The Great Resignation: how to protect your small business

According to Sanjay Raja, the chief UK economist at Deutsche Bank, Brits are resigning at the highest rate since 2009. And across the pond, almost 57 million Americans quit their jobs between January 2021 and February 2022.

What’s the cause?

Unrest was rippling beneath the surface for some time but when the pandemic hit, employees took action. Whether they cited burnout, lack of appreciation or poor management as the reason, many employees simply decided they’d had enough.

For others, the pandemic sparked a renewed sense of optimism and entrepreneurial spirit. Because, as well as resignations, we saw a record number of redundancies and many employees were furloughed. That’s a lot of people with time to kill, and so, time to pursue passions or even start a business.

But that’s not all

All this talk of the Great Resignation is enough to fill any business owner with dread. But the other worry is the record number of job vacancies in the UK, which reached 1.3 million earlier this year.

That’s a lot of companies competing for talent. Some firms are going to extreme lengths to attract applicants, offering ludicrous salaries and extravagant perks.

That’s alright for large, established companies with big budgets, but what are small business owners to do?

Here are two possible solutions for small business owners:

• Hold on to existing talent for longer
• Attract talent with cost-effective incentives

Let’s start with the first.

Improve employee retention

 Lead with empathy

Leadership looks a little different post-pandemic. What used to be considered a ‘soft skill’, empathy, is now crucial to effective leadership.

The pandemic has tested all of us. And as a result, workers’ needs have changed. Whether that’s the need for flexible hours or extra support, employers unable (or unwilling) to accommodate those needs risk losing out to an employer that will.

So what employees really need right now, is a leader who understands their personal circumstances and how that impacts their work. A leader who checks in, asks questions, pays attention and takes action. A leader who cares.

As well as helping to build positive relationships and improve retention, studies show that empathy has a positive impact on innovation, inclusivity, engagement and work-life balance.

 Invest in wellbeing

Wellbeing is not a buzzword, it’s a workplace non-negotiable. Companies can reduce the risk of employee burnout by maintaining manageable workloads and promoting a healthy work-life balance.

On top of organising recreational and social activities and allowing employees to work flexibly or remotely (we’ll come on to that shortly).

And, where budget allows, a comprehensive wellbeing programme that includes as many of the following as possible:

• Mental health support
• Physical health and fitness incentives
• Occupational health
• Health insurance
• Optimal working environments
• Access to external resources.

Embrace flexible working

In a survey conducted with YouGov, we asked Brits to tell us what would make them choose one otherwise identical job over another. The top answer? Flexible working.

Now it’s important to understand each individual’s needs. Some employees will want to work remotely as it suits their lifestyle or responsibilities. Others want the best of both worlds; to work from home and the office.

Small business owners need to find a way to meet those needs if they can. Otherwise, they run the risk of employees walking out the door.

Prioritise training and development

Did you know that businesses with a strong learning culture have around 30-50% increased retention rates compared to those that don’t?

That’s according to Agata Nowakowska, Vice President of Skillsoft. Small businesses need to keep employees engaged with ongoing training and provide opportunities to progress.

After all, no one wants to be bored at work, and if there’s no opportunity for progression, how many employees will actually want to stick around?

Create a culture employees are proud of

“Retention is about cultivating an environment where people can do their best work,” Nick Francis, CEO of Help Scout.

Unlike established companies where the bureaucracy is stifling, small businesses the unique opportunity to cultivate a culture from the ground up, with the input of their team.

When having these discussions, consider if whether the following is true:

• Employees understand why their work matters.
• Employees understand how their role contributes to the big picture.
• Everyone is aligned with a common goal/mission in mind.
• There are clear expectations for behaviour, communication and collaboration.
• Positive wellbeing and a healthy work/life balance is encouraged, and management lead by example.

Recognise and reward teams

We won’t talk about financial rewards like bonuses too much because that’s something few small businesses can afford.

What all businesses can do regardless of budget, is celebrate their team’s achievement and recognise and thank employees for their contributions. And not just privately. Reward and recognition should be an integral part of a company’s culture to make employees feel valued.

Remember, a lack of appreciation is one of the reasons why many people joined the Great Resignation in the first place.

Small businesses can also reward employees with equity. It’s cost-effective for the company as there’s no need to pay out cash lump sums. And in some cases, shares can be financially more rewarding than a high salary alone, and more tax-efficient than a bonus.

A cost-effective way to attract talent

 Share schemes

Speaking of equity, employee share schemes like Enterprise Management Incentives are proven to not only improve retention but also attract top talent.

We analysed huge data sets to analyse the impact of EMI schemes and the results were overwhelmingly positive:

• 93% of Vestd customers confirmed their EMI scheme has helped with recruitment.
• And 95% said their EMI scheme has helped improve employee retention.

And interestingly, one in three Brits would be swayed by a company share scheme. Food for thought.

But the stats aside, what sharing equity does to a team is transformative. Employees with skin in the game are likely to perform better and support each other as they have a vested interest (literally).

While plenty of people are quitting their jobs, there are plenty of others on the fence. Granted that’s a cause for concern, but it also presents a unique opportunity for small businesses. Adapt now to build a better, stronger business. One that employees will want to stick around for!

Join our webinar on Thursday, 28 July to dive deeper into The Great Resignation. Or book a call with one of our equity specialists to learn more