Strategies for Attracting and Retaining Talent in Small Businesses

As entrepreneurs strive to build dynamic teams capable of driving growth and innovation, implementing effective strategies becomes essential. Drawing from the insights of seasoned entrepreneurs, this article explores a myriad of approaches that small businesses can leverage to attract and retain talent. Let’s find out how!

Strategic Compensation

As business owners, we have to come to terms with two realities. One is that no matter how visionary our dreams are for our business, at this stage, we will not be able to compete with the full benefits package of a blue-chip corporation in the same space. Two, that an applicant who’s looking for a job will ultimately be motivated by money.

Now, that said, it’s not impossible for small companies to attract top talent.

However, you do have to be more thoughtful about the compensation and benefits package that you offer.

As much as possible, try to match your base salary with industry standards or exceed it.

From there, you can sweeten the deal further.

For example, while you may not be able to offer full medical benefits and a car plan, a flexible working schedule, fully remote operations, and unlimited PTO are very attractive benefits that most larger firms can’t offer.

Gianluca Ferruggia, general manager of DesignRush

Creating a Family-like Environment

How often do people quit their families? Not often, right? I retain top talent at GetSure by treating them like family. If an employee is not performing well, they get coached, not fired. If they’re having a bad day, ask about it. Make yourself vulnerable. We all can instinctively gauge authenticity, so if you actually care, they will know. If you go out of your way for them, they will go out of their way for you. Reciprocity is a powerful motivator, and if you can invoke that by treating your employees like family, I have no doubt your retention will skyrocket.

Rikin Shah, founder & CEO of GetSure

Offering Bonuses and Incentives

One of the tips I can give to small businesses that are looking to attract and retain talent is to apply a reward or bonus system to motivate them to not only do their jobs but to do it with excellence.

For instance, if your small business is focused on selling clothes online, then you can specify that aside from the base salary they’ll be getting, they can also earn a bonus if they go over a certain threshold or ceiling that you have set. 

So if your normal sales during the day are around 10 articles of clothing, once they breach that ceiling and sell 15 on a certain day, then give them a small bonus or incentive. This will motivate them to always aim for higher sales by reaching out to customers or coming up with new ideas to help increase daily sales instead of just sitting around since they know they are on a fixed salary.

Always remember: An employee who feels appreciated will always give more than what is expected of them. 

Vlad Khorkhorov, co-founder & CEO of WebsitePolicies.com

Building a Culture of Connection

I will answer with respect to the emerging talent — Gen Z. They value the culture of the organisation a lot. If they like the culture, they are more likely to join and continue. From my experience as the founder, I am convinced that creating a culture of genuine connection is exceptionally effective. Considering you are focusing on small businesses, it is easier to construct this culture in such an organisation. It is because these organisations are closely knit together, and people are much more approachable compared to large organisations. 

This also includes investing in employees’ professional growth, understanding their aspirations, recognising their individual accomplishments, and coming up with activities that bring employees together. This creates an environment where employees feel valued and connected, enhances retention, and sparks a collective passion that fuels productivity and innovation.

Nyokabi Mickens, owner of Loclicious

Networking for Talent, Flexibility for Retention

One of our most important employee pipelines, especially for our core office staff, is my professional network. I’ve got a group chat with about a dozen old friends and colleagues who are all in management positions at small businesses, and we’re constantly recommending employees for new roles at each others’ companies (and warning each other about the ones that may not be great fits). These hires come in with great recommendations and often bring great ideas with them, making them valuable additions to the team. Our retention strategy revolves around flexibility. If people need to change their schedule, workload, or job description in order to make their careers fit around their lives, we’re usually happy to make it work.

Nick Valentino, VP of market operations of Bellhop Atlanta Movers

Establishing Clear Career Advancement Paths

The most effective way to retain talented employees is by giving them a clear path for advancement. Many times, employees leave their workplace because it seems like they did so much with no way to climb the corporate ladder. Most people want that. They don’t want to stay in the same place. So, if they’re reminded of possibilities for promotions as well as motivation, they’ll stay, especially when those avenues feel like real possibilities.

Dan Bailey, president of WikiLawn Tampa Lawn Care

Pet-Friendly Workplace

Creating a workplace that allows employees to bring their dogs is an effective technique for recruiting and retaining talent. This effort helps to promote a positive work environment by addressing pet owners’ worries regarding pet sitting. Many studies mention that being around pets can improve moods and promote general happiness among employees. This novel strategy not only improves job satisfaction but also has a substantial impact on talent retention. In summary, a pet-friendly workplace promotes a positive and enjoyable environment, which benefits the team’s general well-being and reinforces their dedication to the firm.

