If you employ around 30 people, then the chances are you’ll be replacing about three or four of them most years, and it’ll be rarely because you’ve fired them. Most likely they’ll have found another job somewhere else, and although the pay might not be a massive jump, they’re happy to leave an unrewarding job. Cue another round of local ads, recruitment agencies, CV assessments, interviews and onboarding, then weeks or months of training and allowing the newcomer to get up to speed.

It may come as a surprise that estimates for the cost of replacing someone range from a low of about £5,000 to a high of £30,000 depending on the role and the sector. For three employees, that’s £15,000 to £90,000. None of that business expense is welcome, no matter how much the recruit is.

This is all why employee retention is such a key factor in business profitability. Keep staff happy and they’re less likely to look elsewhere. Saving just one employee a year is worth the effort.

Reward equals retention

Fortunately, there are ways that you can help retention – and they can cost just a fraction of the cost of losing and replacing an employee. Among them is setting up a reward scheme. We’ve written about reward schemes before, and it’s well worth looking through the business section of our Advice Centre if you’re looking for ideas.

Essentially, you’re allowing staff members to accumulate tokens as they go about their work. You can use them to target problem areas, for example timekeeping or repeated absences, but in a well disciplined workforce the same techniques can be used to enhance motivation and thereby increase job satisfaction and productivity.

Tokens can be allocated by managers, and to ensure managers aren’t left out, they can be allocated tokens by owners and senior management. A good way to reward is to give tokens out when staff go above and beyond the call of duty. In a creative business, that could be coming up with brilliant ideas (which we all know are the result of hard work). In services, they can be offered for excellent customer service. In production, high throughput can be rewarded.

The idea is that you reward small actions with small amounts of tokens, and have a list of things that they can cash the tokens in for. Meal vouchers, cinema tickets and such like are always welcome, but you can even offer weekend breaks or extra holidays for the highest achievers.

But how does this help with retention and motivation? By making employees think more about the work they’re doing, they are less likely to become drones, doing the absolute minimum of work between paydays. And it’s no secret that if employees are more engaged in their work and are sure that their hard work is being recognised by those above them, the motivation is often enough to stop them from looking elsewhere for work.

In short, everybody wants a rewarding job. With a well managed scheme, you can help your staff towards that goal, both figuratively and literally.