How Does the Impact of Turnover Affect Small and Midsize Businesses Versus Enterprise Organizations?
In most instances, discussion of small and midsize businesses (SMB) focuses on the organization’s number of employees, with small being fewer than 100 and midsize landing somewhere between 100 and 999. But as Gartner reminds us, there is another identifying factor: revenue. Here, small businesses are organizations with less than $50 million in annual revenue, and midsize make more than $50 million but less than $1 billion in annual revenue. Seeing those numbers on the page (or, more likely, screen), a few things jump out.
To start, we’re talking about a vast range of organizations, from the mom-and-pop shop up the block to a solid portion of the Inc. 5000. Workforces range from a handful of folks wearing multiple hats to teams that can dwarf entire organizations. Though there is undoubtedly an intrinsic link between workforce and revenue, in most instances, the smaller the organization, the bigger the individual impact of each worker.
The State of the State
At a time when uncertainty abounds after sustained pandemic conditions and turnover in an increasingly unpredictable job market, it’s important to remember that for the smallest of the SMBs, “The difference is that if you lose one or two employees, that’s half your workforce and threatens your ability to actually run your business." As the Great Resignation reached its height, almost 48 million people left their jobs voluntarily in 2021, setting a new annual record. Earlier in 2022, Grant Thornton’s State of Work in America survey found that 21 percent of workers took a new job in the past 12 months. Of those recent job-switchers, 40 percent were already looking for another opportunity. This increase in turnover is just one of the reasons we’ve seen local restaurants and businesses slash hours and even temporarily shut down due to recruiting and retention challenges.
From Challenges to Opportunities
In recognizing the state of the SMB in 2022, the conversation around impact goes beyond just keeping positions filled. As one article explained, small businesses represent 99 percent – or approximately 31 million – of all businesses in the U.S. These organizations employ roughly half of the American workforce and account for up to 65 percent of net new jobs annually. The experience of the last few years compounded by the churn being witnessed today sets up a series of new questions for consideration, including:
- What does it mean to be a worker in an SMB?
- What do these workers mean to the organization?
- What happens when people leave?
- How can SMB organizations recognize the impact of their workers?
- What does recruiting look like? Retention? Is there a way to prevent further attrition?
In reviewing these questions, it’s worth noting that most of the answers stem from HR and talent departments – a level of expertise that not every SMB has on their payroll. As such, in response to today’s dynamic job market, 32 percent of small business owners say they have raised wages to attract workers, while 27 percent have offered more flexible hours and 24 percent more on-the-job training. Fewer have provided additional benefits, including enhanced medical (8 percent), educational benefits (7 percent) and child-care or elder-care benefits (5 percent). These are not insignificant gestures for these businesses, and yet, trying to compete against larger organizations can feel like a losing battle.
Navigating the Sliding Scale
When it comes to impact, SMBs should focus on what they can offer – instead of what they can’t. There will always be another player out there ready to pay more or to promise fancy perks like unlimited paid time off. At the same time, it’s true that the smaller the organization, the bigger the impact of the individual worker; it’s also true that the smaller the organization, the bigger the opportunity to do better for each and every worker holistically.
Small and midsize businesses need to showcase how impact goes both ways and offer their workforce intangible benefits such as personal fulfillment and professional development, connection, collaboration and networking, and respectful and supportive work environments.
As part of this effort, SMBs must learn to understand their workers as people by uncovering their career goals and aspirations, existing skills and capabilities and even their unseen potential. No one walks into work fully formed on day one and leaves a job in the same state. Homing in on what makes workers unique and valuable enables these organizations to nurture their tenure and show appreciation in a meaningful way. It is in those moments, the everyday ones that add up over the course of a week, month and year, when organizations are able to make an impact and quite possibly, shift the sliding scale in its favor.