Harrison Tang, co-founder & CEO of Spokeo

Creating a Positive Work Environment

The key here is that retention and attraction are mutually reinforcing. We rely heavily on referrals from our existing employees whenever we’re trying to fill out our staff, but we’re only in a position to do this because we work hard to make our business a good place for people to work. We keep our pay competitive and transparent. We give regular raises that at least match inflation rates and exceed them when we can. We work hard to upskill our workers, and we’re as flexible as we can be about our hybrid workflow. All of this means that our workers love to work for us and are happy to recommend their friends for open positions.

Ann Martin, director of operations of CreditDonkey

Engaging with Colleges Beyond Internships

As the leader of a busy law firm, I know it’s important to always bring in fresh, new talent to keep up with our workload. Working with local colleges and universities is a great way to attract young talent and can help small businesses, especially if you require skilled team members.

Most people will think internships are the only way for businesses to connect with the colleges in their area. However, most small businesses may struggle to afford internship programs. The good news is that there are plenty of other ways for businesses to get involved with colleges in their area. Taking part in speaking engagements, like business classes or clubs, is a great way to make yourself known in the college community. You can also connect with career services and participate in mock interviews or resume reviews. Finally, businesses can mentor young professionals at a college, engaging in key networking events that get them in contact with exceptional talent.

J. Tucker Merrigan, managing partner and attorney at Sweeney Merrigan Law

Embracing a Personalized Approach

As a startup founder and small business owner with a limited budget and resources, it has always been a challenge to compete with larger, more established companies when it comes to attracting and retaining talent. We could never pay as much, and we don’t have ping pong tables and beer kegs in the break room. My strategy has been to offer what the larger companies can’t: a hyper-personal approach. From the first phone interview to the exit interview, I always have made it a point to personally connect, empathize, and communicate in a positive and friendly way. People always like to feel valued and seen, so I’ve turned my communication skills and affinity for humor into a business asset. By facilitating a positive and friendly vibe throughout the organization, my teams have always reciprocated with hard work and great interpersonal relationships. By listening closely and treating everyone with respect, my teams have reciprocated by respecting me and, ultimately, the company at large.

Alex Back, CEO of Couch.com

Implementing Servant Leadership

One great piece of advice I learned about in a previous job is “servant leadership.” The best leaders — and therefore employers — have done away with their egos and made it their goal to serve their teams, which in turn serve the business and its customers. In reality, that means that you should regularly seek candid feedback from your team, learning from them what they need to work most effectively. Is an employee starting a family soon? Sit down with them and ask them what they need to make the journey as smooth as possible — and make it happen. Creating an environment where people can do their best work reverberates across the business, making people more likely to stay and making your business more attractive to prospective employees.

Kay Tukendorf, CEO of Nix

Attractive Job Description & Team Bonding Benefits

When you are a small business, no one has heard of you. So if you want to attract talents to apply for your jobs, make sure your job description is very well written. Instead of focusing on what you want from the candidates, specify what you offer to the candidates. 

In our job description, we introduced our company growth and made sure the candidates saw it as a promising workplace for future promotions and growth. We mention every nice benefit we offer, including free breakfast every day and free lunch once per month. Our food allowance is competitive too. 

A good job description attracts good candidates and good team benefits bond them together and retain them in the company. These hacks are very simple and not costly to follow.

Yalu Xu, co-founder of Momo Lifestyle

Being Transparent

The key idea I like to share is focusing your hiring process on transparency. I often see candidates complain about how their existing boss made a ton of promises during the hiring process that never came true. 

In my approach, I level with candidates at every step — I tell them about the non-glamorous parts of the role, such as working outdoors for eight hours dragging brush when it’s 35 degrees and rainy in Seattle winters. 

I don’t beat around the bush or over-promise on role elements that I know we can’t deliver on. 

Does this make it harder to actually hire folks? Yes. We scare away talent all the time. But this is a MUCH better strategy than hiring someone who doesn’t know what they’re getting into, who then churns 3–6 months later once they see the whole role for what it is. 

