In the current financial climate, small businesses are constantly looking for ways to boost their bottom line and reduce costs. It may seem counterintuitive, but spending time and money on retaining your best employees is an effective way of doing just that.

Keeping hold of staff is not only excellent for a firm’s stability, but it can also reinforce your reputation as a great employer. Any job hunter will look for an employer who has a track record for excellence, while studies have also shown that a company is far more likely to grow and perform effectively if its employees are engaged, loyal and productive.

With many small businesses still overlooking this critical component of business success, here are six ways in which employers can establish an effective employee retention strategy.

Establish an attractive company culture 

A healthy business culture is closely associated with employee satisfaction, productivity and creativity, so it is no coincidence that many of the most successful businesses in the world are known for having a great company culture.

To establish a well-defined and pervasive ethos for your business, first consider the beliefs, values and behaviors that you would like to underpin your company.

As the leader of an organisation, your staff will look to you for guidance and direction. Your actions –  not just your words – should act as a powerful example for employees. If you want your business to have an open, helpful and cooperate culture, you will need to begin by embodying these qualities when dealing with staff and clients.

Consider the following. Would your employees stay late to help out a colleague? Would they approach management directly if they encountered an issue, confident they wouldn’t be blamed or criticised?

The behavior of employees should tell you everything you need to know about the impact you have on your organisation’s culture.

Strong leadership should breed an inclusive culture

Hire the right people

It may sound obvious, but making astute hiring decisions is essential for a successful engagement strategy. Hiring employees that don’t fit the existing company culture can result in decreased job satisfaction, poor work quality and high staff turnover.

An extensive CV and impressive interviewee is great, but if a prospective employee doesn’t share your company’s values, visions or even your sense of humour, they are unlikely to stick around for long. So, no matter how great your need is for extra manpower, don’t make rash hiring decisions or you’ll be back to the drawing board in five months’ time.

Build a relaxed and fun working environment

Creating a pleasant working environment can go a long way to keeping people’s spirits high and setting up a home away from home where employees can feel comfortable.

The number one rule here is to demonstrate due recognition and appreciation for staff achievements and accomplishments. This could be as simple as a thank you in person or by email, or making a positive comment on how they have performed in a recent task.

Too many offices have also developed a culture, intentionally or unintentionally, that encourages employees to work through their breaks. Given that regular breaks can lead to fresher minds, greater focus, problem-solving and creative thinking, try setting up a dedicated breakroom and ban employees from eating at their desks.

Communication builds credibility

One of the greatest contributors to employee satisfaction and engagement is open, transparent and honest communication. The brilliant thing about this is that it won’t cost you anything, though it does require a certain amount of effort and commitment from you and your management team.

Keeping communication channels between individuals and departments open, and informing staff on any corporate changes, will foster strong relationships and ensure staff feel valued and included.

You can also boost staff engagement by ditching the hierarchy and treating junior members of staff the same way you’d treat seniors.

Likewise, try to address any staff complaints attentively and in full. Express your appreciation for their honesty and courage in bringing the issue to your attention, and re-emphasise the goal of working efficiently and productively as a team.

It's good to talk, even better to listen

Invest in the development and progression of your staff

Most employees don’t just want a job; they want a career. Somewhere they can stay and develop, learn and grow. Supporting employees in their career development can reduce turnover by reinforcing commitment to long-term working relationships and staff progression.

Investing in the upskilling your staff will also unlock their potential, improve skills and give them confidence to make a difference, whilst improving morale and job satisfaction. Development days, workshops, monthly reviews and training, mentoring and peer recognition programmes can all help in this respect.

Promote a work-life balance

You might assume that your employees are content with their work-life balance, but how do you know for certain? As an employer, it is important to ensure that your employees are not taking their work home with them unnecessarily or becoming too stressed out, since this could have an adverse effect on their personal life, as well as their efficiency at work.

If a staff member looks stressed, let them know you’re there to help change the process and consider offering flexible working, telecommuting or extra holidays when necessary.

Peter Tuvey is Co-founder and managing partner at Fleximize.