Our local economy is in pretty good shape. That’s the good news. However, a hot economy presents many unique challenges for small businesses (defined as less than $10 million in annual revenues) and mid-market companies. One of the most important challenges is how to retain talent.
Here is my advice on how to retain key people:
- Leverage your strengths of a small business: family culture, flexible work environment, opportunities to learn the entire business, building relationships with customers and suppliers, making a difference in your community.
- While you have unique advantages from being small and knowing everyone’s names, make sure that you run your business like a real company: clear strategy, measuring performance and results, plans and budgets, giving honest and effective feedback, and holding people accountable.
- Build relationships with your employees so that you understand what makes them tick, how they learn, whether they perform well under pressure or need one goal at a time.
- Be specific and ask for what you want.
- Focus on speed and responsiveness in customer service. Compare yourself against the big companies and show your people how you’re better than the big guys. This will give them more confidence and help them sell more.
- Give people real responsibility for results, for hiring, for spending money and for managing others.
- With every pair of hands, you get a free brain and a free heart. Make sure you’re utilizing the entire person by getting them excited about your vision and caring about your customers.
- Utilize your employees natural strengths for the benefit of your customers and your business.
- Develop an organizational chart and make sure everyone respects the reporting structure.
- As the owner, don’t meddle or contradict your managers. This destroys their credibility, confuses your employees and will cause long-term damage to your business potential.
- Compensate people at or above average rates. Provide benefits and training. If you can’t afford to compensate at higher rates, fix your business model and increase your profits.
- Compensate them, in part (ideally, at least 20% or more), based on results that align with your company strategy and overall business profits.
- If you reward individual results over company results, you may create hoarding and destroy teamwork.
- If they’re not excited about your vision and don’t care about your customers, let them go. They’re in the way and preventing your from hiring a better person.
- If they don’t play well with others, upset your employees, and are regularly giving you grief, let them go. If you don’t let them go, and they’re behaving badly, then the other employees with think that you endorse and approve this bad behavior. The next thing to happen is that the good employees will either leave (and you’re stuck with the lousy ones) or the good ones will start behaving badly.
- Share financial information for business unit or product line margins.
- Share the full financial statements with your senior people so they understand working capital, cash flow, leverage, margins, and why a low margin sale to a slow paying customer is worse than no sale at all.
- Don’t tell them how to do things. That’s micro-managing and probably a waste of your time. However, you need to have documented policies and procedures so that you have work standards and other people can be responsible for training.
- If you, as the business owner, need to control everything, then you probably shouldn’t be a business owner. Because, you can’t control everything unless you want to stay small.
- If you want to grow, then hire smart people who know more about certain things than you do. Give them resources and encouragement to take risks and hit the occasional home run. Sure, they’ll strike out, but they will learn something.
Retaining talent is about engaging people and giving them opportunities to utilize their talents to help your customers. A happy employee will create a happy customer. And, happy customers will help you to grow your business and provide more opportunities for your employees. Eventually, your business can run itself. You will be able to put your manager’s hat away and just enjoy ownership: dividends without the hours. Good luck. If you need help making this happen, call an expert.
Copyright 2012. Phil Symchych. All rights reserved.


