Why Your Business Has Poor Employee Retention | Fora Financial Blog
5 Reasons Your Business Has Poor Employee Retention
July 19, 2018

5 Reasons Your Business Has Poor Employee Retention

Losing a valuable, trusted employee can be very costly and time-consuming for you as a small business owner. After one of your best workers leaves, you must devote considerable time and resources to finding a replacement. Plus, when a qualified, new employee is hired, your company must spend more time and money on training them. Furthermore, the whole process can be extremely disruptive to your business and its customers.

Clearly, you can save yourself a great deal of time, money, and aggravation by retaining your top workers. In this post, we’ll explain the reasons why you may be having trouble retaining your employees, and will offer tips on how you can improve employee retention moving forward.

1. Poor Benefits Packages

Workers want competitive health insurance plans with relatively low premiums, low deductibles, and access to the best doctors and hospitals.

In addition to strong health insurance benefits, most employees are looking for generous retirement saving plans and three or more weeks of paid vacation each year.

If your employees are paying high premiums for health insurance with deductibles of $1,500 or more and have limited choices of doctors and hospitals, many of them will take positions with companies that offer better plans. Similarly, if you don’t offer a 401(k) plan and more than two weeks of paid vacation per year, your employee turnover will probably be high. To combat this, reassess your existing packages, and determine how you can provide your employees with better benefits. We also suggest asking your employees for feedback, so that you can find out what’s important to them and implement these changes.

2. An Overbearing Management Style

Employees dislike being micromanaged. You should delegate tasks to your trusted employees and provide high-level guidance, rather than being closely involved in every detail of projects. As Dale Carnegie once pointed out, people respond much better to praise than criticism, and you should criticize others very gently. In general, you should try to offer more positive reinforcement than complaints, and it’s a good idea never to embarrass your employees by saying negative things about them in front of their peers. It’s possible to provide guidance without being overbearing or demeaning, so you should reassess your management style if you’re making these types of mistakes.

3. Failure to Create a Collaborative Workplace Environment

Most people enjoy teamwork and collaboration. If most of the important decisions at your company are made by two or three senior managers, it’s likely that your other employees will feel undervalued, isolated, and unappreciated. You should try to get the input of your employees on important decisions, so that you can create a collaborative work environment that’s fair for everyone.

4. Insufficient Growth Opportunities

It’s well-known that people enjoy variety in their lives. Nobody wants to do the same work day after day, week after week, year after year. According to Undercover Recruiter, “Employees will always seek growth opportunities and that is especially true to the Millennials and Gen Z’ers you have in the workplace.”

Due to this, you should allow your employees to take on different tasks and learn new skills. Of course, it’s best if these new tasks and skills meet the needs and objectives of both your company and your employees. For example, let’s say your assistant wants to try social media marketing, and you want to increase your company’s presence on social media. In that case, if your assistant can write well and isn’t extremely busy, it probably makes sense to train them in social media marketing and then let them handle it independently from there.

Senior employees may leave if they want to try managing projects but are never given the opportunity to do so. If you believe that an experienced employee is responsible and has leadership capabilities, you should let them manage projects.

If you don’t promote senior employees at least occasionally, the employees at your company will feel as though they’re stuck in a “dead end job.” To combat losing these individuals, encourage employee growth and offer promotions when possible.

5. Lack of Scheduling Flexibility

If you aren’t a little flexible when it comes to meeting employees’ scheduling needs, they may move to another company that’s less strict. For example, if employees want to work from 7 am to 3 pm or from 10 am to 6 pm instead of from 9 am to 5 pm, you should, to the extent possible, allow them to do so. In addition, you could allow your employees to work from home instead of using a sick day when their children are sick. People value work/life balance, so by being understanding about employee’s personal lives, you’ll likely retain them long-term.


Holding onto top employees isn’t easy and requires sacrifices. Still, in the long run, those sacrifices will be extremely beneficial to your business and your bottom line.

How do you retain your top employees? Share your tips with us in the comment section below!

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].