Employee Retention and Development Strategies in Small and Large Companies

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The issue of motivating a productive employee to keep working for a certain company has always been pressing both for large and small organizations. Many studies have been carried out to uncover the best retention and development practices along with reasons why workers tend to change jobs and seek a better place of employment. The experience of various successful companies has been a source of corporate wisdom on the topic. However, there is no fit-for-all approach. Each business path is specific to its size, place, the sphere of operation, and other factors. The problem is, the best practices of the major multinational corporations are often quoted and there might be a risk of small businesses trying to adapt their models. Therefore, there is a need for examples of differences and similarities in employee retention and development strategies implemented in large and small enterprises.

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Approach

The current study utilizes a case study approach. The basis for case choice is the size of a business. The material for contrast and comparison is the retention and development experience of major IT and telecom giants like Google, Apple, and Netflix. The small businesses experience features Foothills Veterinary Hospital in South Carolina, Hangar Cleaners in Kansas City, Missouri, and Indian online recruitment company, Naukri. They are examined to identify the differences and similarities in retention and development strategies.

Focus

Not all cases of success could lead to the prosperity of a company. Organizing a small enterprise and basing its employee management model fully on a large corporation’s experience not realizing the differences might be a mistake. The present article aims to prevent such planning errors and help build a successful interaction style within the company. The primary focus of this research is to identify differences and similarities in big and small business employee retention and development strategies. The practical relevance is in the urgency of defining the difference between retention and development techniques in big and small-sized organizations to prevent planning mistakes.

Literature Review

There is a considerable body of scientific knowledge related to managerial problems and retention and development strategies in particular. Many researchers try to identify the best practices and compare them. Others focus on problems in a particular sphere. There are also studies that summarize and analyze the existing findings.

Koedel and Xiang (2017) explore the extent to which pension benefits incentivize workers to keep their loyalty to a particular company. They found that among school teachers there was a significant tendency for prolonged employment after their retirement bonuses rose. However, the researchers note that the effect varies depending on the age group. While there was no significant difference in employment habits of the young teachers, the professors of the pre-retirement age tended to value such kind of policy improvement.

According to Bryant and Allen (2013), the total losses of a company that fails to retain an employee exceed 100% of his or her annual earnings. In their study, they name several effective practices that are aimed to improve retention rates and workers’ performance, including the introduction of compensations, benefits, and fairness of payment. One of the key observations in the paper is that salary level and salary satisfaction per se do not affect the individual turnover as much as general satisfaction with the job, commitment to the cause, or understanding of the company’s values.

Another source to consider is the review of managerial literature concerned with problems of employee retention performed by Das and Baruah (2013). Among the gathered ideas was a notion that there are three dimensions of employee job satisfaction that influence the likelihood of his or her resignation. Those dimensions are social, physical, and mental. Another valuable insight is that bright career opportunities can inspire workers to commit more strongly.

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As far as the IT sector is concerned, James and Mathew (2012) note that organizational culture has a direct connection to individual turnover intentions. However, the results of a questionnaire among the Indian IT companies show the complete dominance of salary over personal satisfaction and welfare bonuses. Among other important findings is the fact that employees strongly value the possibility of remote work. It may be considered a good retention strategy for a company.

Kar and Misra (2013) suggest that high demand in the sphere of information technologies and highly competitive markets indicate great career mobility. Therefore, the adoption of the best suitable retention and development strategies in firms is critical. Researchers note that apart from salary the key factors that influence employees’ commitment are proper motivation and career opportunities. The research also states that employees’ expectations are not affected significantly by differences in age, sex, or race.

Another factor that could influence workers’ intentions to seek better opportunities is work-life balance (WLB). Several researchers found that this is a significant retention factor. Kar and Misra (2013) state that companies helping employees maintain a reasonable WLB tend to form an emotional attachment in the latter. This notion is further backed by the research performed by Deery and Jago (2015) who identify a bilateral connection between WLB and work stress.

Nowadays, there is a strong emphasis on human capital investments in the IT industry that has a direct influence on employees’ performance (Bapna, Mehra, Gopal, & Gupta, 2013). This may also be linked with retention and development as education opportunities were also on the worker’s wish list (James & Mathew, 2012). Position-specific education is said to be a good incentive to stay in the company as such skills allow to yield benefit from them only in the job, for which they were acquired (Bapna et al., 2013).

According to the case study presented by Ratna and Chawla (2012), one of the key factors that minimize personnel turnover is a well-thought HR hiring policy. Picking the right person for the job allows a company to reduce the possibility of him or her leaving. Achievement recognition also stays among the top factors influencing employees’ commitment to the organization.

