5 Common Causes of Employee Turnover at Small Businesses

5 Common Causes of Employee Turnover at Small Businesses
What usually drives people to quit their jobs.
by Square Mar 15, 2016 — 3 min read
5 Common Causes of Employee Turnover at Small Businesses

Whether you have one person on staff or one hundred, it’s likely your employees have experienced some work-related frustration at one time or another. But how do things get so bad that people want to quit? And what are the factors that make someone walk away? Let’s take a look at some of the most common reasons why people put in their two weeks notice. Hopefully you’ll walk away with an idea of how to mitigate turnover at your small business:

Stagnant wages

The longer employees are at a job, the more they invest themselves in the company, and they expect their compensation to reflect that. But if annual wage increases are minimal (or nonexistent), and bonuses and raises aren’t happening, employees might feel unappreciated and undervalued in their current role and decide to look elsewhere. It’s not an uncommon situation. In fact, a study found that minimal wage growth is the top reason why U.S. millennials leave their jobs. So use smart strategies to figure out how much you should be paying employees at your small business. You might also reassess how you handle tips or commission to entice people to stick around.

Bad managers

When someone uses the term “horrible boss,” you think of a manager who is outright rude or abusive — the type of person who would create a miserable work environment. But a manager doesn’t have to be blatantly hostile to make work an unpleasant experience. Instead, a subpar manager can be anyone who doesn’t motivate or guide their employees.

A Gallup study found that employees who are engaged in their work have managers who focus on their strengths, help them set performance goals, and are open and approachable. In other words, employees want a boss who is invested in their success and committed to nurturing their growth and giving feedback throughout the year — not just during their annual performance review. In fact, if employees are sitting down with their managers to discuss goals and progress only once a year, they might not stick around that long. So make sure you have regular check-ins with each and everyone one of your employees.

Weak coworker relationships

It’s not just the relationship that employees have with their manager that affects retention, it’s also how they get along with their colleagues. In other words, having work friends is more important than you might imagine. However, it’s not just having people to go out to lunch with (although that’s arguably important, too). A study found that employees who experienced high levels of appreciation and respect from their colleagues were more likely to want to stay at their current job. So whether it’s their manager or their peers, employees want to feel that the people they work with value them and respect their contributions. This all goes back to the hiring process. Make sure you’re bringing on the right people to fit the role and the company.

No flexibility

Life is complicated, and employees have plenty of things going on outside of work. Whether they need to attend their child’s basketball game, take their elderly parent to the doctor, or just go home to let in a repair person, employees want a workplace that allows for flexibility, like adjustable work hours or working from home. In a study, employees said that one of the most important things about a potential job was “being able to work flexibly and still be on track for promotion.” When a business is adamant about adhering to a rigid schedule, employees can see this as an indicator that the company’s leaders are not open minded, which could mean that it’s not a place where they can grow and thrive.

Excessive workload

The issue of work-life balance is a much-discussed topic when it comes to employee happiness, and for good reason. If staff members feel that they’re constantly being asked to work on more projects with longer hours and fewer resources, pretty soon they’re going to burn out. Not surprisingly, an employee retention report found that workers who are tired and burnt out are 31 percent more likely to think about looking for a new job than their colleagues who do not feel burnt out.

Turnover is a drag—especially if you’re a local business that relies on hourly employees to manage the day-to-day. But knowing the common causes that drive people to quit—and how to prevent them—will help to make sure your best people stick around.

The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.


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