The Top 7 Recruitment and Employee Retention Strategies for Small Businesses

In today’s competitive job market, attracting and retaining top talent isn’t just about offering a decent salary. Companies of all sizes are recognizing the power of company culture — the shared values, beliefs, and behaviors that shape the work environment. But while large corporations might have the budget for more lavish perks, small businesses hold a distinct advantage: the ability to cultivate a more personal, responsive, and value-driven culture. 

This isn't just wishful thinking. Studies on employee retention strategies for small businesses show a clear correlation between strong company culture and employee satisfaction. In fact, a recent study by HR.com’s HR Research Institute and UKG showed that more than half of small to mid-sized businesses (SMBs) surveyed have concerns about critical functional areas such as hiring, retention, and culture, but only about a quarter of them are currently using strategic HR technologies to help address these concerns and improve their overall HR performance. 

According to the study, areas of primary concern for SMB HR teams today are the retention of key talent (60%), creating a supportive employee culture (58%), and hiring qualified employees (56%), but it’s HR leader organizations (those that rate their HR operations as high in maturity) that are more likely to be focused on how culture influences retention (51%).

It’s clear that SMB HR teams are realizing that, to compete successfully with larger organizations for top talent, they need to create the kind of culture that focuses on employee satisfaction, wellbeing, and development. Here are some of the top advantages to making culture a larger part of your HR focus: 

• Attract top talent: A strong culture acts as a beacon, attracting individuals who align with your mission and values. This leads to a more positive hiring experience and a team that’s genuinely excited to be there.
• Boost engagement and trust: When employees feel valued, respected, and supported, they’re more likely to go the extra mile for your business. Happy employees are productive employees, which leads to better outcomes all around.
• Reduce turnover costs: Replacing a departing employee is expensive, especially for smaller organizations. A strong culture builds loyalty and reduces turnover rates, saving you time and money over the long term.

Understanding the current landscape

Before you can build that successful culture, it’s important to understand the current hiring and retention landscape. Today, as in the past, most smaller businesses have limited budgets for attracting and retaining talent, and a lack of formal HR infrastructure can make it difficult to implement and measure cultural initiatives. 

However, companies that invest in culture are finding that when their employees feel valued and connected to their company’s mission, they’re more likely to be engaged in their work and less likely to jump at the first outside opportunity. So what is the best way SMBs can make that happen? HR technology.

The importance of HR technology

It’s easy to assume that most organizations are using HR technology, but that’s not true of all SMBs. In fact, according to the HR Research Institute study, only 36% of HR professionals surveyed said their organizations either are not using HR technology at all or are still at a foundational level of usage, only using payroll and record-keeping systems. This indicates that small to mid-sized organizations need to boost their HR maturity with tools and technology to advance their HR function so they can focus on building a culture where people want to stay.

Employee retention strategies for small businesses

Now that you understand the importance of HR technology in culture-building, where should you start finding and keeping all your great new employees?

First of all, modern, all-in-one HR platforms are designed to streamline day-to-day HR tasks that free teams to focus on strategic rather than tactical initiatives. Secondly, these HR tech tools can be used to create personalized experiences that attract and engage new hires and deepen employee engagement and satisfaction over the long term. To improve recruitment and retention, consider a technology solution that puts people first and fosters autonomy, flexibility, and connections. Here are seven top employee retention strategies for small businesses you can execute to attract and retain top talent aided by HR technology tools: 

1. Attract top talent with engaging job postings 

Post listings on social media and industry sites. Use an applicant tracking system to save time and write clear descriptions with GenAI (if available). Showcase your company culture, benefits, and work environment.

2. Impress candidates with a smooth hiring process

Offer online applications, skills assessments, and video interviews. Keep them informed throughout the process.

3. Use data to refine your recruitment strategy

Data will also help you build a strong team, track applicant flow, tailor your outreach, and identify top performers.

4. Simplify onboarding 

Use automated workflows and a centralized portal. Provide clear communication and resources throughout the process.

5. Invest in employee development

Offer team members online learning, career paths, and regular feedback. You can also implement programs for upskilling and reskilling to keep them on a clear professional development path.

6. Support and empower employees 

This is easily done through recognition programs, gathering feedback, and offering ways to communicate with you for addressing concerns before they become problems.

7. Modernize payroll and benefits

 Automation tools provide accuracy, compliance, and self-service ease of access for employees.

Culture-building outside the box

Here’s a good example of where technology can help build a positive employee culture in an unusual yet powerful way: the daily commute. Many HR teams would never think to look at commute times as a source of attrition or disengagement, yet it can be a driving factor. Beyond salary and perks, the journey to work can profoundly affect employees, especially frontline workers. According to U.S. Census Bureau data, Americans who drive to work travel an average of 27.6 minutes in each direction — and additional research shows that lengthy, stressful commutes can lead to burnout, job dissatisfaction, and attrition.

While large corporations have the resources to mitigate these issues with various employee transportation solutions, SMB employees must often grapple with fragmented and unreliable public transit. Enter Hop In, a UKG Labs™ partner. Hop In’s research reveals that nearly a quarter of employees quit due to poor commutes. “Workforce management doesn’t start and end with a shift,” says Hop In cofounder Erich Ko. The UKG and Hop In collaboration levels the playing field by aggregating neighborhoods of employers for more efficient transportation solutions to ensure happier, more engaged employees. Consider surveying your workforce, formally or informally, to determine if commutes are a problem, and be on the lookout for other non-typical ways to improve culture.

Building your competitive advantage 

In today’s competitive business landscape, a strong company culture is no longer a luxury – it's a necessity. And as you’ve seen, the numbers bear this out. By implementing these employee retention strategies for small businesses and investing in technology to foster your employees' well-being and creating a nurturing work environment, you can attract top talent, boost engagement, and ultimately gain long-term success. Remember, building a strong culture is a continuous journey, not a one-time destination. By following the steps outlined above and adapting them to your unique business needs, you can cultivate a thriving work environment that sets your SMB apart.

Learn more about how all-in-one UKG Ready® can help meet your culture-building needs for stronger business success.

UKG customers interested in participating in the UKG Ready/Hop In collaboration may reach out here.