Back in 2019, before the Covid pandemic took its toll, research indicated that small US businesses found it harder to retain employees than hire them. A survey of more than 600 businesses with 50-500 employees indicated that 63.3% concurred with this finding.  There are other statistics worth noting:

  • 99.7% of US employers are small businesses
  • 81% of those business owners agree that employee turnover is a costly problem. In fact, looking for replacement workers costs US employers $1.1B per year.
  • 79.3% of small businesses believe that employee turnover is detrimental for growth, while 78.6% says that it impacts productivity. Delays to customer projects and/or services is the most common outcome.

Tight job markets, supported by low unemployment rates and highly tapped talent pools placed job hunters in a favourable position.

Understanding employee turnover

A common definition of employee turnover is the loss of talent in the workforce over time. This includes any employee departures such as resignations, layoffs, terminations, retirements, location transfers, and deaths. Companies often calculate their rate of employee turnover as a means of predicting the impact on customer service, productivity, and even morale.

Has this challenge changed today?

Given the global impact of the pandemic in 2020/21, perhaps the employee market may have changed. Many employees may have lost their jobs, but only a future analysis will determine the exact economic repercussions on employers and their employees. However, it would be unwise for any Board to consider this situation as being the new norm. Replacing good employees that have an intrinsic knowledge of the business and its customers still leads to new recruits costing the company “school fees”.

What does it take to retain quality talent?

Employee Engagement is the obvious place to start, which has been defined as follows:

  • Gallup states that engaged employees are “those who are involved in, enthusiastic about and committed to their work and workplace”.
  • Willis Towers Watson states that employee engagement is “employees’ willingness and ability to contribute to company success”.
  • Aon Hewitt defines employee engagement as “the level of an employee’s psychological investment in their organization.”
  • Quantum Workplace defines employee engagement as “the strength of the mental and emotional connection employees feel toward their places of work”.

These definitions highlight behavioural, cognitive, and emotional attributes. This is how employees’ roles are affected; how they think about their roles; and how they feel about their roles. When employees feel engaged, they care about the company and give their best to achieve the company’s goals. Employee engagement is not about employee benefits, it’s about being part of a company that has direction and success with its intentions. To succeed, it requires trust, integrity, two-way commitment and communication between the company and its employees.

Internal Communication that counts most

  • Leadership Insights

Research indicates that leadership communication is the top internal communication factor that statistically correlates to employee engagement. Internal communication teams have a powerful role in supporting, coaching and reminding leaders of communication’s importance.

  • The Employee Voice

The employee voice is highly correlated to employee engagement, yet it is a mostly untapped resource. This is when employees believe they have a say, and that it leads to action.

  • Company Affinity

Communicate topics that create a good company reputation. Typical examples are positive media coverage, awards, recognition, and business social responsibility. This has a positive impact on what employees think about the company, and what their friends and family perceive of their employer.


Gallup found highly engaged business units and teams achieved consistent high performances. Their 2020 report examined 54 industries in 96 countries, 276 companies, 112,312 business/work units and 2.7 million employees. Although the research was not conducted on small business specifically, the findings highlight tangible business benefits:

  • 10% increased customer loyalty/engagement
  • 18% increased productivity (sales)
  • 81% reduced absenteeism
  • 18% lower staff turnover in high-turnover organizations
  • 43% lower staff turnover in low-turnover organizations
  • 28% reduction in theft (shrinkage)
  • 41% fewer defects (quality)

Teams in the top-quartile achieved higher performance with more positive outcomes and fewer negative outcomes than bottom-quartile teams. With Gallup’s ongoing research over many years, these findings conclude that good internal communication creates better engagement, and therefore better organizational performance.

About the Author: Martin Brandt

Martin Brandt is the Co-Founder and Chief Strategy Officer for JamAngle.