How to Retain Workers without a Non-Compete

While the recent Federal Trade Commission’s (FTC’s) final rule banning noncompete agreements was blocked by a Texas court, this doesn’t mean retaining your employees is a no-brainer.

Recall that employees in states that already limit non-competes have freedom to move between employers within the same industry, which can help increase competition for talent. And as remote work and multi-state operations become increasingly the norm, note that the permissible scope of non-compete agreements may vary from state to state, limiting what interests an employer may be able to protect in a non-compete agreement. So, it is still vital for employers to find other ways to retain their top employees.

Retaining employees is essential for helping to optimize your HR costs

In addition to lost productivity and employee morale, there can be a real impact on turnover costs to replace your employees who leave for what they think are greener pastures with competitors.

According to the Society for Human Resource Management (SHRM), the average cost to hire a new employee is $4,700, and the average cost of onboarding is $4,100. However, the total cost to hire an employee can be as large as three to four times the position's annual wage.

So, besides offering more competitive pay, what can you do to help retain your workers who may be wooed by competitors if you can’t rely on most existing non-compete agreements? For many workers, benefits can be a differentiating factor. A 2023 study showed that more than half of the employees are somewhat likely to accept a new job with lower pay but with more generous benefit offerings.

Offering workers better benefits can significantly help reduce attrition by addressing their needs and improving job satisfaction. Here are some top ways:

1. Enhanced Job Satisfaction: Providing benefits such as broad health insurance, retirement plans, and paid time off can enhance overall job satisfaction. When employees feel supported by you and have access to resources that contribute to their well-being, they are more likely to feel valued and committed to their job.
2. Increased Employee Loyalty: Offering benefits can foster a sense of loyalty among employees. When workers feel that you care about their long-term financial- and personal well-being, they are more likely to remain with the company rather than seeking opportunities elsewhere. This loyalty can help lower turnover rates and reduce costs associated with hiring and training new employees.
3. Attract Top Talent: Remember, a lack of non-compete agreements works two ways. Competitive benefit packages can attract top talent to your company. In a competitive job market, businesses that offer comprehensive benefits stand out as desirable employers. By providing attractive benefits, your company can draw skilled individuals who are seeking opportunities for growth and stability from others in your industry.

Overall, offering workers benefits demonstrates a commitment to employee well-being, fosters loyalty, and helps to attract and retain top talent, all of which can contribute to reducing attrition at a small business.