6 Ways to Keep Your Employees Happy

The Importance of Keeping Your Employees Happy and Retaining Staff

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Even in hard economic times employee turnover can be one of the most challenging aspects of running a business.  Recruiting, hiring, and training employees is expensive and time consuming, and high employee turnover rates reduce productivity and affect morale.

Staff Turnover Can Be Expensive

Staff turnover is not so much of an issue in, for example, the fast food industry where it is common to have over 100% turnover of employees per year, but in In industries such as the tech sector where knowledge retention is key to the business, losing a valuable employee can cripple the organization.

Employee turnover can directly affect the bottom line - regular customers form relationships to particular employees and sometimes prefer to deal with them. If the employee goes out the door to a competitor, the customer often goes with them.

Why Do Employees Leave?

According to employee surveys, some of the top reasons for a worker to leave are:

  • Sub-standard wages and benefits
  • Toxic work environment
  • Lack of flexibility in when and where they work
  • Dissatisfaction with management

How Do You Retain Quality Staff? 

By paying competitive wages and benefits and providing a respectful, rewarding, fun, and challenging work environment.  Studies have shown that employees are more productive and creative when they have more positive emotions.  In fact, a Gallup study found that business sales and profits tend to correlate with employee attitudes and perceptions of their work environment.

Here are some ways to keep your employees happy and your business running smoothly.

Pay Your Employees Well and Provide Benefits

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Retaining quality staff means paying them competitive wages and benefits. Loyalty has limits and over the long term if your rates of pay are lower than average chances are you will lose staff. 

A business associate of mine owns a roofing company and has had the same group of a half-dozen employees for several years in an industry that has a strong demand for skilled workers. He keeps his employees by paying above-average wages and providing benefits and profit sharing.

If you are not familiar with the rates of pay for various occupations in your area there are online sites that that allow you to compare rates of pay for different occupations in different locations.


Offering a benefit package for full-time staff may be the deciding factor for getting a quality prospective employee to accept your job offer. In addition to the required statutory benefits such as Canada Pension Plan (CPP), Employment Insurance (EI), Worker's Compensation Insurance (WCB), and paid vacations/holidays, many employers cover the cost of basic provincial health care, extended health care, and other benefits such as life insurance or retirement contributions.

Most employers only offer benefits to full-time staff (e.g. those that work more than 30 hours per week). Consider offering benefits to part-time employees as well.

Other Ways to Reward Employees Financially

Profit sharing can be an excellent way to motivate and reward employees.  Other schemes such as bonuses (either in the form of cash or goods and services such as a company-supplied cell phone or a fitness membership) can also be used to reward employees. (See taxable benefits.)

Communication - Keep Employees in the Loop

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Good communication is key to employee retention. Poor communication in the workplace is one of the major causes of employee dissatisfaction with an organization. In fact, a study conducted by Watson & Wyatt showed that organizations that communicate more effectively are more likely to have lower employee turnover levels, and similar studies have shown that poor communication can lead to higher rates of absenteeism.

When employees feel uniformed they often tend to make "worst-case" assumptions. Closed-door meetings and whispered conversations stoke the rumor mill and feed people's natural insecurities.

Good  managers/business owners know that keeping employees in the dark in not a recipe for business success.  Here are some tips to keep your employees in the loop and improve workplace morale.

  • Adopt an "open door" policy.
  • Have regular meetings or individual discussions with your employees.
  • Nip rumors in the bud by addressing them right away.
  • Be clear and concise with communication. Avoid "buzzwords".
  • Communicate both good and bad news.
  • Followup individual or group meetings with email summaries as required.
  • Make sure the deeds live up to the words! Lack of follow-through by management will quickly lead to loss of credibility with employees.

Pay Your Employees and Contractors on Time!

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In my varied experience as an employee, contractor, and business owner/employer, nothing causes employee morale to plummet faster than missing payroll. Even though it may not be the case, most employees will immediately assume that the company is in financial difficulty and some may start looking for employment elsewhere.

