7 Tips to Help Small Businesses in Canada Boost Employee Morale and Engagement

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7 Tips to Help Managers Boost Employee Engagement for Small Business Workers

Offer flexible work schedules
Benchmark salaries
Get creative with benefits and perks
Support training and development
Embrace your smallness
Create a culture of belonging
Understand managers’ critical role

Canada’s 1.19 million small businesses aren’t just focused on making profits: they also build community ties and customer relationships. For public-facing businesses, the two are often one and the same.

That’s why, for 45 years now, the Business Development Bank of Canada (BDC) has celebrated Small Business Week during the third week of every October.

No matter who your customers are, building customer loyalty and satisfaction is key, which requires enthusiastic employees committed to supporting them. Unfortunately, finding the right workers, keeping them engaged, and building employee morale are among the top challenges of managing employees in a small business.

According to research for the 2025 Canada Salary Guide From Robert Half, 50% of small businesses cited finding candidates who align with company culture as their biggest hiring challenge, while 69% said they were somewhat or very concerned about keeping their teams motivated and engaged. 

If you’re a small business manager, here are some employee morale boosters to consider that will let your teams know they matter and remind them why working for your small business can be so fulfilling.

For many workers, flexible work schedules are no longer a nice-to-have; they are an expectation with an outsized impact on employee morale. More Canadian professionals (65%) cite flexible work schedules among their top three perks than any other accommodation, while 34% who aren’t seeking a new job don’t want to give up their current level of flexibility.

Fortunately for them, small businesses are more likely than their medium and large counterparts to offer flexible work schedules (97% versus 90% and 95%). This helps them not only attract and retain top-quality talent, but improve productivity and engagement, with 42% of workers saying they feel more engaged and productive when their employer offers flexible scheduling. Even a small adjustment in hours can make a commute smoother, a school pickup less rushed – and an employee happier.

Time and again, research shows that boosting employee morale and retaining a loyal workforce can be as simple as ensuring they’re competitively paid. According to the 2025 Canada Salary Guide From Robert Half, 92% of Canadian workers are concerned about inflation outpacing salary growth, 51% report feeling underpaid, and one third said they’ll look for a new role if their employer does not raise their salary.

The 43% of small businesses in Canada planning to increase employee salaries this year are the ones most likely to retain them. Meanwhile, the 32% of Canadian small businesses increasing starting salaries for new hires will have first crack at the ones who leave.

But while your employees have likely done their homework already, the Salary Guide can be an excellent tool for employers too. It reports the national average starting salaries for hundreds of positions, and its Salary Calculator can be used to localize the figures for your area.

Do your research to find out what the competition offers and make sure you’re paying the market rate or higher. Regularly benchmarking your salaries and making adjustments can help employees feel they are being fairly compensated, keeping  staff retention and employee engagement high.

For a small business employee benefits and perks can be nearly as important to retaining workers as compensation. In fact, 32% of employees told us the main reason they planned to look for a new job was for better benefits and perks, second only to salary.

Many candidates might think employee benefits for small business workers can’t match their larger counterparts, but the opposite is often true: Our Salary Guide research shows that 30% of small businesses plan to add new perks and benefits this year at a comparable rate to medium (30%) and large (32%) organizations.

To further differentiate themselves, the small business employee benefits packages Canada-based companies offer can frequently match or even exceed the coverage offered by their larger competitors. For example, employee benefits for small business are more likely to include extended health insurance, retirement savings plans, employee assistance programs, and pre-tax programs than their medium counterparts.

Perks can also help distinguish your business in the minds of your employees and show appreciation for their hard work. You don’t need to reach for extravagance either – creativity can be just as effective. With a smaller employee base to support, a monthly subscription to a popular entertainment streaming service, a subsidized gym membership, or an office- or home-delivered lunch on the last Friday of the month are all modest investments that can bring a smile to your workers’ faces. That’s likely why small businesses in Canada are more likely than their medium and large counterparts to provide flexible work schedules and subsidized meals or snacks.

