If there’s one headache owners of small businesses share, it’s labour—or the shortage of it. When you’re in a market where you’re competing for good people against giant corporations with deep pockets, it can seem like that headache is a chronic condition that can only get worse.
But are you really doomed to having to watch employees come and go as they get snapped up by higher-paying companies? Not if you take a step back and consider how you can give employees an excellent experience. When you become an employer of choice, your business will benefit—and your valuation will soar.
A recent client case—involving a husband-and-wife team that had taken over a graphic design company in Fort McMurray, the heart of the oilsands—nicely illustrates how attraction and retention can be improved even when competition for labour is stiff.
The business was successful, at least in terms of profitability. But the couple was unsatisfied. They felt that they weren’t really in control and that they weren’t meeting all their objectives. In particular, they were struggling with employee retention—a major difficulty in their city, where big energy players offer compensation smaller companies simply can’t compete with. While it was relatively easy for the firm to hire employees, people were also easily lured away to work in the high-paying energy industry.
Play up the non-financial advantages small businesses can offer as employers—think: opportunities to learn, close camaraderie and positive reinforcement from senior decision-makers—that make people stick around
So the pair decided to try a different tack. Instead of attempting to match the giants in salary, they decided to try playing up the non-financial advantages small businesses can offer as employers—think: opportunities to learn, close camaraderie and positive reinforcement from senior decision-makers—that make people stick around.
This decision gave them the framework to redevelop their whole HR strategy—particularly surrounding retention.
A major pillar was education. First, they developed and delivered a much more in-depth learning environment for new (and existing) employees, giving them the tools and knowledge to be successful in their jobs. By providing an opportunity for growth and development, with appropriate guidance and supervision, the company has differentiated itself in the competitive labour market; the giants in the oilpatch aren’t likely to offer this kind of direct mentorship. This started attracting people interested in a position where they could become highly proficient in a field and receive recognition for their individual efforts.
Which brings us to another small-business advantage the company chose to play up. A key aspect of the new HR strategy is to celebrate victories of all sizes to show the team that doing a great job is fun and rewarding. This took many forms, a key one being the frequent issuance of prizes for hitting targets.
The couple also drew on the what might be the greatest advantage of working for a small company—a sense of family. They made treating employees like family a priority. The pair starting holding weekly staff meetings to keep them informed and involved; they invited everyone to freely share ideas, dreams and challenges to the owners. These simple activities have given everyone a better sense of ownership , engaging them enough to want to do an excellent job. For many, it has created a much more attractive work environment than that of a giant company where you’re just a cog in the machine.
What has been the result? This couple improved both the firm’s attractiveness as an employer (in fact, most recruiting is now done by its staff, via referrals) and its retention (employment tenures are up—and the turnover rate is down). The benefits of this have spread across the business, too. Quality has improved because employees were engaged and cared about the success of the company. Not surprisingly, profitability has also increased, as has the owners’ sense of control and enjoyment in running the business.
Want to replicate their experience? Follow these simple steps:
- Identify what makes your company a unique working environment compared to your competitors. In this case, a small family-owned graphic design business offers a tight-knit environment in which people can excel.
- Determine what you can do with the resources you have to help employees succeed. When people feel successful, they enjoy their jobs and are less likely to be drawn away, even by a larger paycheque.
- Open the lines of communication. People like to feel that their ideas and opinions are important, and they want to be seen as contributing to the overall direction of the business.
With labour market challenges expected to get worse before they get better, sitting down today to consider how you can stand out and create an environment people want to stay in is a valuable use of any business owner’s time. If a little company in the oilsands can do it, so can you. The result will be a company that is more fun to run, more successful, and more attractive when you’re ready to sell.
Dave Zimmel is a partner and the vice-president of Private Enterprise for MNP in Calgary. He focuses on providing assurance, accounting and business advisory services to private enterprise clients in the oilfield services, construction and real estate sectors.
More columns by Dave Zimmel