Holding onto Your MVPs: Retention Secrets.
This week, the focus is on talented personnel retention and hiring issues faced by Small to Medium-sized Companies (SMBs). A company’s Most Valuable Players (MVPs) often leave for positions with better salaries, more opportunities, or a combination of both, or they are let go for one reason or another.
Having worked with smaller businesses over many years, this isn’t something new, but it seriously affects personnel at all levels within a company. For businesses developing software for niche markets, the problems are only becoming more serious. Bringing in new people inevitably means the hires are inexperienced, as experience costs money, which smaller companies cannot afford.
The costs associated with finding suitable candidates, interviews, and training increase the overall costs of each hire. Inevitably, many of these trial period employees will fail to meet expectations. Thus, the costs can only be written off as business losses.
Retaining talented individuals has also become more complex as opportunities for advancement and learning new skills are often severely limited.
Disclosure. I sometimes use Generative AI tools to help me when writing. From outline suggestions to topics or subtleties I had yet to think of.
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Why Talent Retention is Crucial
When we talk about the costs of hiring new talent, we need to consider not only the financial implications but also the time consumption and potential project delays involved. The financial outlay is always significant, whether the new hire turns out to be worth retaining or not. It can only worsen if the new hire has been brought in to replace a talented individual who has left or will be leaving the company.
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Any extra time that must be invested in training and handover always has an impact on running projects. The responsibilities of the soon ex-employee must be handed over to other team members, which costs time and money. In SMBs, projects are more often than not planned to a tight schedule where any delays will have a knock-on effect on following or dependent projects.
The replacement employee and any other personnel required for coaching and training must invest time, which is unproductive. Salaries must be paid whether or not an employee is productive, yet another cost overhead.
Once the new employee is trained and up to speed with the company culture, that is how this particular company does things; SMBs must ensure that any discovered talent is retained. Maintaining a good Company Culture is essential for morale, but the company must be constantly vigilant to keep talented individuals, especially MVPs. The regular disruption caused by high personnel turnover quickly affects morale and productivity.
Stability in teams also contributes to morale and a cohesive culture and impacts the quality of any work. This, in turn, allows the company to achieve more accurate planning to ensure that any deadlines are attainable without pressure.
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For a clear ROI for long-term employees, especially for SMBs, the employee must achieve mastery over proprietary tools and processes relatively quickly. Even with the best talent, this will take time and again, time means money. Apart from the productivity side, they must develop a deep-rooted understanding of company values and mission.
With all of the costs involved with onboarding a new employee, it is evident that retaining talented individuals must be a top priority for any company. Apart from the upfront costs, if an MVP leaves the company, the most valuable assets, knowledge and experience are also irretrievably lost.
Common Reasons MVPs Walk Away
Larger businesses can absorb such losses, but for SMBs, losing a talented employee has a more severe impact. Some reasons talent leaves smaller companies are easy to understand and understandable from the individual’s point of view.
In SMBs, the possibilities for career advancement are a significant concern. There are, inevitably, limited opportunities for upward mobility where, for example, a talented junior developer may quickly be promoted to a medium developer role. However, further advancement to a senior position is handicapped by the company’s size. There are only so many seniors that the company requires or can support.
Many small and medium-sized businesses operate within a specific niche market, limiting project diversity’s scope and breadth. Though initially challenging and rewarding, the daily work will fade into consecutive days without much variation. That is, each day becomes a daily grind and quite dull.
By far, the most common reason talented personnel leave an SMB is down to competitive lures from the more prominent players in the industry, with often significantly more attractive financial packages, brand name allure, and better opportunities for advancement. Once employees have reached a certain level of competency, they can feel under-employed and undervalued within smaller companies.
But it isn’t only for financial reasons and other benefits that MVPs may leave. The availability of professional development opportunities, courses, and certifications also becomes an issue. This is especially evident in software development, where technologies rapidly change, and newer technologies emerge. Talented software developers will feel left behind and in danger of losing their ‘edge’.
Retention Strategies
Fortunately, it’s not all bad news for SMBs; the more personal culture of smaller companies remains one of their strongest attractions to job-seekers. Maintaining a positive company culture cannot be taken for granted, as anything worthwhile requires constant attention. However, a pleasant work environment will only take things so far; we must proactively search for and implement other ways to retain the best people.
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Firstly, investing in employee growth. Where possible, implementing mentorship and coaching programs speeds up the costly onboarding period and enhances the company culture’s fostering. Sponsoring, preferably relevant, courses or certifications demonstrates how much a person is valued. Notice that I wrote “preferably relevant” in the last sentence; most individuals have diverse interests from their colleagues. So, even if a requested course is not directly relevant to the employee’s daily tasks, it should be considered for full or partial support.
Flexible working arrangements such as remote working models, flexi-hours, or 4-day work weeks greatly impact employee retention. An SMB demonstrates that it recognises life’s importance outside business hours by emphasising a work-life balance approach.
Small and medium-sized companies find it extremely difficult to compete with large corporations regarding salaries. But, by providing other competitive compensation beyond wages and a more relaxed company culture, SMBs can often put together attractive compensation packages—for example, stock options or profit sharing, where possible. Awarding performance bonuses is another way of valuing talented personnel. Health and wellness programs tailored for smaller teams may be another attractive benefit for employees in many countries.
Engagement and recognition is another area where many companies fail. It is all too easy to criticise, which is fine when it’s merited, but it must always be constructive. Provide positive and regular feedback and acknowledgement sessions and make sure that there are opportunities for employees to voice concerns or suggestions.
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Above all, building a strong community and culture with thoughtful and inclusive team-building activities and retreats. Promote a sense of belonging, purpose, and value.
Final Thoughts
An SMB is doing well if it can retain its talented people for two to four years; anything more is a bonus. However, we must face up to the fact that the best personnel will move on eventually. As long as redundancy has been built into the team structures, this can be handled relatively painlessly.
Above all, we must emphasise the importance of retention for SMBs in the current tech landscape. The costs associated with a high turnover or personnel have a disproportionately large impact. Be proactive and develop tailored and flexible approaches to retain the MVPs and perhaps less talented but nonetheless talented individuals.
Small and medium-sized businesses must critically analyse their retention strategies and implement changes. I am very interested to hear about your personal experiences, so share your retention challenges and success stories. I would love to hear from you.
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I apologise to my readers for some of the spellings you may feel are incorrect. I was born and brought up in the United Kingdom, and this is the spelling I am comfortable with (Grammarly is happy with it anyway).