Every year during Small Business Week, we celebrate the grit, innovation, and heart that small businesses bring to our communities and economy. But behind every thriving small business is more than just a clever product or a strong service offering.
There’s a team of people working hard to make that small business a success.
And behind every great team? Great human resource practices thoughtfully applied.
Yet, as we mark another Small Business Week, it's clear that many teams are struggling. Polling firm Gallup reports that employee engagement fell to a 10-year low in 2024, with only 31% of employees saying they feel engaged. Worse still, many business owners and leaders don’t seem to realize it. According to HR Dive, 83% of leaders surveyed believed their workforce was fully engaged, but only 48% of employees said the same.
That 35-point disconnect is significant…and dangerous.
Many small businesses overlook the power of HR here, however, because they imagine HR as a “big company” concept, requiring sprawling departments and complex systems. But the truth is, some of the most powerful HR practices are not only accessible to small teams, they're often better suited to them. With the right employee retention strategy, even a team of ten can build a workplace culture that rivals the largest corporations for loyalty, engagement, and retention. Here’s how to improve company culture and build unrivaled workforce loyalty at even the smallest of small businesses.
How Can I Build a Loyal Team in My Business?
Building a loyal team starts with treating your employees with respect and fairness. That begins with a personalized onboarding experience that helps new hires feel welcomed from day one. Offering flexibility, like flexible hours or role adaptability, shows you value their time and priorities. Regular recognition reinforces their contributions, and investing in their growth, even in small ways, shows you’re committed to their future. Together, these actions build trust and long-term loyalty.
Treat Your Employees Right
Foundationally, before anything else, just treat your team right. “Employees want to feel supported and seen by their employers,” Jordan Peace, CEO of Virginia-based lifestyle benefits firm Fringe, told the Society for Human Resource Management (SHRM), “and they'll be evaluating their loyalty based on how they were treated and respected."
Best-selling author and columnist Harvey Mackay agrees, writing, “Employee loyalty begins with employer loyalty. Your employees should know that if they do the job they were hired to do with a reasonable amount of competence and efficiency, you will support them. You will take an interest in their career advancement and give them the tools they need to perform effectively.”
This support isn’t just about tools and training, though; it’s about trust and respect. Customizable rewards and people-oriented policies that meet real-life needs create meaningful experiences that make employees feel seen. When small businesses treat employees with dignity, respect, and hope, the payoff is a more loyal, resilient team.
Onboarding That Matters
Onboarding isn’t just for enterprises with giant HR handbooks and mandatory training portals. In fact, small businesses have a unique advantage: they can make onboarding deeply personal.
When new hires are welcomed with a structured, thoughtful onboarding process, one that introduces them to not just their tasks, but the company’s story, values, and people, they immediately feel like part of something meaningful. And studies show that over two-thirds (69%) of employees who experience effective onboarding are likely to stay with an organization for at least three years.
Yet 43% of employees say their onboarding experience is little more than a day of orientation and an information packet. That’s a missed opportunity.
At a small business, this might mean pairing each new hire with a “buddy” on their first day, providing a hand-written welcome note from the owner, or hosting a casual lunch to introduce them to the team. These low-cost, high-impact gestures set the right tone, right from the start.
Flexibility: A Small Business Superpower
While large companies might boast gyms, gourmet cafeterias, and endless perks, small businesses often have the edge when it comes to the perk employees want most: flexibility.
Offering flexible work hours, remote work options, or customized schedules allows small businesses to meet employees where they are. Flexibility shows trust, respects employees’ lives outside of work, and can dramatically improve satisfaction. Some high-profile return-to-office mandates notwithstanding, the Covid-19 pandemic simply permanently altered how most workers think about their physical workplace and schedule.
And that new perspective now manifests in a keen desire for more flexibility. Research from remote work jobsite FlexJobs shows that 79% of employees would be more loyal to their employer if they had flexible work options. Flexible work can also help attract talent in the first place; a study in the Journal of Occupational and Organizational Psychology found that job applicants were more drawn to organizations offering flexible arrangements.