When small companies are concerned, high-performance work systems (HPWS) might be a solution. Research by Patel and Conklin (2012) suggests that in small working environments corporate culture might be as important as in large ones. Additionally, maintaining high performance among workers through HPWS might also reduce employee turnover. They further argue that a developed group culture is one of the key factors that ensure the competitiveness of a company on the market as it allows to reduce costs of labor relations.

The topic of retention and development strategies is further developed in the studies of Inyang, B. J. (2013). The researcher argues that Corporate social responsibility (CSR) may be one of the retention factors. It implies higher moral standards, community contribution, and strong team-building implications – attributes of a corporate culture that generally influence personal commitment. For small companies, it allows them to gain local publicity and serve as a pillar of a community. Such image applied to most of the employees motivates them to further involvement and commitment.

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Google Case Study

Google being a large multinational corporation with more than fifty-seven thousand employees globally represents a solid field for research in terms of worker development and retention. According to a 2014 state of the industry report, top companies spend on average 1,208 dollars on employee training and development (Miller, 2014). Google is one of these companies that pay perhaps even more. No wonder that it is considered one of the top companies to work for in the IT industry. Such an image is based on a high value that is placed on every employee. What is especially valued in Google is the leisure time and rest provision. Most of the Google offices in the USA are equipped with various leisure facilities such as sports halls, massage rooms, gyms, and others. Many offices in the company abstain from typical cubicle-like office designs offering a wide range of personal workspaces.

According to a recently introduced policy, developers are allowed to spend 20% of their time on personal endeavors and projects. The positive impact of such an innovative approach can be proven by the fact that some of the Google most recognized services like Gmail and AdSense were developed as a result of these side projects (Gersch, 2013).

Another side of the company-employee relationship in the organization that has an impact on retention and potential development is corporate values. Google is a multicultural company that employs dozens of different religions, ethnicities, and races under the roof of one office. Therefore, universal values are the key to collaboration. If people can perform as a part of a team and show good results it does not matter what color or gender are they. Google has a People Operations team that surveys all employees twice a year to identify their wishes about the company environment where they work. According to these data, they may adjust employee-related policies.

All in all, Google seems to employ various retention and development strategies that are mostly based on providing numerous opportunities to the employees in terms of leisure and education. Moreover, the company has an established name and is recognized around the world which makes each position there a top-class opportunity that every applicant desires.

Apple Retail Case Study

Apple designs products that are known and used by millions of people around the world. Similar to Google, the company is on top of the most prestigious employers. Many skilled designers, software developers, managers, and other professionals dream of being a part of the team that brings universally praised devices to people around the globe. According to the Apple’s retail vice president, Angela Ahrendts, Apple store employee retention rates reached 81% (Whitney, 2016).

However, according to the interview with a retail store employee, Jordan Golson said he earned 11.25 dollars an hour, which is frankly not very much. According to the article, most of the workers in Apple retail stores do not earn much. However, as a former sales representative noted, “when you’re working for Apple you feel like you’re working for this greater good” (Segal, 2012). This phrase gives an insight into corporate retention policies that may be based on forming a vision of Apple’s values like selling the best user-oriented devices on the market, and for a company with a great name, it is often enough to keep workers motivated and committed to their job.

Netflix Case Study

Another well-known company with many employees is Netflix. It has brought some innovation to the sphere of HR management. Sheryl Sandberg, Reed Hastings, and some other HR employees of Netflix composed 127 slide-present that explained the company’s values in plain language. What was different is that they stepped away from populist terms like ‘integrity that are often not clearly defined. Instead, they focused on particular skills and behaviors that are valued by employees with a particular definition and examples in simple language (McCord, 2014). Despite the considerable length and unsophisticated visuals, the document became quite popular both inside and outside of the company.

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Another management practice that Netflix uses is keeping the logic and sensibility above the formal policies in the recruitment process (McCord, 2014). Adequacy and grown-up behavior are the universal templates for the company employees’ behavior. They are said to eliminate most of the HR issues and ensure the company’s goals are met. Netflix code seems more like a guidebook instead of a policy. It gives workers virtually unlimited possibilities in terms of vacation and day-offs, which only need to be discussed with managers and driven by common sense (McCord, 2014).

Netflix does not have commonly accepted performance evaluations. HR specialists of the company believe that they only add unnecessary paperwork and stress. Most of the performance issues are obvious to the direct supervisors and discussed privately. It also eliminates the unhealthy competition and obsession with numbers in reports instead of the real quality of the job (McCord, 2014).

