The Complete Guide to Culture, Retention and Return on Investment

As many SMEs know, the labour market and inflation are tighter than at any time since the 1970s, and there is little hope for improvement in the short term. There is no doubt that solving such structural problems will require strong government input, and with the recent change following the 2022 elections, we are unlikely to see any major upheaval, but instead must hope that efforts to increase education in skill shortage areas bear fruit. In the meantime, SMEs need to learn how to compete with larger companies when it comes to attracting and, more importantly, retaining employees in a challenging environment. In Part 3 of the wattsnext blog on inflation, minimum wage and strategy HR (Part 1 can be found here and Part 2 here), we will focus on culture, employee retention and the importance of return on investment.

What is Culture and Why is it Important?

First, let’s look at what culture is – Ben Watts (Chief Executive Officer – wattsnext) recently looked at just this (check out his in-depth breakdown here) and determined that culture is made of two important bases – Surface and Sustainable Culture.

·      Surface Culture is the visible and tangible aspects – the pay, the cool tech gear, the car parks, the short Fridays, and the free lunches – whatever employees can visibly/physically see and feel day to day.  

·      Sustainable Culture is the less glamorous day to day stuff that focuses on the intangible aspects – are managers and employees held accountable? How do managers support employees? Are employees empowered to work autonomously or micromanaged? Are leaders leading by example or relying on the hierarchy to achieve outcomes? Do you offer training and development opportunities?  

Remember, employees are always watching how their colleagues are treated and not following a consistent and fair strategy here will prove damaging.

The real challenge in creating a good workplace culture is finding a balance between the superficial and the sustainable – we don’t want perks/benefits to becoming an expectation, and we don’t want managers to be afraid to be direct when necessary, or everything you’ve built will be in jeopardy.

What are the Top 3 costs SMEs can avoid by using the Retention Strategy?

Employee retention is about fostering job satisfaction and creating a work environment that engages your employees and shows them why your company deserves their loyalty. Often overlooked is the value of employee retention in SMEs – so let’s take a look at some of the costs SMEs can avoid through employee retention:

·     Recruitment – it can be expensive, paying for advertisements, the time spent reviewing applications and interviewing, making offers, and negotiating in a tight market.

·     Onboarding and Training – No employee can be expected to hit the ground and be a super-star, new employees need training and support to understand internal knowledge/processes and goals. This isn’t free and often hiring managers lose up to 20% of their week for multiple weeks of training, reviewing work and guiding new employees as they begin their journey.

·     Risk – With new employees SMEs can’t be certain what they will get. As much as a good recruitment process aims to get a great outcome it is not guaranteed and there is risk that the employee may not be a good fit or have the skills required – leading to the process restarting.  

It’s not all negative, improving retention will have positive impacts and will help promote a productive and efficient workplace – employees who are happy and loyal are more likely to go the extra step to get an outcome that is beneficial for the business. In addition, business’ can leverage retention by setting up mentorship programs for new hires and/or promoted employees which can:  

·     Show new/promoted employees that the workplace is proactively supporting their success; and  

·     Demonstrates to existing employees that their knowledge and experience are valued and useful.

A return on investment process is important for SMEs

It’s always critical to remember business fundamentals which are to capture a return on investment from such schemes (whether direct or in-direct). Here at wattsnext, we support our clients by providing unique and tailored engagement surveys that allow us to guide decision-making and conduct routine check-ins to see if actions taken are having the desired effect. Through hundreds of these surveys we:

·     Reduced the total cost of any scheme implemented by removing unwanted or less important ideas.

·     Highlight some quick/easy wins that likely have a low cost/investment (such as regular feedback from management and workplace flexibility).

·     Increase employee engagement, retention and alignment with an organisation and its Vision, Mission, and Values.

Remember, developing a process for measuring a return on investment is important, otherwise your decisions may not be informed and could cost you dearly.

In summary, you need to have a good workplace culture, focus on employee retention, and invest in your employees to ensure they get the best results.

wattsnext can help SMEs navigate this complex area to ensure you get the best results – if you need further guidance or tailored advice, get in touch!