Final answer:
Small businesses face challenges in retaining employees due to the limited resources for providing continuous rewards and growth opportunities, coupled with generational shifts in attitudes towards job loyalty. Economic conditions and restrictive labor laws can further complicate employee retention and hiring practices.
Step-by-step explanation:
- One reason small businesses are challenged in retaining employees is their inability to provide the same level of rewards and career development opportunities that larger companies can offer. This issue is particularly relevant when considering generational workforce changes.
- Millennials and Generation X employees regularly seek meaningful work, frequent rewards, praise, and feedback, which can be more difficult for small businesses to consistently provide due to resource constraints. Moreover, the expectations of job loyalty have shifted, with younger generations less likely to stay with one employer throughout their careers, in part due to a reduced expectation of employer loyalty.
- External factors such as economic recessions can also influence a company's ability to retain employees. During a recession, employers may initially retain workers to avoid the costs of recruiting and training new ones, but if demand for their product or service lags, layoffs may become necessary. This can result in losing experienced employees, compounding the challenge of employee retention once the economy recovers.
- Additionally, labor laws in some countries, like France, impose significant costs on businesses looking to fire or lay off workers, encouraging companies to be more cautious in their hiring, which could limit their ability to scale up operations and retain a stable workforce.