How Small And Medium-Sized Businesses Can Better Retain Their Employees


CEO, Sodexo Engage. Passionate about elevating the employee experience at work and beyond through benefits, rewards and recognition.

From overt quitting to quiet quitting, many employees these days are saying “enough” to suboptimal working conditions and seeking greener pastures.

When you dive into the statistics, their frustration is understandable. According to a 2022 Deloitte worldwide survey on “14,808 Gen Zs and 8,412 millennials across 46 countries,” 46% of Gen Z respondents and 47% of Millennial respondents stated that they “live paycheck to paycheck and worry they won’t be able to cover their expenses.”

Additionally, citing data from the United Kingdom’s Office for National Statistics, The Conversation reported in March 2022 that in the country, “resignations rose sharply from the end of 2020 and significantly exceeded their pre-pandemic levels in the final quarter of 2021.” The “rise in resignations,” the outlet continued, “was driven overwhelmingly by workers resigning to move sideways into new jobs in the same occupation.” And, in 2021, “workers moving to new employers saw higher gains than those that did not move.” What’s more, according to a May 2022 survey by PwC UK, which covered “52,195 workers across 44 countries,” including more than 2,000 in the UK, “almost one in five UK workers (18%)” stated that “they are very or extremely likely to switch to a new employer within the next 12 months.”

The statistics are grim, and while companies of all sizes are being hit by workers quitting en masse, I believe that small and medium-sized businesses (SMEs) are especially at risk for higher turnover. In April, my company released a survey that showed that “women are key drivers” of the Great Resignation and that almost a third of women job seekers would prefer working for a bigger company. Why? Of the respondents, 45% said it was due to “stronger promotion prospects,” and 36% said it was because of “more inclusive benefits.”

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The costs of poor employee retention rates add up fast, both in terms of money and time. So, how can businesses—in particular, SMEs—improve their employee retention rates? In my view, it comes down to focusing on four main factors.

1. Enhanced Career Opportunities

Larger corporations can offer employees more career advancement opportunities by virtue of having wider networks and more resources. For example, an employee who starts off as a marketing assistant has a clearer pathway to becoming a marketing manager.

At SMEs, however, these pathways aren’t quite as cut-and-dry, and employees might leave for external promotion opportunities. However, SMEs should strive to help employees advance in their careers to the fullest extent possible. They should prioritize promoting employees with new titles and offer appropriate pay raises within their budgets.

SMEs might not always have the resources to offer employees these “traditional” career advancement opportunities. But because of their more tight-knit nature, one way they can shine is by transforming people’s roles in ways that align with a higher purpose. Consider this analysis by Tera Allas, director of research and economics for McKinsey’s UK and Ireland office: Nowadays, how people “feel about their job is strongly influenced by whether their psychological—rather than just material—needs are fulfilled,” such as “autonomy, mastery, positive relationships, and purpose.” An SME can take action in this area by, say, replacing tasks that are more akin to “busy work” with tasks that help with partnerships with local nonprofits.

2. Stronger Employee Benefits

Benefits such as paid maternity and paternity leave and robust health insurance plans attract new employees and incentivize employees to stay. Good benefits help people feel valued and appreciated, building trust between employees and employers.

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Going back to my company’s survey, we found that of the female SME employees we surveyed, almost three-fourths would more readily take a role at an SME company that provided good benefits, and 33% said better benefits would help them engage more at work. They noted the following as the most important benefits: “private healthcare (25%), private dental care (25%), and discounts on everyday expenses (23%).”

Again, I understand that SMEs and large corporations aren’t on a level playing field when it comes to financial resources; however, SMEs should survey their employees to see which benefits are most in-demand and then work to secure the best benefits possible within their budgets.

3. Greater Work-Life Balance And Flexibility

Good work-life balance and flexibility go hand-in-hand with good employee benefits.

According to a 2022 Gallup report, globally, only 33% of employees are “thriving in their overall wellbeing” and 44% “experienced a lot of daily stress in the previous day.” Greater work-life balance and flexibility can help turn these numbers around—higher flexibility generally correlates with higher levels of employee engagement. Some steps SMEs can take on this front include giving employees more vacation and sick days, letting employees at least partially work from home (a hybrid model) and telling employees it’s OK if they need to arrive or leave an hour or two early every now and then.

When examining work-life balance and flexible working arrangements, SME employers should keep in mind that flexibility will look different from sector to sector and that employees in different industries have different needs. Again, survey your employees to find out their specific needs and wants so that all parties align as you implement these changes to your benefits programs.

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4. More Recognition

Company culture plays an important role in shaping the employee experience, and employee recognition is a key ingredient in crafting a great company culture.

Building a company culture that, at its core, revolves around employee recognition can improve both the employee experience as well as employee retention. With top-down (and the reverse) and peer-to-peer recognition, employees can feel seen—and feel like their work is being validated.

Just look at the numbers. According to Deloitte, a “15% improvement in engagement can result in” a “2% increase in margins” and employee engagement, “productivity and performance are 14% higher” than in organizations “without recognition.” And as my company found in its survey, approximately “7 in 10 female employees” at SMEs said that “they’d be more likely to stay in their current job if they were rewarded on a more regular basis.”

SMEs should create more formal employee recognition programs, such as an “employee of the month” reward in the form of a bonus or giving weekly shoutouts for a job well done in a company newsletter. SMEs should also create work cultures that naturally celebrate employee wins. For example, saying “thank you” to a team member can go a long way.

Ultimately, these four factors come down to helping people feel more appreciated. When employees see that they have better career opportunities, benefits and work-life balance and are recognized and thanked for what they bring to the table, they’ll be much more likely to show up to work happy—and stay in the long term.


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