What SMEs must rethink to retain talent in 2026
2026 is well underway, and, for SMEs, holding onto staff in an increasingly competitive marketplace is trumping initial recruitment in terms of risk. The reasons for this are manifold and evolving faster than many employers realise.
The new What Workers Want survey, reveals 38% are likely to look for a new role within the next year. While seeking flexible working models remains one of the key drivers of job changes. Simultaneously, AI is quietly reshaping roles, increasing scope and responsibility, often without leading to salary reviews.
In the face of this rapidly changing landscape, HR leaders must take strategic action to meet these new realities head on, and, in doing so, retain a satisfied, committed workforce.
Company culture is key to workforce wellbeing
According to SHRM’s Global Workplace Culture Report , cultivating a strong company culture is a “strategic imperative that directly impacts performance, retention … and long-term success.” 83% of employees who rate their workplace culture positively are motivated to ensure their work is high-quality, showing that prioritising company culture is a win-win – benefiting employers and employees alike.
In today’s dynamic workplace, leaders need to be aware of cultural differences and DE&I standards, as well as considering the Gen-Z workforce’s outlook – which can clash with more traditional, hierarchical ways of working.
One way of enhancing workplace culture is through leading by example when it comes to embodying and promoting company values – for example, encouraging annual leave and celebrating achievements. A Deloitte study shows that finding meaning in their work triples an employee’s likelihood of remaining.
Another key factor impacting company culture at present is AI. Workers report feeling confused and insecure about the implementation of AI in their workplaces. Clear communication around how AI is being used and how this will impact roles will help to assuage fear of replacement by AI and help staff feel secure.
Consistent benchmarking prevents turnover
The working world no longer evolves gradually. Now, the reality for businesses can change in weeks, or even days – with new technologies, economic fluctuations, and regulatory updates often happening faster than employers can respond.
Many companies only review salaries on an annual basis, however, workers are acutely aware there are other opportunities available and won’t hesitate to leave if they feel they are being lowballed or unsupported in their current roles.
Continuously assessing factors impacting workers, benchmarking salaries with regularity, and conducting quarterly ‘pulse checks’ on your pay structures will allow leaders to react to factors like rising living costs, statutory changes, or role adjustment due to AI, in time to retain employees.
Salary benchmarking reports also consider desired local benefits, such as flexible working models, allowing SMEs to factor these into their packages, as 51% of employees without flexible options are likely to look elsewhere, and 72% of Gen Z workers would reject a role based on lack of flexibility.
By getting ahead of workers’ requirements, SMEs can halt preventable turnover, while creating a supportive environment where employees feel recognised. After all, workers repeatedly cite feeling respected and valued as vital if remaining with an employer.
Salary satisfaction costs less long-term
Today’s workers increasingly expect salary transparency, while online tools coupled with peer comparisons across industries allow workers to develop an increased awareness of what is available.
In addition, the concept of ‘market rate’ has become increasingly ambiguous due to the emergence of new roles and working models, such as AI-augmented positions, and hybrid arrangements – which lack historical pay structures on which to base remuneration decisions.
Benchmarking compensation, ensuring competitive salaries and offering specialised bonus or reward schemes can deter employees from moving jobs.
While these tactics may seem pricier in the short-term, investing in long-term retention is actually a cost-saving measure. New research shows that replacing an employee could cost between 50% and four times that individual’s yearly salary. These striking figures serve to demonstrate just how important it is to build a strong retention strategy, not only to look after employee wellbeing, but also to reduce expenditure over time.
SMEs don’t need to offer the highest salary in their sector to retain a satisfied workforce. Instead, they should focus on communication, transparency, and employee wellbeing.
Regularly reviewing remuneration, providing flexible working arrangements, generous annual leave, and clear progression pathways will contribute to fostering organisational longevity and a strong workplace culture, as can ensuring clear communication regarding the use of AI and what impact this will have on current roles.
For SMEs, retention in 2026 means taking a dynamic and considered approach, one that allows for constant monitoring of internal and external actors – making room for innovation and growth to continue far into the future.
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