In terms of salary and bonuses, Netflix is consistent with its belief in common sense: the right people with a competitive salary do not need any rewards. They work to their full potential without the need for material inspiration. The employees are always welcome to converse with recruiters and competitive firms to see what they have to offer and tell managers about the results. That way the HR is always informed about the market situation and able to assess the need to change if necessary. One more thing to note is that a good HR manager should always make it clear to the workers what are their options in terms of professional growth and increasing their earnings. That approach ensures that employees clearly understand their career path (McCord, 2014).

Netflix seems to implement somewhat unusual employee retention and development strategies that do not correspond with commonly adopted practices. However, they follow straightforward and understandable principles of honesty and logic. Combined with a strict adequacy check on the stage of recruitment the system where every person is adequate and exhibits adult behavior seems to work perfectly. Clear ethical and procedural guidance, the absence of needless evaluations and quality checks, open and transparent bonuses system, and a competitive salary ensure that the right employees stay in place and are motivated to work in the company’s best interests. They know that they are their interests too.

Hangar Cleaners Case Study

The story of a small cleaning enterprise was built around the idea of bringing innovation to the market. As in many small ventures, it started and continued fueled by the ambition of the owner. A plan to make an environmentally friendly cleaning company succeeded. Joe Runyan is now an owner of a company with 35 employees and 1.6 million dollars of revenue (Ryckman, 2014). In terms of employee handling, his secret is simple: be honest and motivated by an idea. Runyan saw that most of the rival businesses did not put much effort into teaching the staff to be client-oriented and friendly. He meant to change it.

Since most of the advertising and marketing was at first done by the van drivers, who picked up laundry from clients, they were the faces of the company. The motivation for top performance was pretty straightforward: the more customers they attract, the better payment they get. Possibly the only retention tactics there could be were the competitive salaries and inspiration by the idea that together they make the world a better place. Pension, health insurance, and all other modern job pluses can hardly be applied to small businesses, at least at the start.

Naukri Case Study

Naukri started as a small enterprise without an office. Now it has grown to the largest online-recruitment website in India with several thousand employees and headquarters in Noida city. Most businesses in India, either big or small, were largely hierarchical. Naruki owner, however, practiced liberal approaches inspiring creativity, engagement, and communication among all employees. In the late 90s, when the IT-sphere was only emerging and gaining strength, it was crucial to find and retain young and talented workers. After the financial crisis in 2008, the company executives were afraid that young talents would opt for other opportunities. The reason for that was the share prices for the companies dropping significantly and many employees have benefited from the ESOP. That is where retention strategies should have been gentle but effective.

Firstly, top executives offered workers to buy shares with discounts so they would not lose money on them. Additionally, they financially incentivized sales managers with salary bonuses. The final argument was that attractive job offers from the US IT companies did not imply fast career progress, while in Nauki one could easily move up after a successful improvement proposition. As a result, the company managed to prevent a local brain drain. As exemplified by the present and previous cases, the power of motivation could serve as a good retention strategy for a small enterprise provided it offers some financial stability as well. The Nauki case also shows the critical meaning of HR department decisions in times of turbulence on the market.

Foothills Veterinary Hospital Case Study

The case of Dr. Randall, an owner of a vet clinic shows the importance of a work environment in a small company. Randall from the very beginning realized that his small and young enterprise relies heavily on talented specialists. Since the company was not recognized even locally, and he could not offer higher salaries, he decided to create the best employee-friendly workplaces. This approach included team buildings, parties, and fresh air events, with pension and health benefits added to the package later as the company grew. Since the organization was health-related, workers understood the profits of having a medical insurance policy at the expense of the company, which added extra motivation. Besides, it resulted in less prolonged sick leaves and the general promotion of a healthy lifestyle in the company (Isaacson, 2015).

Dr. Randall’s clinic grew, and most of the staff he began working with stayed. This speaks to the fact that he made the right decision creating a friendly and well-built team of professionals from the start. That gave the company the much-needed foundation for growth.

Results

The six company cases with the focus on different retention and development methods in both big and small ventures allow us to draw parallels and identify differences in their application. Cases of Google and Apple showed the power of a brand that offers certain freedoms in terms of hiring and retention, which smaller ventures can rarely allow themselves. In the first two cases, the companies do not struggle to find a good employee as their name and dominant market position attract thousands of potential workers.

Upon recruitment of the best potential applicants, Google, Apple, and Netflix are allowed to choose from a wide range of retention and development practices to motivate employees to perform and be loyal. Google selected the path of creating one of the best working environments by allowing certain freedoms in time allocation and workspace choice. Apple retail already has a set philosophy of excellence that is easily accepted and well-known. It lets itself be complacent as long as the retention figures stay relatively high. Netflix built a sensible performance-oriented mutual trust model that allows great financial possibilities and non-material benefits.

