Staying competitive: How small businesses can attract and retain talent

Since the pandemic, small businesses have faced ongoing challenges in hiring and retaining employees — a struggle that continues into 2025.

Employee priorities have shifted, with quality of life, company culture and flexibility being valued more than just a paycheck. At the same time, a younger workforce is gradually replacing an older generation that is retiring, bringing in new expectations.

While small businesses may be more limited in what they can offer in terms of salary and wages, there are still plenty of practical ways they can stay competitive in attracting and retaining great workers.

Offer comprehensive health benefits

Smaller businesses often lack the budget to provide the same healthcare benefits as larger companies, especially as health care costs continue to climb. But a strong benefits package doesn’t have to break the bank. By exploring lesser-known, cost-effective solutions, small businesses can still provide comprehensive options to employees.

Strengthen your employee onboarding process

First impressions matter more than you might think, and your onboarding process for new hires can have a lasting impact. The findings below come from the article “Employee Onboarding Statistics: Top Trends & Insights” by Devlin Peck, and illustrate just how important the onboarding process is:

• Employees with a better onboarding experience are 2.6 times more likely to feel satisfied at work.
• About seven in 10 employees are more likely to stay for three or more years after a positive onboarding experience.
• A strong onboarding approach improves revenue growth by 2.5 times and profit by 1.5 times.
• Effective onboarding can improve employee retention by 52% and productivity by 60%.

The employee onboarding experience involves more than simply filling out new hire forms, such as the W-4 or I-9, and signing off on the company handbook. It’s about setting the tone for an employee’s future with your company.

When planning the onboarding process, consider the following questions: What does the new employees’ first day, or week, look like? Are they fully aware of their job description? Is their workspace set up and ready for them to start? Have they been introduced to the other staff? It’s also wise to consult an HR professional to help tailor your approach.

Fine-tuning the employee onboarding process is an affordable way to increase employee retention. When you think about creating a great culture within your organization, it all starts with these types of processes.

Redefine workplace culture

The idea of “working to live, not living to work” has become more than just a saying for today’s job seekers. For small businesses competing for talent, fostering a positive workplace culture and offering flexibility are ways to stand out.

Providing added office perks like wellness programs, in-office gyms, free snacks or coffee or places to unwind are becoming more appealing to employees, and they can make a big difference in how people feel about coming to work. Similarly, celebrating milestones such as hitting a major project deadline, a birthday or the holidays can help foster connection and boost team morale. These moments don’t have to be extravagant. Even small gestures can go a long way.

Providing flexibility in where and when employees work can be just as important. Whether it’s allowing someone to work from home to care for a sick child or pet, adjusting their work hours for personal needs or making sure they take time off without guilt, flexibility allows employees to manage life without sacrificing performance.

Develop your employees

Hiring is hard, but retention is even harder. One of the most effective ways to retain employees is to invest in their growth. Small businesses may not always have clear-cut promotion tracks, but that doesn’t mean they can’t provide other pathways for continued success. Offering stretch assignments, mentorship programs, cross-training and more can help employees gain new skills and feel more invested in the business.

When people feel heard and valued and can see a future with the company, they’re far more likely to stay.

Final thoughts

For small businesses, staying competitive in today’s hiring landscape doesn’t require matching the resources of larger companies — it requires being intentional. It is also important to work with partners you trust to offer honest, strategic guidance on all your available options. With the right approach, small businesses can create a workplace that draws people in and makes them want to stay without overextending their budget.

Greg Cullen is the Director of Business Development at 1RDG, the financial center, which provides businesses with a full range of management (payroll, benefits, HR), compliance, and advisory services.