How to manage employees as a small business owner: Essential tips for productivity and retention

1Setting goals and objectives for employees

Managers should set clear goals and objectives to help employees understand what they're working toward and how they contribute to overall business success. For example, employees may be expected to meet a specific sales quota or resolve a certain number of customer support requests or work remotely a few days a week.

Setting clear employee performance goals can provide much-needed structure for your team members, keeping them motivated as your business grows.

2Provide professional training for employees

Give employees the tools, skills, and knowledge they need to succeed in their roles and evolve as professionals.

For guidance on how to train employees effectively, consider exploring resources that offer structured training programs tailored to your industry. When considering how to hire employees, look for candidates willing to learn and grow within your company culture. As a hiring manager, consider prioritizing the current skills and developmental potential of your prospective team members.

Training employees is an ongoing process that needs to adapt to evolving industry standards as well as individual career aspirations. By staying committed to continuous learning, you can position your business and its employees for long-term success.

3Review employees’ performance

Review employees' performance on a regular basis — such as monthly or quarterly — to make sure people are tracking toward their goals, satisfied in their roles, and acknowledged for their work. For example, small business managers may establish a monthly performance appraisal meeting with each employee to assess their performance and provide feedback.

Performance reviews shouldn’t just be about evaluating an employee’s work. They should also be tied to tangible rewards, as a strong compensation and advancement strategy ensures top performers feel valued and remain engaged. Employees may expect a pay increase or promotion based on their performance. Companies should have a structured plan in place to address this.

If performance reviews happen more than once a year, establish clear guidelines on when raises or promotions occur to maintain motivation and prevent frustration. This could include defining salary increase percentages based on performance metrics, offering skill-based promotions, or implementing milestone-based bonuses.

4Be communicative with employees and vice versa

Another skill you should learn when learning how to manage employees is being communicative and upfront — both during scheduled performance reviews and throughout each workday as needed. If a problem arises, address it head-on with clear, constructive communication. If an employee is doing a particularly good job, let them know by providing positive reinforcement.

On the flip side, encourage employees to communicate with their managers as well. Whether through instant messaging platforms, emails, feedback forms, or good old-fashioned in-person conversations, knowing how to train employees is key to creating an open channel of communication for voicing needs and ideas in real time.

5Build trust with your employees

Building trust is important in the workplace. Employees should feel safe and comfortable enough to ask challenging questions, try out new strategies, and take guided risks.

To start, small business managers can use these tips to learn how to manage employees and build trust:

• Accept feedback and avoid giving defensive responses
• Treat all employees equally regardless of their status or experience
• Invest in long-term employee relationships by providing opportunities for growth
• Encourage collaboration and team-building

6Always support your employees

Take proactive steps to support your employees professionally and personally, when appropriate. Supporting employee mental health and well-being can help reduce burnout and increase job satisfaction. For instance, you may provide opportunities for career advancement, improving work-life balance, and practicing self-care.

Whether you’re learning how to train employees or how to start a small business, prioritizing employee support is crucial. So how can managers support employees? Begin with these quick tips:

• Accommodate flexibility in work arrangements when possible
• Offer training, skill development, and career advancement paths
• Pay attention to employees' concerns, ideas, and feedback, showing that their opinions matter
• Offer resources for physical and mental well-being, such as mental health or wellness days

7Reward your employees for their performance

Small business managers should celebrate employees for a job well done. This can occur throughout the year, and does not necessarily have to be tied to performance reviews. Rewarding employees for their work helps boost morale and encourage future success. It also shows employees that their efforts are valued and appreciated.

There are many ways to reward employees for their performance, such as through monetary compensation, special perks or bonuses, public acknowledgment, and one-on-one feedback.

8Offer a benefits package to help retain employees

One way to attract and retain employees is by offering a competitive company benefits package. For example, you may offer health insurance options, paid leave, perks for remote workers, and retirement plans. These perks can go a long way in helping manage employees effectively and improve employee retention. Offering added value on top of compensation helps to not just attract top talent but also encourages their long-term commitment to your business.

9Motivate your team for peak performance

Wondering how to motivate employees as a manager? There are several ways you can work to energize your team. Here are some examples:

• Mentorship and coaching: Pair experienced employees with newcomers for guidance and skill development.
• Team building: Organize team-building activities, outings, or casual gatherings to strengthen interpersonal relationships.
• Innovation: Encourage idea sharing and experimentation, allowing employees to contribute meaningfully and creatively.
• Peer-to-peer recognition: Implement a system where team members can acknowledge each other's contributions.
• Gamification: Introduce friendly competitions, challenges, or point-based systems to make tasks more engaging.

10Know how to manage workload of employees and balance with well-being

Learning how to manage employees can sometimes be a challenge. That’s why balancing workload and well-being is key to small business employee management. Whether you’re looking for tips for managers or tips for new business owners, these strategies can help create a healthier, more productive workplace:

• Allow employees to work remotely or have flexible hours to balance work and personal commitments.
• Create an atmosphere where employees feel comfortable discussing concerns with management.
• Design a comfortable workspace with ergonomic furniture and adequate lighting.
• Encourage employees to take short breaks to stretch, relax, and recharge during the workday.
• Offer access to counseling services or employee assistance programs for emotional and mental well-being.
• Ensure workloads are reasonable and manageable to avoid burnout. Allow employees to take sick days or personal days when needed.