While the long term macro-economic impacts of rising wages are generally positive, the short-term impact on start-ups and small businesses can be very negative, putting pressure on often stretched cash flows. However, there are ways to recruit and retain the talent you need by being creative with non-monetary compensation.
Flexible work schedules: If your business does not require staff at a fixed schedule, allow your team flexibility in their work hours. A white paper by the Regus Corporation found that 59 percent of employees would turn down a job that ruled out flexibility in work schedules.
Flexible work allows your business to tap into labor pools such as parents with school-age children, talented students and semi-retirees that do not want to put in a 40-hour work week. Flexibility can mean opportunities to telecommute, take extended breaks to pick up the children from school, or work only during key times. However, be sure to put in accountability measures so you do not sacrifice productivity in the name of flexibility.
Promote from within: Entry level workers are more likely to stay if there is an opportunity for advancement. Rather than leave your firm to earn a dollar more an hour with no upward mobility.
A commitment to help someone grow even from line staff to a shift supervisor can be a powerful incentive. Larger corporations and organization have complex “succession planning” strategies, but for a small business the process can be simpler.
Taking the time to teach someone new skills, providing leadership coaching, or mentoring might seem like a time consuming burden, but the investment will pay off with less hours spent hiring and training new employees. Remember that the cost of replacing an employee is usually 150 percent of their annual salary. Investing in upward mobility can affect the bottom line as well.
Share your books: Employees often think that owners are making it big because they often never see the realities of the business.
The Harvard Business Review reported on a recent trial by a corporate travel company providing employees with monthly financial information at three of its branches. The offices with shared information exceeded profit projections by 20 percent generating more than $1.7 million in profit.
Sharing financial results not only helps your team feel engaged in the business, but can be used to improve results by highlight wasteful costs, quality issues and emphasize up-selling. However, when profits do rise, be prepared to reward the team with part of the results!
While small businesses often cannot compete with the quantity of compensation of larger firms, they can provide quality of work life that cannot be found in large hierarchical organizations.
If you can make your venture a place where employees want to work, rather than have to work, you can find and keep the talent you need to succeed and grow.
Ryan Davis is the dean of Business and Applied Technology at Everett Community College. Write him at firstname.lastname@example.org.