How to keep staff motivated and engaged as a small business

6 Min Read
A happy team - How to keep staff motivated and engaged

As a small business owner, having a team of motivated and hard-working employees is a key factor in determining business success. In fact, many studies have shown that engaged employees are a means of achieving both your customer and financial goals. 

But an engaged workforce isn’t a given, and one unmotivated employee can have a detrimental effect on the rest of the team. 

In this article, we have a look at the science behind employee engagement, the links between management style and underperforming employees, and how small businesses can increase employee engagement by making small but impactful changes.  

Why a performance problem is often a management problem

There’s no doubt that raising employee engagement levels has benefits across the entire business. A study found that employee engagement affects the majority of performance indicators including ‘customer metrics; profitability, productivity and quality, turnover, absenteeism and safety incidents.’ 

Similarly, a recent Bain & Company report concluded that for the majority of their clients, higher employee engagement translated to stronger customer relationships and, in turn, better financial performance. In short, when a company’s employees are more engaged, all parts of the business are positively affected in one way or another. 

Unfortunately, if you analyse employee data on a global scale, engagement is severely low: only roughly  30% of US employees are engaged at work, while worldwide this figure sinks as low as 13%. And what’s worse, these numbers have remained low over 12 years, meaning that employees could be contributing so much more if engaged properly. 

So what’s going on? 

According to Gallup, an American analytics company that has studied the performance and engagement of millions of employees over the past two decades, managers account for at least 70% of variance in employee engagement scores across businesses. 

The management style of an individual has a huge effect on the work motivation of those they oversee. In fact, they calculated that if a company increased the number of talented managers and [as a result] doubled the rate of engaged employees, they could achieve, on average, 147% higher earnings per share than their competition. 

higher employee engagement translated to stronger customer relationships”

The science behind employee engagement

But what does this mean for small business owners, and how can you ensure that your management style is positively affecting employees? Let’s take a step back to understand the reasons why an employee may lack engagement or have performance issues in the first place. 

The most well-known definition of employee engagement is that of William Kahn, professor of organisational behaviour. In 1990, he published a paper called the ‘Psychological conditions of personal engagement and disengagement at work’, in which he defined engagement as the ‘harnessing of organisation members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally.

Kahn outlined three psychological conditions required to cultivate employee engagement, namely: 

  • Meaningfulness: the extent to which a workplace enables an employee to feel useful and valued. 
  • Safety: the extent to which a workplace fosters a trustworthy environment so an employee feels comfortable enough to voice their opinion without being shot down.
  • Availability: the extent to which an employee has the physical, emotional and psychological resources available to ‘bring their full self’ to work. In other words, to what extent you as a company empower your employees with the right tools, knowledge and time to complete their job.  

It goes without saying that companies experiencing increased employee turnover are likely lacking in one (or more) of the above psychological conditions, potentially as a result of management styles that fail to foster a positive working environment.

So what can you incorporate into your management style to achieve higher levels of engagement from your staff?

How to motivate underperforming staff

If you’re wondering how to deal with an underperforming employee or looking for ways to improve engagement across the board, you’ve come to the right place. There are certain changes you can make to encourage a positive workplace culture in accordance with Kahn’s three psychological conditions, which we’ve outlined for you below.


Every employee wants to feel that their work is being valued. And every employee wants to understand how their work fits into the bigger picture. In order to satisfy Kahn’s criteria of meaningfulness, ask yourself whether you’re providing enough feedback on work well done as it’s easy to fall into a trap of only giving feedback when something requires improving.

If an employee is struggling, letting them know when their work has helped reach a set business goal, for example, can go a long way. Another way to make an employee feel that their work is meaningful is by showing gratitude, but more on that later.


It’s important that employees feel they are able to be themselves at work, and that they have the freedom to experiment and make mistakes. As a manager, you can foster this type of environment by setting up a mentorship programme, either between peers or between yourself and the employee.

And when an employee does make a mistake, maintaining a positive attitude while explaining how it can be prevented is the most effective way of dealing with it.


It’s quite simple really: you’ll see better results from employees that are empowered to make their own decisions on how to execute tasks. Giving them this autonomy helps foster trust, and a trusting relationship is what keeps employees engaged and motivated.

As a manager, provide each employee with clear objectives that they can work towards, giving them the freedom to choose how to achieve these goals themselves. 

Employee engagement advice for small business owners

As a small business, it’s common to have close working relationships amongst team members. We often even hear of teams referring to themselves as a small ‘family’, and that’s a good thing. 

As such, treating people as partners, rather than employees, will go a long way. Involve them in the decision-making process to give them a sense of control and a say in how the team, and company, can reach its targets. Employees automatically are more inclined to work towards a common goal if they feel they’ve been involved in setting it from the start.

Encouraging two-way feedback is also another great way for small businesses to build up employee engagement. Sometimes simply asking how you as a business owner can improve your management style might teach you more than you might think.

Three changes you can make today

  • Implement team success reviews: To encourage engagement through meaningfulness, implement recurring team success reviews to help employees see the difference they’re making to the team and company as a whole. Ask each team member to talk about a recent task or project they’ve done a good job on, and how they achieved it in collaboration with an individual or the rest of the team. This is also an excellent way to help internal working relationships grow, thus satisfying Kahn’s required ‘safety’ condition.  
  • Introduce gamification to reach goals: Setting long term goals encourages the availability element of engagement, but who says reaching them can’t involve a little fun? Through the introduction of elements of gameplay, e.g. by providing small prizes for each milestone hit, you motivate employees to work harder to reach business goals all while having fun with it. 
  • Recognise hard-working employees: Introducing employee recognition is probably the oldest strategy in the book, but there’s a reason for that: it works. Going back to the meaningful element, employees want to be valued and are motivated to continue their hard work as a result. And because monetary recognition isn’t always an option for a small business, giving diligent staff members an extra day off or even a shout-out in the next internal meeting can be an effective alternative.  

Creating a win-win situation

Investing time and effort to increase employee engagement is really a win-win situation. While implementing management strategies to help your staff feel valued and recognised will increase job satisfaction on their end, you’ll be able to reap the financial rewards of high-performing employees as a business.

Because remember: to win in the marketplace, you have to first win in the workplace. 

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