When selling a business, one metric potential buyers should look at is staff retention.  If yours is lower than the industry average, it represents a risk for a buyer.  What is causing it?  What will the new owner need to invest to fix the problem?  Can you fix it before you sell it?  Retention, after all, is not an intangible business concept but instead a strategic competitive advantage – or disadvantage, if it is too low.

For every successful business, the essential connections among the systems, strategies, support, and clients are human connections. And through the strategic and tactical operations of the business it is human wisdom that results.  As a business owner looking to sell a business, you are looking to demonstrably stabilize and monetize that wisdom and value.

Thoughtful creation and execution of a retention strategy can result in a higher business valuation. The research and case studies agree on one thing – whether you choose to create a retention strategy or choose not to, you will still have one – your actions will communicate what it is, and the results will be visible to potential buyers.

Key questions to assess staff retention in your organization:

1. Is there currently a retention issue? How do you measure up against industry standards?
2. How is retention currently tracked and analyzed? Do certain thresholds in tenure tend to correlate with loss of valued employees?
3. Is there unhealthy turnover in any particular segment of your business?
4. What is turnover in the areas of the business that create the most value or return for the business? Where do people tend to go who leave that area – on to greater responsibilities, or out of the company?
5. How does your company adjust for anticipated retirements?
6. What is the primary impact of staff turnover currently – does it increase workload for those remaining, decrease quality and productivity, and or does the work just not get done?
7. Would your company benefit from a “Key Individual” program to identify those with expertise especially critical to the continuity of operations?
8. Do you have some method for capturing the knowledge of valued workers so it can be incorporated into the resources of the company e.g. knowledge management? Document management system? Even robust Intranet?

Developing a powerful retention strategy is pragmatic and truly increases your business value.  As a business owner, ensure the use of your organizations’ staff retention priorities to tailor compensation, benefits, vacation and career development policies to reward results, performance, attitude, initiative, and to align people-oriented programs toward the issues that most worry employees.

Whether the specifics are to make employees happier about their employers, their career growth in their jobs, or their personal growth in general, hiring and retaining happier employees means fewer costs from turnover and greater productivity for the organization.

A potential buyer, unless a turnaround expert, wants to buy an enterprise that is thriving from both a profit and people perspective.  When selling a company, address retention issues and make yours a strength the market will reward.

I invite you to use these ideas during your journey to sell a business.

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