How to hire and retain staff

Don't let recruiting and keeping staff be a problem for your business.

Hiring and retaining staff has long been regarded as an issue for small and medium-sized businesses.

And despite an increase in the number of people who are unemployed, it's likely to remain so.

Indeed, in the recent Business Finance Survey 2020, conducted on behalf of the British Business Bank, an issue with recruiting and retaining skilled staff was considered likely to be a 'significant obstacle' to 6% of businesses that responded.

High staff turnover can be problematic, especially when the departing employees have specialist skills or strong relationships with customers.

Moreover, it may point to deeper issues within the business, such as a lack of opportunity for progression.

So what can your business do to hire from a wider pool and retain your best staff?

The recruitment process

It's important to realise that although recruitment and retention may be separate concerns, they are linked.

The recruitment process itself affects an employee's view of your business from the very outset.

In a way, it's the first impression they have of your organisation, so you don't want to leave any room for misgivings at the very beginning of your working relationship.

Moreover, you want to make sure you're able to retain the right person for the job.

Similarly, the induction process is important in helping a new recruit settle in and make a good start.

The Chartered Institute of Personnel and Development (CIPD) provides some guidance on the induction process, while the Advisory, Conciliation and Arbitration Service (ACAS) provides a step-by-step guide for small business owners seeking to hire staff.

In addition, there's also detailed information on the ACAS website on how to make sure you're following discrimination law.


Embracing diversity (including during the recruitment process and in the context of career progression) and embedding it in your culture can benefit your business significantly.

Casting your recruitment net as widely as possible will increase the potential catch from which you can select a suitable employee. There are also tools you can use to remove unconscious bias from your recruitment process.

Learn more about why diversity matters


There are many potential benefits to businesses that encourage flexible working, as recognised by the British Chambers of Commerce (BCC).

Even before the COVID pandemic struck, research revealed that providing staff with flexible working arrangements can improve recruitment and retention of skilled people, increase workforce productivity, and reduce the impact of commuting on the environment. Jane Gratton Head of people policy at the BCC

She argues that flexible working not only helps to retain talent and institutional knowledge but also promotes diversity and inclusion and means employees are trusted and valued for the contribution they make – rather than the time they spend in the office.

As the economy reopens later in 2021, employers can begin to embed flexible working practices as the norm, ensuring that everyone can access work opportunities and develop in their careers. A more flexible approach to how, when and where staff work, together with investment in digital skills, makes good business sense. Jane Gratton Head of people policy at the BCC

The BCC network offers help to support firms through this process and also provides information on grants and other assistance available.

Why your employees are leaving

If you want to reduce your staff turnover, it's useful to know why employees are leaving your organisation, although getting accurate information might be difficult.

There are many reasons for why people leave a job, and it's worth your time to try to understand them. Of course, the reason someone gives for their departure may not be the real one, as people may be reluctant to criticise the organisation, their manager or their colleagues.

If you conduct exit interviews as part of your process, the Chartered Institute of Personnel and Development (CIPD) advises:

The interviewer should not be a manager who has responsibility for the individual or who will be involved in future reference writing. Confidentiality should be assured and the purpose of the interview explained.

The CIPD suggests that having someone from outside the business carry out your exit surveys is more likely to capture people's genuine reasons for leaving, as individuals are more willing to be honest when reassured that their responses are anonymous.

Learn more about how to get the most from an exit interview

Ongoing engagement with staff is also important in trying to solve issues before people actually leave - for instance, by using regular confidential attitude surveys. If you do identify an issue, it's then crucial to listen to the feedback and work to resolve it.

The CIPD website has a useful section on employee turnover and retention

Improving how you retain staff

Clearly, pay and benefits are crucial elements in attracting talent but by themselves may not be enough to retain many employees in the long term.

According to the Chartered Institute of Personnel and Development (CIPD), as well as basic pay and benefits, organisations should consider the following elements, all of which have been shown to play a positive role in improving retention:

  • Selection. Give prospective employees a realistic job preview at the recruitment stage. Don 't oversell the job or play down aspects of the role.
  • Career development and progression. Give employees the best possible opportunity to develop their skills and careers. It's also important to understand and manage people 's career expectations. Where you 're not able to make promotions, look for sideways moves that allow employees to gain different development experiences.
  • Consult employees. Make sure that employees have a 'voice' through consultative bodies (UK employers should be aware of the updated Information and Consultation of Employees regulations), regular performance conversations, attitude surveys and grievance processes.
  • Be flexible. Wherever possible, accommodate individual preferences on working hours and times. As part of this, it's also important to monitor workload and ensure people can manage their tasks and duties within working hours.
  • Pay attention to employee wellbeing. Support managers to help their teams thrive and manage issues such as workplace stress and 'presenteeism ' (showing up for work despite being too ill to be productive).
  • Treat people fairly. A perception of unfairness, whatever management's view of the issue, is a major cause of why workers voluntarily resign.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

Making business finance work for you

Our Making business finance work for you guide is designed to help you make an informed choice about accessing the right type of finance for you and your business.

Read the guide to making business finance work for you

Your previously read articles