Hiring and retaining the right employees can make or break a small-to-medium sized business. In a business this size, everyone contributes to the company’s goals in a significant way and affects the company culture on a daily basis. Additionally, every hiring decision you make can dramatically affect your business’ bottom line.
According to the US Small Business Administration (SBA), the cost to hire a new employee is “typically 1.25 to 1.4 times the salary”. For an employee who makes $50,000 a year, you’re looking at a potential expenditure of $62,500 to $70,000. Then, once you’ve hired that employee, keeping them around is essential because there are hidden expenses lurking there too. While the costs of employee turnover can vary, The Society for Human Resource Management reported that on average, “it costs a company 6 to 9 months of an employee’s salary to replace him or her.” For that same employee making $50,000 annually, it could cost your business approximately $25,000 to $30,000 to find and hire a suitable replacement.
Over time, these costs add up. Especially if your business is frequently losing existing talent. Plus, if you’re not storing essential customer, contract, inventory, and billing information all in the same system—you may be experiencing a brain drain with each employee that leaves. Without adequate documentation and easy data accessibility, turnover could be costing you additional time and money that your small-to-medium sized business can’t afford to lose.
The following tips will help you streamline the hiring process and improve your employee retention so you can improve your SMB’s bottom line. If you want to avoid losing valuable information along with every employee that leaves, consider implementing an end-to-end business management system like Tigerpaw.
Cost-effective tips for streamlining the hiring process
1. Create a standardized, realistic hiring process
Before you begin searching for a new employee, set aside time to establish a standardized hiring process. This ensures that each candidate is being evaluated by the same people in the same way and eliminates the potential for biases and slip-ups. It’s also a great time to designate follow-up steps so candidates don’t go weeks without hearing from you and assume you’re no longer considering them for the position.
Finally, this is the perfect time to establish realistic expectations and create a job description that reflects them. If you want to attract higher quality candidates who are more likely to stick around, make sure you include some insights on company values, what a day in the life in this position looks like, and some fun details about your company culture.
2. Promote from within
Once you have a hiring process established, consider evaluating your existing employees for a potential promotion from within. If there’s someone working for you who is qualified or would be with a little extra training, the cost of training might be less than the cost of hiring a new person for a more advanced role. Additionally, according to LinkedIn’s 2021 Workplace Learning Report, employees at companies that hire and promote from within stay almost twice as long as employees at companies who don’t. Also, “employees who move into new roles internally are 3.5 times more likely to be engaged employees.” Promoting from within will help you streamline your hiring process and improve your employee retention rate in one fell swoop.
3. Incentivize referrals
Don’t forget that your existing employees can often be a great resource for finding qualified and trustworthy candidates! Your employees will likely recommend someone they’d enjoy working with on a regular basis, which could help in your retention efforts for both the existing employee and the new employee. If you offer incentives like bonuses, additional paid time off, or gift cards for referrals that work out, you’ll likely shorten your hiring process and spend less time and money overall.
Cost-effective tips for improving employee retention
1. Prioritize and improve company culture
The shared values, goals, and attitudes that make up your company culture need to be clearly defined and actively prioritized if you want to improve overall employee retention. Why? Because “47% percent of people actively looking for a new job pinpoint company culture as the main reason for wanting to leave.” Creating and exemplifying a coherent, well-communicated company culture will help you improve your employee retention at little-to-no expense.
2. Training, development, and advancement
In addition to promoting from within, your employees are less likely to leave a job where they are offered professional training, development, and advancement opportunities. The ability to learn and implement new skills on a job will often keep existing employees engaged a lot longer. This spans the generational divide but, according to a recent Gallup poll, “87% of millennials say development is important in a job.” Creating time for job shadowing, allocating a portion of the budget to employee training and upskilling initiatives, and identifying advancement opportunities within your company are all cost-effective ways that you can improve your employee retention.
3. Challenging and engaging work
While some employees leave for more money, this Korn Ferry survey found that 33% of those changing jobs cited boredom as the main reason for their departure. It’s difficult to keep employees engaged in a workload that is simple, monotonous, and lacks any kind of challenge. This is one of the reasons why workflow automation can be so beneficial—it eliminates tedious manual processes and frees up your employees’ time for tasks that are challenging and more satisfying to accomplish. Plus, increased automation means improved efficiency overall meaning you may not need to hire as many employees to do the same amount of work or your company can more easily grow with the staff you already have.
You can save tens of thousands of dollars a year by streamlining your hiring process and improving your employee retention. At a small-to-medium sized company like yours, these tips will go a long way to creating a healthier cash flow and allow you to focus your resources elsewhere.