Your best employee just accepted a LinkedIn recruiter’s message. You won’t know until they give two weeks notice. By then, it’s too late.
This happens to service business owners constantly. The pattern is predictable and expensive. A great employee joins your team, works 12 to 24 months while you invest in training and development, then leaves for what they call a better opportunity. You assume it’s about money and consider raising their pay. But exit interviews reveal the real reasons have nothing to do with compensation. They mention lack of growth opportunities, unclear expectations, poor work-life balance, feeling undervalued by leadership.
The cost shows up everywhere. Client complaints about the new person who doesn’t know their account. Projects taking 30 percent longer because the replacement is still learning. You working more hours to cover gaps in knowledge and relationships. The financial impact gets worse when you calculate what replacing an employee actually costs.
Calculate Your True Cost of Turnover
Most business owners dramatically underestimate what turnover costs. Here’s the reality in three questions.
How many employees left your business last year? Write that number down. What’s the average salary of those positions? Multiply the number of employees who left by their average salary. Now multiply that total by 1.5. That’s the conservative estimate of what turnover cost you last year.
A business that lost 4 employees averaging $50,000 in salary didn’t just lose $200,000 in payroll. They lost $300,000 in total replacement costs. That includes recruiting expenses, training time, lost productivity during the learning curve, mistakes made by inexperienced workers, client relationship disruption, team morale impact, and the owner’s time spent interviewing and onboarding instead of growing the business.
Research shows replacing an employee costs between 50 and 200 percent of their annual salary depending on the role and industry. The higher the skill level and client relationship responsibility, the higher the replacement cost. Your $50,000 employee might actually cost $75,000 to $100,000 to replace when you account for everything.
The pattern across service businesses reveals something important. You’re not losing employees because you can’t afford to pay more. You’re losing them because your competitors position themselves as better places to work. Your competitors became the employer of choice while you stayed the employer of necessity. Employees work for you because they need a job, not because they want this job specifically.
The Employer of Choice Solution
What if your business became the place employees fight to work for instead of the place they’re looking to leave? That’s not wishful thinking or unrealistic optimism. It’s a strategic positioning decision called becoming the Employer of Choice.
An Employer of Choice is a business that prospective employees have a strong desire to work for and current staff have no reason to leave. Your business becomes sought after by employees in the marketplace. When you post a job opening, qualified candidates apply within hours. When competitors try to recruit your team members, they decline without considering the offer. You become known as the best place to work in your industry and geographic area.
This positioning creates a direct connection to profit that most business owners miss. Employee retention is one of the seven profit levers in every business, and it impacts almost every other lever simultaneously.
What’s a Good Retention Rate?
Before implementing any employee retention strategies, you need to know where you stand. Your retention rate is calculated by taking the number of employees who stayed for a full year divided by your total number of employees at the start of that year, multiplied by 100.
If you started the year with 10 employees and 7 of them are still with you 12 months later, your retention rate is 70 percent. Industry benchmarks show that 70 to 85 percent retention is typical for service businesses. Retention rates above 90 percent indicate you’ve become an employer of choice in your market. Retention below 70 percent signals a serious problem that’s costing you significant profit.
A service business with $500,000 in annual revenue and 70 percent retention is spending approximately $45,000 per year just replacing employees. That same business improving retention to 85 percent would reduce replacement costs to $22,500 annually. The $22,500 difference drops straight to profit. But the bigger impact shows up in client retention, service quality consistency, and the owner’s ability to focus on strategic growth instead of constantly recruiting and training.
There’s a pattern across service businesses that understand this connection. When employee retention improves by 15 percentage points, client retention typically improves by 8 to 12 percentage points. Why? Because clients work with people, not companies. Consistency in who serves them creates trust and loyalty. When your team turns over constantly, clients notice and start exploring alternatives.
The 4 Pillars Framework
Becoming the Employer of Choice isn’t about offering ping pong tables or casual Friday dress codes. Those are perks that might make the workplace more enjoyable, but they don’t address the fundamental question employees ask themselves: Is this the best place for me to work, or should I keep looking?
The answer to that question depends on your Position of Market Dominance as an employer. This framework has four specific pillars that work together to create positioning that separates you from every competitor in your market. The structure isn’t complex, but it does require strategic thinking about what employees actually want versus what you assume they want.
An accounting firm facing massive turnover during tax season demonstrated how this works. Their competitors all operated the same way with 70-plus hour work weeks during January through April, mandatory office attendance, and the expectation that tax season meant personal life disappears. Every firm in the market accepted these conditions as industry standard. The firm that became employer of choice asked a different question. What if we challenged the industry standard and offered what accountants actually want?