If team morale has fallen by the wayside in recent years, it might be because your employees feel stuck in their careers. That kind of frustration can drive workers to look for opportunities elsewhere. To boost employee morale in your small business and keep valued workers on the payroll, talk to individuals about their career goals and discuss training and development strategies to help them advance.

Keep in mind that professional development is a win-win. Here are a few ideas to try:

Financial support for learning: For the truly industrious employee, one who’s willing to give up their evenings or weekends to study, reimbursement for college tuition or professional certification fees is a golden ticket. If that’s out of line with your budget, look for more affordable group memberships at LinkedIn Learning or other e-learning training sites. Training can serve a dual purpose when you invite employees to share what they learn with other team members (however, don’t make it a requirement to receive the training).

Cross-training: No matter the size of your business, cross-training is a smart practice. Training staff in roles not typically assigned to them allows employees to gain skills and experience. They can also get an inside look at roles they might be eyeing but are uncertain whether they want to pursue. And it gives your organization the backup it might need when someone is out for an extended time.

Mentoring: Sometimes the best resource is just down the hall. Ask your most seasoned employees to share their knowledge with colleagues, either through organized training sessions or continuous mentoring. If you can, give them a bonus or some other reward for the extra investment of their time.

Want to improve employee morale for small business workers? Don’t let them fall behind! Learn how leading employers throughout Canada are helping workers upskill for the future in this article.

Many Canadian consumers are passionately loyal to small businesses. They value the personalized service, uniqueness and community roots these companies display. That intimacy should be reinforced as part of your company culture.

Your team members already know how to make a client’s day, whether it’s a prompt and tailored response to a service request or simply remembering the client’s first name when they interact. By making team morale a priority, you’ll make customer service a priority too.

If a customer is delighted, make sure all of your team members hear about it. Praise people when they accomplish something a bigger firm would struggle to handle. Instill pride in your staff by reminding them why a small business is a great place to work.

If you know how to manage small business employees in a way that helps them become more customer-centric, you’ll see many positive returns for your efforts, including a good business reputation, repeat business – and of course, improved employee morale.

Many of Canada’s most successful small businesses cultivate a “family” feel that ensures everyone who works there feels they belong, fostering employee engagement and keeping everyone connected. By providing a collaborative and welcoming environment that recognizes everyone’s unique point of view, you can keep employee morale and engagement high.

Create opportunities for team members to get to know each other outside of work. Host a pizza party, schedule a virtual happy hour, or sponsor an employee networking group, after-work club, or sports team to help people bond on a personal level. Social activities are especially important for remote workers who may miss out on in-office conversations or activities that can help employees feel like part of the team.

Employee recognition programs are another way to instill pride. Numerous studies confirm that workers who receive recognition are much less likely to be burned out and more likely to be engaged and loyal. Take time to spotlight staff for specific achievements. Whether it singles out the accomplishments of one worker or an entire team, public recognition for a job very well done should be a part of any workplace culture. Even a personal note from the CEO can go a long way toward helping employees feel like they make an impact.

As a manager, don’t underestimate what you can do to improve employee engagement for small business workers. By and large, workplace culture is an organic, amorphous order of attitudes, practices and values. It can’t be codified, nor can it be created and imposed by a firm’s leadership. But company policies and your personal behaviour can influence and help shape the company’s culture and how employees build on it.

Demonstrate support, inclusivity and empathy through your own actions. Give your employees a sense of empowerment. When workers can make decisions on their own or with minimal direction, they will feel more invested in their roles and responsibilities.

Don’t let your employees slide into burnout. Instead, loudly and repeatedly promote a healthy work-life balance. If an individual or team is struggling to meet an important deadline, either bring in contract professionals to help or put aside your own work and pitch in yourself.

Mastering how to boost morale in the workplace is never a one-size-fits-all journey, especially for small businesses in Canada – what works for a small legal practice might not fly at an accounting firm or a boutique marketing agency. But you can quickly make a great deal of headway by showing your teams appreciation, respecting their needs and limits, and offering them engaging and meaningful work.

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