This article was updated on Aug. 29, 2018.
A common perception is that small businesses, due to their increased business agility, are able to more quickly react to an accelerating economy. While some of this growth might be due to several increases in state minimum wages, it more broadly corresponds to a trend toward higher wages for small business employees, which a 2018 NFIB Small Business Jobs Report noted.
Although small businesses are driving growth in the workforce, many lack the HR resources that large organizations have. Instead of dedicated HR departments, many rely on employees with diverse workloads to handle HR duties alongside other tasks. Yet, they are successfully onboarding and training these employees, and they continue to bring on more employees.
What can larger organizations, who have traditional HR resources at their disposal, learn from these agile small businesses?
Give Them More
This is obvious, but still worth mentioning — pay as much as you can get away with. Paying more is the most straightforward way to match current trends in small business compensation.
As businesses grow, they tend to become more bureaucratic and less accommodating. This is especially true with respect to compensation negotiation. For smaller organizations, the freedom to have unrestricted compensation conversations can make a difference in hiring and retaining crucial talent.
For structural reasons, it doesn't make sense for large firms to abandon formal salary structures. However, large organizations are in a much better position than small organizations to institute creative, comprehensive fringe benefits programs like gym memberships, on-site childcare facilities and negotiated travel discounts. These are all ways larger organizations boost their compensation packages and make them more attractive.
For large businesses, interacting with a complex organizational structure often overshadows genuine person-to-person conversation. This can produce a pervasive indifference to the organization, while many small businesses can easily maintain a warm, supportive culture that makes employees excited to engage with their work. Smaller organizations, many of which are family-owned, can use this tightly-knit culture to their advantage. Cultivating a congenial, encouraging setting for your talent can foster the type of environment that yields productive, happy employees.
While there are key structural differences that prevent large businesses from emulating the retention strategies of smaller organizations, the keys to employee satisfaction are constant regardless of size. If you show your employees that you value their hard work with various forms of compensation and provide a comfortable, nurturing place for them to work, you can cultivate a workplace that can help attract and retain strong employees.