This doesn’t mean we shouldn’t pitch candidates on the good parts of the role of course; I just think we as business owners/hiring managers need to be transparent throughout the hiring process. Great candidates notice & appreciate that candor, and the ones who make it to the end of our hiring process know exactly what job they’ll be doing. Six months later, there are no surprises, and we are far more likely to retain them.

Kaustubh Deo, president of Blooma Tree Experts

Creating a Culture of Mutual Benefit

Most of my 13 years in the workplace have been spent in two different organizations, which could be described as opposite ends of many different spectrums — industry, culture, people, ownership structure, strategic direction, etc. As an employee at various levels of seniority in both companies, the biggest difference has been the feeling that my performance has a direct and measurable impact on the business’s success. A major part of this ‘feeling’ is actually a realization that there is a clear and explicit alignment of incentives. When I deliver more value, the business reaps the rewards, but so do I. Win-win! If you are on the hunt for real top 1% talent, they will expect an arrangement that lets the business & themselves win in a meaningful way. Making it material for the appropriate role level is key — if you’re convinced you’ve found the next superstar, don’t give them pizza and an Amazon voucher — give them a slice of the pie.

George Ashford, founder of mydevelopmentor

Offering a Four-Day Week

Though it may seem a little extreme, it’s one that we have found works incredibly well for staff retention, particularly at a point where, like us and for many small business owners, you can’t afford to offer competitive salaries with your larger competitors.

That strategy is the four-day week.

We implemented the four-day week a year ago, and staff retention, fulfilment, energy levels, and focus have all improved. The number of mistakes made has also decreased.

People are happier here because of our four-day week, and you can win that time back by making organisational and process changes, such as reducing the number of meetings or unnecessary phone calls and improving the efficiency of communication. So, there’s no actual loss to your business.

If you want to retain staff, a four-day week is the thing that none of the larger competitors will be doing. Once people form their lifestyle around that four-day week and start a new hobby or a new side hustle on that Friday, they’ll be very protective and will want to avoid giving that Friday back to work.

So, it may seem extreme, but it’s absolutely future-proof.

Aled Nelmes, founder & CEO of Lumen SEO

Prioritizing Supportive Work Culture Over Salary

As a small business, it is difficult to attract talent when my competitors can offer 15-20% higher salaries for the same consulting jobs. However, what some of my competitors do not have is our company’s supportive work culture and brand. In a company culture and climate survey we conducted in 2022, 90-95% of those who responded said they had a supportive and engaged leadership that cared about them and their career. That’s our secret weapon to attract and retain talent in this highly competitive market.

When new hires join AvantGarde, we put an entire support system around them designed to help them assimilate into the company and succeed. Our project managers and team leaders take full responsibility for the success of the new hires. Our leadership loves, nurtures, and cares for our people. In a world where everything is fast-paced and where people are being driven to “perform and perform,” employees need and want to know that leadership cares about them as individuals. To ensure that we live true to our company values, we need to get to know and care for the individuals serving on our team. Once you learn to lead with love, the performance will become a natural byproduct.

Rebecca Contreras, founder & CEO of AvantGarde

Comprehensive Interview Process

The best way I’ve found to keep talent is during the interview process. Here are the steps when we hire. #1 – Phone Interview with me (owner). #2 – Onsite interview with me and other key leaders. #3 – Candidate working interview. We have them come in for four hours. They are paid for their time, and they sit with almost everyone on the team. They get their hands dirty, and my team gets to know them on a personal level. If there’s even one person who gets a bad vibe, we don’t hire them. Everyone on the team gets input.

Gabe Viscomi, owner of Nudge Printing & Fabricated Customs

Tailored Development Plans and Rotational Responsibilities

When it comes to attracting and retaining talent in small businesses, especially in the sports industry, I believe in harnessing passion and creating an environment of continued growth. I have found tailoring personal development plans for every team member highly effective. It’s not just about the job role but understanding each individual’s aspirations, strengths, and potential. 

For example, a coach in one of my institutes may be interested in event management. In this case, we’d involve them in our tournament organizing committees or offer related training sessions. Another unique strategy is our cyclic rotation of responsibilities. This keeps the job interesting and ensures every team member understands different aspects of the business. Breaking the monotony adds zest to the work-life and brings forth unforeseen skills. Both these techniques require minimum financial investment and foster a strong sense of loyalty and job satisfaction, making retention more organic.

Marc Massad, certified pickleball trainer & IFP pickleball ambassador at Velocity Paddle