Their Position of Market Dominance message read: Can’t Face the Long Hours and High Stress of Yet Another Tax Season? At Acme Accounting, Work from Home, Get Half-Day Fridays, Not Only During Tax Season But All Year Long. Applications from qualified CPAs increased 400 percent within 60 days. Top talent from competitor firms started reaching out directly asking about open positions. The firm didn’t raise salaries. They changed positioning.
The 4 Pillars of Employer of Choice Positioning
Creating your employer of choice positioning requires a systematic approach. These four pillars build on each other to create a message that makes you the unequivocal employer of choice in your market.
Pillar 1: Understand Current Employee Frustrations
The foundation starts with entering the conversation employees are already having with themselves about their current job conditions, frustrations, and desires. You can’t position yourself as different until you know what employees consider the same across all the options they’re evaluating.
This understanding comes from focus groups with your existing team, analysis of exit interviews from employees who left, informal conversations with candidates who interviewed but didn’t accept offers, and industry surveys about workplace satisfaction. The goal is identifying the most pressing issue or concern prospective employees have with your industry and other employers in your industry.
The pattern across service businesses reveals industry-specific frustrations that repeat constantly. Accounting firms face the long hours and tax season stress problem. Construction companies battle the weather-dependent schedule chaos that makes personal planning impossible. Marketing agencies struggle with the always-on client demands and expectation of weekend work. Healthcare practices deal with burnout from patient volume and administrative burden. The specific frustration varies by industry, but every industry has one that’s keeping good employees from staying or joining.
Why does this pillar matter so much? Because you can’t craft a compelling solution until you deeply understand the problem. Your competitors are offering the industry standard. You’re about to offer something employees actually want but can’t find elsewhere in your market.
Pillar 2: Identify What Employees Actually Want
Once you understand the frustrations, identify what solution employees desperately need. This often requires innovation because if you were already providing it, you wouldn’t be experiencing retention challenges in the first place.
The modern workforce wants different things than previous generations valued. Today’s employees, especially those under 45, prioritize work-life balance, remote flexibility, shorter work weeks, career development training, and feeling valued beyond their productivity metrics. Benefits that support emotional needs as individuals matter more than traditional compensation-only packages.
Examples of what drives retention include paid time off and holidays, remote working arrangements, flexible schedules, on-site childcare or childcare stipends, adoption assistance, four-day work weeks, career development opportunities, paid time off for volunteering, wellness initiatives, and implementing innovative ideas suggested by team members. When life demands more from your workforce, employers of choice get ahead of known stress factors and provide meaningful support.
The innovation opportunity exists because your competitors haven’t figured this out yet. A restoration company implemented four-day work weeks during slow seasons while maintaining full-time pay. A law firm offered fully remote work for senior attorneys with proven track records. An HVAC company guaranteed no weekend emergency calls for technicians with three or more years of tenure. These aren’t expensive benefits that require massive budget increases. They’re strategic positioning decisions that cost little but attract talent competitors can’t match.
The business that innovates to solve what employees actually want creates differentiation that money can’t easily copy. A competitor can match your salary. They have a much harder time matching your culture and positioning.
Pillar 3: Craft Your Position of Market Dominance Message
Your employer Position of Market Dominance has a specific structure. It’s a one-two punch that first addresses the pressing issue or frustration, then offers your clear and compelling solution. This isn’t a paragraph of corporate speak about your values. It’s a direct message that makes prospective employees immediately understand why working for you is fundamentally different.
The structure follows this pattern. First part: acknowledge the industry problem prospective employees face when working for your competitors. Second part: present your unique solution that solves it completely.
Industry-Specific PMD Examples
Accounting Firm: “Can’t Face the Long Hours and High Stress of Yet Another Tax Season? At Acme Accounting, Work from Home, Get Half-Day Fridays, Not Only During Tax Season But All Year Long.”
Shortened version: “Ditch the Long Hours. Have a Life. Work Half-Day Fridays During Tax Season AND All Year Long.”
Construction Company: “Tired of Unpredictable Schedules and Weather-Driven Chaos That Ruins Your Personal Plans? At BuildRight Construction, Guaranteed 40-Hour Weeks with Indoor Training Days When Weather Doesn’t Cooperate.”
HVAC Service Company: “Exhausted from Weekend Emergency Calls That Destroy Your Family Time? At Climate Solutions, Three-Plus Year Technicians Get Weekends Completely Off, Guaranteed.”
Marketing Agency: “Burned Out from Always-On Client Demands and Weekend Work Expectations? At Creative Partners, All Client Work Stays Monday Through Friday, No Weekend Emails, No After-Hours Emergencies.”