For a small business, flexibility might look like letting an employee adjust their hours to accommodate school drop-offs or allowing a hybrid work model that prioritizes outcomes over office face time. It’s an approach that builds loyalty without adding significant costs and often leads to greater productivity and commitment in return.
Recognition: The Secret Weapon
Employees clearly crave recognition, yet this is an area that’s hugely lacking in most workplaces. According to Gallup, fewer than one in three employees agree that there’s anyone encouraging them in the workplace. Yet employees who feel recognized are 45-55% less likely to leave their jobs after two years.
And recognition is so simple and easy even for a small business to implement. The best part? Recognition doesn’t have to be formal or expensive. A public thank-you in a team meeting, a quick “great job” email, a small bonus or gift card for an extraordinary effort: these simple gestures compound over time, creating a culture where employees feel seen and valued.
Professional Growth: Big Dreams, Small Teams
People as individuals want to grow as much as organizations do as businesses. A survey from The Conference Board found that 58% of workers would likely leave an employer who doesn't invest in their development.
Admittedly, professional development opportunities often seem out of reach for small businesses, but creative thinking can open up powerful possibilities. Small businesses can:
- Encourage job shadowing across functions
- Offer stipends for online courses or certifications
- Host “lunch and learn” sessions where team members share expertise
- Support attendance at local conferences or virtual industry events
Investing in employee growth sends a clear message: “We believe in you, and we see your future here.” That investment pays off. Employees who feel their employer is committed to their development are significantly more likely to stay and to recommend the business to others.
Intentional Culture Matters
Culture happens whether you design it or not. In small businesses, where teams are tightly knit, culture can be either your greatest strength or your biggest vulnerability.
Intentional culture-building starts with clearly defined values and traditions that make employees feel included. “We know that toxic corporate culture is one of the greatest drivers of attrition,” Suzi Okpere, Group Head, HR and Corporate Services at Librod Energy Services, told Senior Executive. “By promoting inclusion and psychological safety, we’re seeing employees more engaged and less likely to look elsewhere.”
Small businesses have the opportunity to be deeply intentional. They can define their values (like respect, creativity, and accountability) and weave them into daily operations. They can create traditions that bond teams, whether it’s “first Friday” potlucks, annual volunteer days, or team storytelling sessions. By investing even a little energy into codifying and celebrating company culture, small businesses can create internal communities where people feel connected, committed, and proud to belong.
How to Improve Company Culture: Employee Retention Strategy Powered by the Right Partners
Of course, there are limits to what a small business can do on its own. Compliance challenges, competitive benefits packages, and evolving HR best practices can be daunting without expert support.
That’s where a Professional Employer Organization (PEO) can become a game-changer. A PEO partners with small businesses to provide access to big-business HR services—such as comprehensive benefits, payroll administration, compliance support, and HR consulting—at a cost and scale that’s friendly to small business budgets.
Working with a PEO allows small businesses to:
- Offer attractive benefits that rival those of much larger employers
- Stay on top of complex employment laws and regulations
- Access expert guidance for building and maintaining a strong HR foundation
In short, partnering with a PEO helps small businesses amplify their impact—making it easier to attract and retain great people, while staying focused on what they do best.
Small Business Week, Year-Round Impact
Small businesses are often called “the backbone of the economy,” but they are more than that. They are the heart and soul of our communities. They create places where people work not just for a paycheck, but for a purpose.
When small businesses invest in smart, human-centered HR practices and employee retention strategy, they unlock extraordinary loyalty and dedication. They build not just teams, but families who are willing to go the extra mile to innovate, to problem-solve, and to grow together.
When small businesses partner with a Professional Employer Organization (PEO), they gain more than just HR support. They gain the tools to build loyal, high-performing teams, support compliance, and create a workplace culture that fuels long term success. For more information how a PEO like CoAdvantage could help you, learn more about our HR Administration services.
**The information provided on this website is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and completeness of the information, we make no guarantees about its correctness, completeness, or applicability to your specific circumstances. Laws and regulations are subject to change, and you should consult a qualified legal professional before making any decisions based on the information provided here.