How Does Organisational Culture Affect Talent Retention in Small Businesses? (Headlands Distilling Co.)

Abstract

Despite growing awareness of the importance of talent retention in small businesses, many struggle with high turnover due to informal organisational cultures lacking structure, development pathways, and scalability, raising questions about how such cultures can be adapted to support sustainable growth. While large firms have been extensively studied, there remains a gap in the literature on how internal culture impacts retention in small enterprises with informal HR systems. This research explores how organisational culture affects talent retention in small businesses through a qualitative case study of Headlands Distilling Co., a Wollongong-based craft distillery preparing for international expansion. Using the Competing Values Framework (CVF) as the guiding theoretical lens, the study examines cultural tensions that emerge when a close-knit, loyalty-driven “clan” culture meets the pressures of scalability. Findings reveal three key challenges: limited structural capacity, restricted professional growth opportunities, and lack of career pathways, all of which risk reducing retention as the firm grows. To address these, the study recommends gradually introducing formal HR systems, creating small-scale development programs, and balancing internal cohesion with adaptive practices that support strategic talent retention. These insights contribute to a broader understanding of culture-driven retention strategies in the SME sector, offering a blueprint for balancing family-like cohesion with structured growth opportunities.