Ellis Waldman, president of 76-year-old Walco Electric Co., makes a point to know the nearly 100 employees’ names and the names of their spouses and children by heart. The company hosts cookouts in the summer and dinner galas in the winter to maintain cohesiveness socially as well as professionally.

“It’s hard to keep up with the big guys,” said Corinne Mattero, manager of human resources at the Providence-based company, which provides electrical and mechanical solutions for industry. “We can’t pay what Hasbro pays … so you have to find other benefits.”

The company, for example, keeps health care costs at 65 percent for the company and 35 percent for the employee even though, Mattero said, it takes a toll on the company’s revenue stream.

That is the struggle of the small business.

A report published last month by the U.S. Small Business Administration’s Office of Advocacy found that employees of larger companies stayed in their jobs longer than employees of small companies. Though there are many reasons for this, the study found, benefits such as health insurance and pensions can increase employee retention.

A firm that offers benefits decreases the probability that an employee will leave by 26.2 percent and increases the probability that an employee will stay an additional year by 13.9 percent.

Some small companies in the state understand the power benefits have in employee retention.

Embolden Design Inc., for example, strategically decided to pay for 100 percent of employees’ health care costs in an effort to retain a highly qualified work force, said Ann-Marie Harrington, president and founder of the Pawtucket-based Web development and consulting firm.

The company, which has 12 employees, has experienced very little turnover in the past five years, she added.

“Particularly with technology companies, it’s difficult and a challenge to find good talent and compete with corporate wages,” Harrington said.

Though Embolden Design provides wages competitive with other small technology companies, it substitutes what it lacks compared with corporate wages with its desirable health care offering and “a good benefit package for time off,” a flexible work schedule, free family memberships to the YMCA and a consensus-oriented decision-making process.

“We’ve actually had folks come work for us from bigger businesses where they were offered larger pay,” Harrington said. “They decided to work for [Embolden Design] for quality of life.”

John Cronin, executive director of the R.I. Small Business Development Center, said the small businesses that do well with employee retention are the ones that take the family approach and provide a flexible work environment sensitive to the needs of employees’ personal lives.

“They avoid turnover because of the loyalty [of their employees],” he said. “It becomes a more fun place to work. It’s more of a softer benefit system.”

Dave Baeder, president and CEO of Providence-based Baeder Corp., said small firms can also help retain employees by creating an empowering environment.

“Within the culture of small business … you’re not very deep in any one discipline or department,” he said. “So very often one person is empowered to their maximum.”

Employees wear many hats, which challenges them in areas they wouldn’t think they’d be exposed to, Baeder added. And it rounds out skills they can take with them to other jobs.

Most employees at Business Link International/OpenBOX Technologies, which are subsidiaries of Baeder Corp., stay with the company from two to five years, he said.

They see OpenBOX Technologies, a database integration software company, and Business Link International, an email/fax/voice marketing company, as a stepping stone in their careers.

But losing employees before the two-year mark is particularly damaging to young companies trying to grow, Baeder said, because one person can be so instrumental in many departments, and the return on investment in training isn’t realized until they are with the company for at least two years.

“What that means is you don’t get a lot of chances to make bad hires,” he said. “You’re much more conscious about hiring.”

Harrington said Embolden Design puts a lot of energy into the hiring process as well, and for the same reason.

Baeder Corp. employs 15 in its Providence office and 25 software programmers in its China office.

The company decided to outsource programming, in part, because the cost of health care in the state is so high, Baeder said.

“It’s probably the single largest barrier preventing us from hiring more employees,” he said.

But if the state would make it possible, through legislation, for small companies to pool together and set out a bid for health care, which could lower the cost per employee by as much as 20 percent, Baeder said, each of those companies could probably afford to hire more employees and retain them.

“We recognize we are at the lower end of the pay scale,” Baeder said. “But the projects and products we work on are so cutting edge … employees are enthused about the type of technology … the technology and culture of how the company is run keeps them here.” •