The future success of any business is dependent on its profitability, whether short or longer term. In most cases, key elements that contribute to the profitability are its staff and their skill to support this profitability. Whether that is a big team or a team of just a few, staff retention can make or break a business. Losing valuable staff can be financially detrimental if it affects productivity or customer loss. In the current climate of seeming instability for a lot of businesses, how do you manage staff retention and labour costs confidently?
We are seeing a lot of business owners currently struggling with retaining staff. Just as the state of the world is affecting businesses, it’s also hitting people in their personal lives, particularly as the cost of living increases. Business owners need to accept that labour costs are likely to increase. At a minimum current employees should be paid at a fair and commercial rate. With the recent increase in market salary, a review of existing staff is essential.
It might be a logical thought to assume higher living costs mean people want to hold on tighter to their income stream. However, it is not always money that may lead to a loss of staff! Factors such as mental health, training and development, childcare, physical health, and proximity/commute are just a few reasons why, in harder times, people leave their place of employment.
So, how do you retain staff? There is a lot of commentary on what keeps staff at a business, and each has its own merits. While some believe that increased wages work, others point to culture. The truth is, it’s the culmination of a lot of things, and it all depends on the workplace and the staff.
However, there are areas that you should closely monitor to see how they’re tracking, and how that measures with a goal to retain staff:
Fair wages (yes, this means legal wage requirements, and meeting industry-standard. But it also means fair for the individual, and what they bring to your business).
Culture (we’re not talking ping pong tables… this means inclusivity initiatives, priorities on the health, safety and welfare of your team etc.).
Team support (is your team under duress because they need help?).
Team morale (monitor how your team feels about their value in the workplace).
This might initially appear out of Maxim’s jurisdiction, but our business advisory covers all areas of business, and all of these seemingly ‘soft’ areas of the workplace actually do contribute to the ‘hard’ areas, like your bottom line.
Good question! In today’s market can I afford NOT to? The likely increase in your labour costs is real, so what can or should I consider?
Prepare or review financial projections is a must!
How long can I sustain the current labour costs with my current financial situation?
Can I implement other strategies to improve my financial situation over this period?
Consider your pricing, is now the time to increase?
What role can my current team play in improving the profitability of my business?
Have I adequately investigated and monitored my cash flow, debts I owe, debts owed to me, the year’s projected profits and hurdles.
If you’re unsure about how to answer these questions, Maxim can assist in walking you through available pathways suited to your business needs.
Staff retention and labour costs are an important part of your business. If you’re struggling with these aspects of your business, talk to a Maxim adviser about how we might assist your business in this area.