Tips for how to retain top talent at SMEs

New research reveals what employees think of onboarding, benefits, and referral programmes. Discover how SMEs can use this insight to help improve staff retention.

In June and July of this year, Software Advice surveyed more than 1,000 employees at small to midsize enterprises (SMEs) in the UK. The research showed that while most SME employees are happy in their current jobs, a majority is also planning to leave. Analysis also revealed the factors behind job satisfaction (a good work environment, flexible working hours, and recognition from managers) as well as the elements that could drive people out of a role (poor salary, stress, and bad management).

In this article, we uncover more about how HR processes affect employee turnover. We also explore some of the critical software, such as talent management tools, that firms use to make these processes more streamlined for everyone. Read on to find out:

• How SMEs use software to manage feedback
• Which employee benefits are the most valued
• Why software can improve the onboarding process
• The top two priorities for SMEs, according to their employees

You can scroll down to the bottom of this article for a full methodology.

How can software be used for managing performance feedback?

As we saw in part one, employees highly value a collaborative and positive workplace and expect their managers to actively foster such an environment. They also seek recognition of their work from management, and when this is lacking, they may start to look elsewhere.

Software is widely used to track performance and handle feedback among the SMEs represented in this survey. At least 60% of those surveyed said their firm uses a digital tool of some kind, with the most popular being dedicated performance management platforms (used by 22%), talent management software (17%), employee monitoring software (16%), and 360-degree feedback software (15%).

Recognition from management is a significant factor in employee satisfaction, and this can take many forms. The most valuable, according to employees in our survey, is performance related bonuses, appreciated by 50%, followed by positive feedback (37%), and profit-sharing (21%).

The data here reflects the fact that employees value the emotional support that managers can provide, but it also reinforces the importance of material compensation. As we found in part one, the right work environment can be a significant driver of retention, but poor compensation is also a significant driver in turnover.

Employees view flexible hours as the biggest workplace benefit

As well as developing the right salary packages, SMEs should also consider the other benefits they could offer to employees. These can be financial in nature —such as offering employees shopping discounts, a subsidised canteen, or enhanced pension contributions— or they might help employees in a less concrete way. Flexible working hours or adapted office furniture like standing desks are two examples of this.

Flexibility, financial support, and wellness benefits are the most valued benefits, according to those we surveyed. However, do these desires align with the current reality of SME employees?

Flexible working hours are both the most commonly received and most highly valued benefit by the SME employees in this survey. The level of desire amongst UK workers for certain benefits roughly corresponds with how common they actually are in today’s SMEs, although most benefits are more sought after than they are used in practice.

It can sometimes be hard for SMEs to compete on salary with larger firms. But offering benefits may be a cost-effective way of meeting employee expectations and addressing their wellbeing needs without a significant hit to the balance sheet.

In-person onboarding still preferred by most

When bosses think about how to retain talent, they might be wondering how to stop long-serving staff from leaving and taking valuable skills with them. But retention starts the moment a new hire accepts an offer. Even the employee onboarding process can have an effect. After all, you only have one chance to make a good first impression as an employer.

We asked employees what type of onboarding experience they value the most and, of the seven options, the top three were:

• On-site shadowing sessions with peers (22%)
• On-site individual training modules conducted by a trainer (17%)
• On-site group training modules conducted by a trainer (15%)

Remote onboarding with human interactions was considered less valuable, and automated remote onboarding via a platform was the least popular. It should also be noted that 20% of the people we surveyed said they had never had onboarding during their career.

This preference for in-person interactions carries through into the factors that new hires value in an onboarding process. Of course, access to the right tools and systems is also a major consideration.

Whether you choose to conduct your onboarding remotely or in-person, using software or not, new employees overwhelmingly appreciate another person to help guide them. These initial interactions are a new hire’s first taste of your company culture, and can set the tone for the rest of their time working for you.

Referral programmes can be win-win

Employee referral schemes reward employees for recommending candidates who end up getting hired. One obvious advantage for SMEs is that it can reduce the cost of advertising jobs and working with recruiters. But it also could help foster a good company culture, which is a major factor in employee retention. If your company is a great place to work, and it hires people recommended by existing staff, there’s a good chance that the candidates will be a good fit for your organisation.

34% of employees surveyed said their company has an official referral programme, 14% say there’s no official scheme, but they can refer people to HR, and 35% say there is no method for referrals at their SME.

Of those employees at SMEs with an official referral programme, 58% have used it, and another 34% haven’t, but would be interested in doing so. For referrers, there are few downsides —they can help a friend or colleague find a new job, plus they potentially stand to pocket a bonus if their referral is hired. New hires will also have a friendly face to help them integrate quickly into the company.

However, the most common reason for using a programme (among referrers) was the fact that they could help their company gain valuable new team members:

Employee referral schemes should be treated with caution, however. While retention may be the original goal, these programmes can have the opposite effect, if not properly managed. Especially in small companies, hiring based on existing networks may increase a tendency towards cliques, where involvement in certain friendship groups or professional circles is the only way to progress.

Top tips:

1. If you are interested in developing your own programme, referral management software may be a convenient way to set up and manage it.
2. It is best practice to offer some kind of reward to employees who refer successful candidates, as this is the main incentive for many.
3. When interviewing, treat all candidates fairly, regardless of whether they have been referred by existing staff. Many recruitment tools have features to help conduct the process in a fair and ethical manner.

Most have used structured development plans, but outcomes are mixed

Although it is not a top priority for employees, many value the ability to advance their career by developing skills and taking on more responsibility. 25%, for example, said that opportunities for learning, skill enhancement, and training contribute to their comfort at work. Employers can do their part by providing structured development plans —53% in our survey said their SME already does this, although only 21% said that these plans had helped advance their career.

Again, SMEs often use software to support these programmes. As well as the common video conferencing software, which companies use for everything from job interviews to mass-participation training exercises, around one-quarter are also using dedicated training or onboarding software. More than one in five use specialist tools that have been built in house.

65% of those who knew what software their SME used to deliver their career development programme said that it was useful.

If you use —or are thinking about starting— development plans at your SME, consider where software could help you by automating and streamlining processes. You should also bear in mind how your plans could help employees in concrete terms rather than being a box-ticking exercise. Understanding what they want from a development programme is a vital first step.

The complex world of employee retention

This research provides SME managers with new insight into employee retention and how their own processes might affect it.

The data explored in part one indicated that retaining staff means focusing on employee wellbeing, creating a good work culture, and offering a compelling salary and benefits package. But it’s also important to accept that some people will be compelled to switch jobs to get better pay or seek new opportunities.

When asked what they think the biggest priority for employers should be going forward, the SME employees we surveyed were most likely to choose benefits and skills development. Focusing on these areas first will help SMEs address employees’ primary needs in their job and could go a long way to improving retention. After that, addressing more specific areas, including onboarding and retention, could boost numbers even further.