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If you think losing an employee doesn’t cost you anything, think again. According to a study from Forbes, the average cost of replacing an entry-level employee is about 50% of that employee’s annual salary. And the cost goes up the higher up the ladder an employee is—for mid-level employees, it’s 150% of their annual salary, and for high-level or highly specialized employees, it’s 400% of their annual salary.

So, do the math. If you lose 1 employee each month for a year—6 entry-level employees at $40,000 a year, 4 mid-level employees at $80,000 a year, and 2 senior-level employees at $120,000 a year—the cost to your small business is $1.5 million.

Clearly, high employee turnover could make your business less profitable. That’s a good reason to find ways to improve employee morale, engagement, and satisfaction in order to retain your staff over the long term.

With an Improved Job Market, Employees Are Leaving in Droves

An improving economy is generally good news for your business, but it also means that unemployment is down and employees have more options.

Figures from Ere Media indicate that 1 of every 3 new hires will quit his or her job within 6 months of being hired—and 1 out of 3 make the decision about staying or leaving within their first week on the job. Facing the high costs associated with replacing those employees, almost 4 of every 5 business leaders now rank employee retention as “important” or “urgent.”

Why Do Employees Leave?

Employees leave their current positions for many reasons, some of which you have little or no control over. For example, if someone decides to move to another state, there’s little you can do to change their decision.

But most of the causes of attrition are things you can influence. Among the top reasons employees leave for new jobs are a poor relationship with their boss or coworkers; another job that offers a higher salary or better benefits (like more flexibility or better health insurance); because they’re bored on the job; or because they don’t think their work is valued.

What most of these causes have in common is that they all contribute to poor engagement. According to Gallup’s daily tracking poll, less than 34% of American workers say they are “engaged” on the job.

When the majority of your employees are not engaged, morale suffers. When that leads to high turnover rates, morale suffers even more.

Said differently, if people work at a company where they don’t like their jobs, and where some of their closest friends have moved on, morale is going to be at rock bottom.

What Can You Do to Improve Employee Morale?

The good news is that there are specific actions you can take to improve your employees’ morale—and, in the process, reduce turnover and increase productivity and profitability.

Here are 5 things you can do to improve morale in your small business:

1. Celebrate your employees’ accomplishments

Most organizations spend a lot of time talking about failures, but almost none talking about successes. Take the time to celebrate your employees’ accomplishments! You can make employees a part of the process by asking them—at least once a year—to tell you what they consider their top achievements of the year. You can then congratulate them individually and host an annual event where you read out the top accomplishments of the year.

2. Mix up the daily routine

Doing the same things at the same times every day contributes to boredom and low morale. Find new ways of doing the same things and surprising your workers. For example, you could give them the option of flexible hours, let them perform some of their duties remotely from home, or give them more say into the contour of meetings.

3. Bring some fun into the office

When your employees go home at night, they find ways to unwind and relax. You can help them achieve a better work-life balance by bringing some of that fun into the workplace. For example, the online discounter, FatWallet, invites its 55 employees to a monthly “Game Day” with activities like Trivial Pursuit and bowling matches. Get creative and find ways to let your employees unwind on the job.

4. Let them volunteer—on your dime

Giving your employees an opportunity to perform community service a few hours each month builds camaraderie and morale. Let them choose the service organization they’ll work for, and be sure to pay them for those hours. They’ll come back to work refreshed and feeling good both about what they did and the fact that you let them do it.

5. Listen to your employees

If you’re not regularly using employee engagement surveys, you should seriously consider starting. The best way to find out what your workers like—and what they don’t—is to ask them. You can use online services like Survey Monkey to help you create your survey. The key is to take these surveys seriously, let your employees know you take them seriously, and make substantive changes directly related to what your employees are telling you. If they want greater flexibility in their jobs or group health insurance, work with them to turn those wants into realities.


The suggestions above are just a few of the ways you can improve morale among your employees. One of the best ways to boost morale, as we just mentioned, is to give your employees great health insurance benefits.

A good start is to read our free ebook, The Employer’s Guide to Group Health Insurance. This will explain what group health insurance is and how to create a plan for your business.

To learn more about our custom insurance solutions for small businesses in New Jersey and nationwide, request a quote today!