In contrast, emerging companies have limited ways to attract, retain, and professionally develop employees. Therefore, in compliance with the study by Patel and Conklin (2012), they relied more on implementing non-financial incentives and integration of employees into the psychologically positive work environment with a parallel identification with the company’s values. The business owner’s charisma and ability to motivate seems to play a key role in employee retention. Nonetheless, the career propositions and additional benefits in the last three cases showed the significance of the material side of retention as well. The limited resources seem to inspire small companies to get creative to hold their best minds in place. Another important difference of retention and development models in big and small businesses is that an outflow of the top-quality staff members could lead the smaller to the downfall while the bigger could withstand such losses.

Another issue in the form of maintaining work-life balance can arise from the nature of small businesses. They are often organized by a small group of people who tend to be quite fascinated with the idea. What inspires them to spend long hours at work as the business requires carrying the burden of a director, financial manager, accountant, and salesperson. Some other person who gets fascinated with the idea may also become involved in the process of making it work. Though entering a team on an employee basis, this person may accidentally be involved in some other problems with the business operation that can take a portion of his or her time. Some may tolerate it but others will not, which may cause misunderstandings.

Based on the experience analyzed in this paper it may be safe to say that there are certain differences in the HR strategies related to employee retention and development. They are crucial and specific to the company size. However, there are also similarities in the key factors that staff finds important in considering their job opportunities. According to Das and Baruah (2013), these factors fit into three domains: physical, social, and psychological. The first is represented by the desire for adequate payment, the second – good relationship with colleagues, and the third – seeing the results of work and recognition.

Conclusion

The identified similarities and differences may be a clear sign that the positive company experience in the field of staff retention and development is not universally applied. Certain size-specific barriers may not allow us to use them in another business category. For example, the careless attitude of Apple retail to the physical domain of their employees’ retention does not lead to a significant decline in the company’s performance, while similar practices may collapse the smaller enterprise. The reason for this is the well-established name and overall stability of Apple’s position on the market that ensures a steady influx of well-trained and experienced workforce. The smaller companies usually do not enjoy such luxury. Therefore, each skilled worker is a hardly-replaceable asset.

Practical implications of the current study may include the suggestion to plan the company staff policy according to the experience of companies of a matching size. As not all practices will have the same effect, a careful study is in order before making significant policy changes. In addition, the implementation of the democratic guidelines demonstrated by the Netflix case under certain conditions may also be considered.

The limitations of the present research feature the lack of detailed data on employees’ earnings for each company and the absence of a complete list of HR staff policies for Apple retail. Besides, the paper, for the most part, leaves out the cultural differences and domestic business conduct traditions. The implication for further studies may include differentiating big and small differences between companies in a single sphere or single country.

References

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Bryant, P. C., & Allen, D. G. (2013). Compensation, benefits and employee turnover: HR strategies for retaining top talent. Compensation & Benefits Review, 45(3), 171-175.

Das, B. L., & Baruah, M. (2013). Employee retention: A review of literature. Journal of Business and Management, 14(2), 8-16.

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Gersch, K. (2013). Google’s best new innovation: Rules around ‘20% time.’ Forbes. Web.

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Isaacson, V. (2015). A small business success story – hint: It starts with employee benefits. Web.

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McCord, P. (2014). How Netflix reinvented HR. Web.

Miller, L. (2014). 2014 State of the industry report: Spending on employee training remains a priority. Web.

Patel, P. C., & Conklin, B. (2012). Perceived labor productivity in small firms – the effects of high‐performance work systems and group culture through employee retention. Entrepreneurship Theory and Practice, 36(2), 205-235.

Ratna, R., & Chawla, S. (2012). Key factors of retention and retention strategies in telecom sector. Global Management Review, 6(3), 974-497.

Ryckman, P. (2010) A local dry cleaner tries to compete against P.&G. New York Times, p. B4

Segal, D. (2012). Apple’s retail army, long on loyalty but short on pay. New York Times, p. A1

Whitney, L. (2016). How Apple’s retail chief views her store workers. Web.

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BusinessEssay. 2022. "Employee Retention and Development Strategies in Small and Large Companies." January 5, 2022. https://business-essay.com/employee-retention-and-development-strategies-in-small-and-large-companies/.

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BusinessEssay. "Employee Retention and Development Strategies in Small and Large Companies." January 5, 2022. https://business-essay.com/employee-retention-and-development-strategies-in-small-and-large-companies/.