Owners

Small-Business Owners Devise Creative Ways to Keep Workers

“They’ll tell me they weren’t looking, but someone approached them,” she said. “In this industry, if another company dangles $5,000 and an opportunity to work on a fashion show, your loyal employee can be out the door media maison.”

With a tightening labor market, more entrepreneurs are facing similar challenges. A record number of job openings, with worsening skill shortages and a tendency among young adults toward briefer tenures, is forcing small-business owners to find increasingly creative ways to hold onto their best and brightest.

After rising in recent years, quit rates in private businesses held steady at just less than prerecession levels in 2015. But survey data from the Bureau of Labor Statistics, which looks at job openings and labor turnover by size of establishment, suggest that the number of employees voluntarily leaving small companies remains on the rise
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At businesses with fewer than 10 employees, for example, 1.8 million people quit in the five months through May, a 3-4 percent increase from the same period in 2014, the bureau’s data shows. In companies with 10 to 49 employees, resignations rose by 12 percent year over year, and, in those with 50 to 249 employees, the increase was 9 percent.

In a June 2015 survey by the National Federation of Independent Business, 80 percent of employers reported they had difficulty finding, or could not find that the talent they needed. Even when they do find it, said Holly Wade, director of research for the organization, “issues come into play when small businesses can’t afford some of the bells and whistles bigger employers can.”

Colin Darretta, a former investment banker, knew when he founded WellPath Solutions in New York last year that he could not compete with a Google or Uber on pay. So in seeking engineering talent for his company, which makes customized nutritional products, he bypassed the Ivy League and hired a local developer from App Academy, in New York.

The fact that the candidate had taken a less traditional path, he added, may have made him better suited to a start-up. “Here was a guy who had developed an interest at a later stage and was willing to take a personal risk to pursue it,” Mr. Darretta said. “The key is looking where those big companies aren’t.”

He has also made a point of spending one-on-one time with all 10 staff members and likes to capitalize on their interests. After a recent busy period, he took a star performer and a newly hired engineer, both big video game players, to a “League of Legends” event at Spring Studios.

Another company can still try to steal employees by offering more money, Mr. Darretta said. But the employee “wouldn’t be getting the flexibility and the other stuff,” he added. “A lot of the time, the other stuff is what matters to people, and it doesn’t cost that much.”

Most people who leave a company do not do so for more money. In a 2015 survey of 11,000 employees by the staffing company Randstad USA, the main reason cited for quitting was a lack of a career path or growth opportunities. Nearly half of respondents said work-life balance was the biggest factor motivating them to stay.

For any incentives to work over the long term, employees must be invested in a company and its mission.

Dr. Amy Baxter, an Atlanta physician who founded MMJ Labs in 2006, has six employees with advanced degrees on a shoestring budget. Her company developed Buzzy, a hand-held device that uses cold and vibration to relieve pain from causes as varied as hypodermic needles, carpal tunnel syndrome and plantar fasciitis, an inflammation of the band of tissue that connects the heel bone to the toes.

“We didn’t even get F.D.A. clearance until last year, which makes it all the more amazing that people have stuck with me with no promise of equity,” Dr. Baxter said.

She said flexibility and transparency helped. MMJ Labs’ manufacturing manager spent early years fitting her work hours around an infant daughter’s heart treatment. If Buzzy loses a customer, everyone is involved in figuring out what happened and helping to fix it. Outings like the company’s regular staff dinners and the all-expenses-paid Caribbean cruise that employees and their families took to celebrate selling the first 25,000 units do not hurt either.

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