Employment Standards Laws and Payroll

Every effort should be made to ensure that salaried/hourly employees are paid on time as per applicable laws. Employment standards laws regulating the issuance of paycheques vary from jurisdiction to jurisdiction - for example, in Ontario an employee must be issued a paycheque on the established pay date. Other provinces have a grace period of one or more days.

Keep Your Employees Informed

There can be many reasons for missing payroll - bank transfer issues, problems with a contracted payroll company, etc. As an employer it is vital to get in front of the issue by informing employees ahead of time if payroll will be missed. Missing payroll and keeping employees in the dark about the reason reflects very badly on management.

Pay Your Employees First

As a business owner my policy was always to pay my employees, contractors, and suppliers first and myself last. If company funds were short at payroll time because of late payment by a major client or greater than normal expenses I made up the difference out of my own pocket as required. 

Pay Your Contracted Staff on Time

For many contracted employees prompt payment is just as important as for salaried employees. Establish payment terms for your contract employees and pay their invoices on time. Maintaining a good reputation with the contractor community will benefit your company in the long run.

Create a Safe, Comfortable Physical Working Environment

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Employee Safety and Security Should Be a Priority

On average there are approximately 970 workplace fatalities per year in Canada, according to the Association of Workers' Compensation Boards of Canada (AWCBC). Construction, manufacturing, and health and social services are the most dangerous industries.

By law employers are responsible for providing a safe, secure working environment for their employees. In high-risk industries safety is an absolute priority. 

The rules governing workplace safety are dictated by the occupational health and safety acts in each province. Depending on the type of business, not having proper worker's compensation insurance can put your employees at risk and may be illegal.


Employers are also responsible for providing a workplace free from harassment. This includes threatening or intimidating behavior by co-workers or bosses, unwelcome physical contact, and discrimination based on race, religion, sex, etc.

Provide a Comfortable Working Environment

If your office or place of business looks like a dump, employees may treat it that way. Studies have shown that a comfortable working environment can boost morale and improve productivity.  Excessive clutter, broken furniture and peeling paint on the walls do not serve to motivate workers.

For employee comfort the working environment should have proper heating, cooling, ventilation, and lighting (preferably some natural light if possible). Where possible allow employees to personalize their workspace with family photos, plants, etc.

Define Employee Roles, Responsibilities, and Expectations

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One of the advantages of a small business is the flexibility in accommodating the individual needs of workers. However, establishing ground rules and applying them on a consistent basis creates a level playing field that is fair to all employees.

This includes clearly defined policies and procedures regarding start/finish times, breaks, lunch hours, sick leave, dress codes, safety, the use of cell phones and the internet, etc. Discussing such policies in advance with new employees will help to avoid problems in future.

If a particular employee requires extra accommodation such as additional leave due to family or medical issues or the need to work from home be sure the circumstances are explained to other employees to avoid the perception of preferential treatment.

Provide sound leadership and be consistent but allow as much flexibility as possible. For example, nowadays the option to telecommute or compress the work week is a high priority with many workers who are looking to improve their work-life balance.  If your employees enjoy social media consider allowing "social media" breaks, or have a daily specialty coffee or pastry break.

See also:

Use These Sample Policies in Your Workplace

How to Write Your Own Employee Handbook

A Sample Internet and Email Policy for Employees

Respect and Reward Your Employees

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Employees tend to treat customers the same way they are treated at work, so as a business owner it is in your best interest to create a respectful workplace environment that boosts morale and fosters teamwork.

Encourage workers to provide feedback and express their own opinions and ideas. If you implement a suggestion from an employee to improve some aspect of the business make sure that they get the recognition.

Single out staff members for a job well done. Do not be stingy with compliments, especially in group meetings. Be kind to your employees and show an interest in their outside activities - ask about their families or hobbies.

Celebrate birthday parties, retirements, or other special or milestone events. Adopt a charity and encourage employees to become involved. Have a "casual" Friday policy. Provide a few inexpensive perks. (See 10 Employee Perks Your Small Business Can Afford.)

Remember that employees have a life outside of work - don't schedule an important meeting at 4:30 PM on the Friday before a long weekend.

See also:

Respecting and rewarding your employees will go a long way toward keeping them happy and developing the kind of loyalty that will keep them around.