Staff retention is critical for small business

A stylised over-sized handing holding a magnet with five small people being pulled towards the magnet.

This story was first published on Thursday 12 July 2018. If you wish to use this content, please contact to confirm that the information is still current.

There can be internal and external factors at play when an employee considers changing jobs. We borrow some tips from our Business Insights page on the jobactive blog to provide some answers for employers. 


Keeping good staff is a chief concern for many small business owners, as high staff turnover can have a devastating impact on business performance.

But almost a quarter of people who start a job end up leaving within 12 months. The cost of this is significant to individual business owners and astronomical to the economy (think billions of dollars).

There are training, advertising and interview costs and then the time taken for new staff to get the hang of things and become fully productive. Other staff may also become disengaged, as they deal with a procession of people leaving. Additionally, the negative effects of high turnover can affect the business’s reputation.

All of this can impact the bottom line. So how can small businesses better retain their staff?

Staff leave a job due to a range of factors. They can be internal factors driving them away or external factors attracting them to ‘greener pastures’.

Poor management, poor communication, bullying, discrimination and harassment are some of the issues that drive staff to seek a change in job. A lack of career opportunities, personality issues at work (with supervisors and colleagues), small or non-existent pay rises and poor work/life balance are others.

Factors that attract staff elsewhere can include a new career opportunity with potential for more experience, better pay and and/or improved non-financial benefits, and personal and family circumstances.

When it comes to increasing retention rates, employers and business owners need to be aware of both short-term and long-term factors.

Short-term staff retention is first about clarity in the job description. If a job role is clear, a business is better placed to ensure the right job fit right from the get go (matching skills, personality and attributes).

Having engaged great new staff, they need be provided with a clear orientation and induction process and opportunities to feel part of the team. As they learn and increase their familiarity with the role, they need positive reinforcement to develop their confidence in their ability to do the job.

Longer-term staff retention involves opportunities for relevant training and development;  giving regular and constructive feedback; and  providing opportunities to take on more tasks or responsibility.

Of course, telling staff how the business is going —  and how their work directly relates to business performance — is likely to help them feel more engaged, too.

The importance of rewarding staff with the occasional early mark and encouraging informal opportunities to get together, like morning teas or a team lunch now and then, should also be considered.

Read about staff retention in 9 Common Reasons Your Staff are Quitting and 10 Strategies to Get Them to Stay.

Find more posts to assist employers on the Business Insights page on the jobactive blog.

Correct at time of publication.