look at your weaknesses or the technical issues bogging down your day-to-day, and ask yourself where you can leverage tools like the cloud computing, off-the-shelf AI/ML tools, etc. If you can buy a tool or service and spend 25% more money but get it 50% faster, it’s a strong buy. Chances are it would take longer and be more expensive to build on your own than you think. Along with releasing some of the pressure of your technical debt, you’re freeing up top talent to push the envelope in new ways.

Don’t underestimate the importance of building your brand. While past generations may have said yes to the first job that came along, Gen Z hires aim to find the right fit. A whopping 93% of Gen Z talent says that a company’s impact on society impacts their decision to work there, and 69% said they’d be more likely to apply to a job with recruiters and materials that reflected a diverse workforce. By being upfront about your values, prioritizing inclusion, and investing in innovative technology, small businesses can attract fresh talent eager to contribute to a company they believe in.

Devote time to utilizing training and upskill resources. Because small business life can feel like a hamster wheel of survival, it can be difficult to encourage employees to dedicate valuable time to educational tools or upskilling classes. Whenever possible, take advantage of the resources, from training videos and virtual webinars, some of which will work with anyone’s schedule. And the benefits are twofold—not only are you keeping your employees interested and engaged in the work, but the skills they’re learning will also help them design the stronger, more compelling products that your customers demand.

Don’t be afraid of a little disagreement. Sometimes, leaders have to make tough decisions that will ruffle feathers. But as a small business, you have the power to make sure your employees feel more listened to and valued than they may at a larger, more bureaucratic organization. Through personal check-ins, team meetings, and water cooler chats, you can create an atmosphere where everyone understands the big picture and works together to accomplish the company’s larger goals.

The reality is that, in today’s uncertain economic landscape where businesses are focused on keeping the lights on and doing more less, the cost of employee turnover is significant. Replacing talent costs on average six to nine months of that individual’s salary, according to the Society for Human Resource Management, which is more than enough reason to explore new ways to engage, inspire, and retain your top talent.

Syed Hoda is a Digital Innovation leader at AWS, where he works with customers to help drive transformation and innovation across their organizations. He joined AWS from Crate.io, an IoT analytics/database start-up where he served as President and Chief Commercial Officer. 

Talent stock image by Rei Imagine/Shutterstock

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