Small businesses are particularly vulnerable to turnover, especially when training and recruiting budgets are limited or when experienced workers take on more than their fair share of tasks. A recent survey of 501 small, fast growing companies conducted by Coopers & Lybrand found that 27% of these companies have had to scale back growth estimates, delay or cancel initiatives, or overhire because of their inability to find qualified and skilled employees. So how can smaller companies boost efforts to retain employees-and keep them happy and productive-without spending a lot of money? By drawing on their unique strengths, namely flexibility and innovation. Here are five strategies that have earned high marks with employees

Although 39% of the companies in the Coopers & Lybrand survey are upgrading employee compensation ranges to attract and retain workers, rewards and recognition programs don't always have to be salary-based or even financial in nature. Powerful recognition and rewards programs include public acknowledgement of an employee's efforts and results, a plaque or award, dinner for two, or a small spot-cash award of, say, $200 or $300. The point is to show strong performers that their efforts are appreciated.

Many employees, particularly high performers, need opportunities for professional growth to feel satisfied with their jobs. Ask your key employees what motivates them from a career development standpoint, then find creative ways to provide those opportunities. Can you help an employee who wants to expand his or her skills to find opportunities for informal on-the-job training? Perhaps the employee with management aspirations can lead a project team or begin mentoring other employees. Just don't assume that all employees want the same things or share your professional interests and goals.

Employee turnover can often be traced to work/life conflicts that can be easily and inexpensively remedied with flexible work arrangements. If a company does not offer part-time work schedules, telecommuting, compressed work hours, or some kind of other flexible work situation, an employee with child or elder care responsibilities may have little choice butt to search for a company that does. In a recent survey by Hewitt Associates, nearly half(44%) of the companies offered some form of alternative work arrangement.

With the future of Social Security in doubt, employees are increasingly concerned with saving for retirement. Thanks to federal lawmakers' actions designed to make retirement plans more attractive to small companies, you have more choices than ever when choosing a retirement plan. Profit sharing, SEP, and SIMPLE plans are options that can fit both your budget and your employees' needs. Plans that provide for company contributions to vest over a period of years may also create an incentive for employees to remain with the company long term.

Health care benefits are the most valued by employees, according to the Employee Benefit Research Institute. But they are also among the most expensive benefits to offer. Medical Savings Accounts(MSAs) can help ease the burden. Companies with fewer than 50 employees can offer MSAs (funded with tax-deductible contributions from either the company or the employee) if employees are also covered by a high-deductible health insurance policy. Employees then use their MSA funds to cover the deductible or medical care that is not covered by their regular policies. Any leftover funds in the MSAs can be rolled over for use in subsequent years or withdrawal during retirement. Employees in companies that are not eligible for tax deductible MSAs can use flexible spending accounts to make pre-tax contributions that can then be used to cover health or dependent care expenses.

An employee retention initiative need not be costly to be effective. To get started, you might informally survey employees about their priorities and needs.