Retention Woes - UK SMEs Are Losing Their Talent!

High employee turnover is a growing concern for UK SMEs. According to ONS data from 2024, staff turnover rates in SMEs rose to 20.3%, up from 17.8% the previous year. Losing talent not only increases recruitment costs, it also disrupts team dynamics, reduces institutional knowledge, and adds to the stresses and time pressures on directors, managers, and team members who must fill the gap until a replacement is found and brought up to speed in the role.

Whilst many SMEs cannot compete with corporate salary packages, they can outshine on purpose, flexibility, and culture. Employees today are seeking meaningful work, career growth, and work-life balance. SMEs must shape their Employee Value Proposition (EVP) accordingly and communicate it effectively.

Stay interviews are a powerful yet underutilised tool. Regularly asking employees what keeps them engaged or might tempt them to leave provides actionable insights. Similarly, onboarding and exit interviews can highlight cultural or process gaps.

It is important to note that retention should not be left to HR alone. Line managers play a critical role. Empowering them with training on feedback, recognition, team building and personal development planning will boost engagement and help both them and their team members to perform better.

Also, consider implementing recognition programmes and flexible benefits tailored to your workforce and business goals. 

Takeaway Tip: Track turnover data by team and tenure. Target retention strategies where the impact is highest (and in line with what your people want, not just what you think they want).

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