From the course: Small Business Secrets

Understanding the role of employee loyalty

From the course: Small Business Secrets

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Understanding the role of employee loyalty

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- What is the biggest expense in the average small business? The answer is labor, in other words, the cost of hiring people to do work for your business. In this video I want to talk about employee loyalty, and how important it is to get the most from the people who work for you. What I'm going to share with you applies to all businesses, all industries, and even if you don't have someone working for you right now, you may be hiring contractors or freelancers, and this still applies. The rule number one when it comes to working with employees is hire slowly. Often entrepreneurs are in a rush to fill a position, and they quickly throw someone in, and it results in a lot of expense, so the first thing that you want to do is take your time, and make sure that you're getting people to work for you who are a fit. Now after that, the second most important thing is to build employee loyalty. When I say employee loyalty I'm defining that as having lower turnover, meaning employees are leaving you less, and you're increasing performance from your employees because they love working for you. There are a few reasons why this is so critical, number one is the cost of hiring. It can be very expensive to find a new employee, to find someone to work for you. Not only do you have the potential expense of listing the job on various websites, but you also have the cost of your time interviewing people, and going through that sifting process, so it's much better if we can retain someone that we already have and not have to replace them. Also, it has an impact on the cost of training. When we bring on someone new into our business now we have to take additional time to train them on how to do their job. If we can avoid that through employee loyalty, that's going to save your business a lot of time and money. Also, we need to consider the transition for customers. Now your customers are going to get used to working with a particular person, if that person changes every six months that's going to have an impact on customer loyalty, because we're not keeping employees around and people just don't like change. Also, we want to consider the impact on knowledge growth. By keeping loyal employees, people who work for you for a long period of time their expertise is going to grow in their position, and that becomes a valuable asset to the business that can be passed on to others. Lastly, leadership, by having employee loyalty you'll be able to cultivate new leaders. As a business owner you want people to rise up through the rank, so to speak, so that they can take those leadership positions that will make it easier for you to exit your business in the future. Employee loyalty is something that if you give it just a little bit of attention it will pay big dividends for your business in the long run.

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