Dental Practice: “Overwhelmed by Patient Volume and Administrative Burden? At SmileCare Dental, Hygienists See Maximum 6 Patients Per Day with Full Administrative Support.”
Law Firm: “Drowning in Billable Hour Pressure and Office Politics? At Justice Partners, Senior Attorneys Work Fully Remote with Results-Based Performance Reviews, Not Time Tracking.”
The pattern across these examples shows the same structure. Acknowledge what frustrates employees about working in this industry. Offer a solution that competitors aren’t providing. Make it specific and concrete, not vague corporate promises.
Imagine an accountant working 70-hour weeks during tax season who’s required to commute to an office daily. The reaction to the accounting firm message would be immediate and intensely positive. That’s not manipulation. That’s speaking directly to what they actually want and offering a real solution they can’t find at competitor firms.
Pillar 4: Deploy and Refine Your PMD
Once created and tested, your Position of Market Dominance message gets deployed everywhere prospective employees might encounter information about working for you. This includes job posting headlines, your career page on the website, LinkedIn company culture sections, recruiting emails, interview conversations, employee referral requests, and company culture presentations at industry events.
The most powerful deployment comes from your existing workforce. Grounding your employer PMD in authentic stories and testimonials from current employees gives it credibility that no corporate messaging can match. Encourage current team members to share their views on what makes you their employer of choice. When employees voluntarily post on social media about half-day Fridays, remote flexibility, or career development opportunities, that authentic proof carries more weight than anything you say about yourself.
Put yourself in employees’ shoes through ongoing focus groups, quarterly surveys, team meetings, staff conferences, or regular informal conversations with individual team members. Narratives and themes become apparent over time. Shape them into a creative, coherent, and authentic employer Position of Market Dominance. As your industry evolves and employee priorities shift, refine your positioning to stay ahead of competitors who are still operating with the industry standard approach.
Success looks like lower recruiting costs because qualified candidates apply without expensive job board advertising. Hiring top talent becomes easier because your positioning attracts better candidates. Diversity and inclusion efforts improve because your message appeals to a broader talent pool. Employee referrals increase because team members want their friends working somewhere they genuinely enjoy. Retention rates climb from 70 percent to 85 or 90 percent. Training costs drop because you’re not constantly onboarding replacements. Client service consistency improves because experienced team members handle relationships. The owner spends less time on human resources issues and more time on strategic growth.
See Your Position of Market Dominance
You can’t afford another year of losing your best employees to competitors who position themselves better. Every employee who leaves costs you 50 to 200 percent of their salary in replacement costs. Add the hidden costs in lost productivity, client relationship disruption, and team morale damage, and the profit impact becomes massive.
The January job search season is already starting. Your best employees are updating LinkedIn profiles, responding to recruiter messages, and exploring better opportunities. By the time they give two weeks notice, it’s too late to counter-offer your way out of the problem. Counter offers rarely work because the decision to leave was never just about money in the first place. You need a different strategy that addresses why employees actually leave.
Becoming the Employer of Choice isn’t about spending more on compensation packages. It’s about strategic positioning that makes your business the place employees fight to work for instead of the place they’re looking to leave. That positioning starts with understanding what employees in your industry actually want, what frustrates them about working for competitors, and creating a clear message that separates you from every other option in the market.
Create Your Employer of Choice Positioning
I’m currently interviewing service business owners for the second edition of Profit Foundation, my book on profit strategies for small businesses. During these 45-minute conversations, I walk through the Position of Market Dominance framework and help you identify what frustrates employees in your industry and what unique positioning would make you the employer of choice in your market.
It’s a research conversation, not a sales pitch. I’m gathering insights for the book while sharing what I’m learning about employee retention strategies across different industries. Most business owners walk away with specific language for their employer positioning and two or three immediate changes they can make to improve retention in the next 90 days.
If you’d like to participate and receive a free copy of the book when it’s published in 2026, you can schedule here: https://mediaaceadvisors.com/contact/
There’s no cost and no sales pitch. These are real research conversations. I’ll help you see what your Position of Market Dominance could be, you’ll discover which employee retention strategies fit your specific business and industry, and I’ll get insights for the book. The January slots are filling up as employees start their annual job search season, so if this interests you, schedule before the end of the month.
Stop losing your best employees to competitors. Start becoming the employer they can’t imagine leaving.
About the Author: I’m Ryan Herrst with Media Ace Advisors. I help service business owners with annual revenue between $250,000 and $3 million identify hidden profit opportunities and create clear pathways to growth. My approach focuses on systematic improvements across all seven profit levers, with special emphasis on employee retention strategies that reduce turnover costs and improve service consistency without increasing compensation budgets.