Why Do Good Employees Quit and What Is It Costing Your Small Business?

It costs a lot to make up for a loss of an employee, let alone a good one.

Besides the financial costs, there is also the emotional cost – you’ve bonded, you’ve learned to lean on this person to tackle your important tasks. And now?

You need to find somebody new to replace her, and it sounds terrifying.

If you are scared of this situation (and I’m sure you are nodding your head right now), then you need to face the potential causes in your business.

Some of the poor management choices you’ve made can lead to the less desirable outcome – you running around, losing money and searching for a replacement.

The signs that you’re about to lose your best employee can be tough to spot, but it’s better late than never.

How can you start improving your business to keep them? Let’s find out.

Reasons for losing your best employees

This is the first thing you need to get your mind around if you have lost a good employee, or you just want to improve this aspect of your employee management.

It’s obviously not always about the company itself why your best employees would leave in the first place (private reasons such as moving to another city or wanting to become a stay-at-home parent).

However, the things that are up to your management should be a priority to improve.

There are a lot of things that the company should take care of as basics, such as not tolerating poor performance from other team members or complicating with too many rules, as per this Forbes article.

Decisions such as these would turn away A-Players that you are trying to keep.

Moreover, there are reasons for leaving you that are not so easy to spot. Those reasons are mainly deeply rooted in the way each employee is directly treated and managed.

As such, here are 3 that I have seen throughout our experiences and those of my clients:


1. Lack of challenging tasks

Top performers are not at the very top because they settle for less.

Their ambitions are not only correlated to the positions they hold but primarily to the challenge the position puts on them.

A couple of years ago, one of our best developers quit on us mainly because the team we had built wasn’t good enough for him.

What arrogance, right? Wrong.

He was right. Unfortunately, we had surrounded an A-player with C-players, and he couldn’t learn from his peers as he would have liked to.

So he left.

There are plenty of companies tackling some of the world’s most cutting-edge and innovative problems which will make them feel valued.

The solution – challenge them before someone else does.

2. Small salary

This one kind of imposes itself, and it’s not exactly a new problem business owners face when trying to keep their best workers.

However, the facts are clear on this – employees that stay in companies longer, get paid 50% less than their peers who decided to switch jobs.

Even if salaries are not discussed openly in your company, team members can spot this kind of unfairness easily.

In case you are not rewarding them fairly for pushing your company forward every year, for knowing your systems better than any newcomer or for their loyalty, you are doing something wrong.

Running a transparent business can help out with laying the groundwork for fair treatment and open communication between your employees.

By getting your financials communicated openly, the entire company will have a better overview and understanding of the current state.

Also, if somebody thinks they are ready for the next level (promotion), they can quickly check their position and prepare a good argument as to why they deserve it.


3. No room for improvement

This reason goes hand in hand with not challenging your employees with tasks demanding their full potential.

If your best employees get the feeling that their future with you is sealed, and that you will not give them more room for growth, that will cause them to feel trapped with your business.

Your best employees don’t need fancy position titles; they need demanding tasks that will get their creative and problem-solving juices flowing.

Ambitious people are driven by growth, and in case you fail to entice them enough, they will move their ambitions elsewhere.

What are the costs when they do leave

The typical cost of turnover when an employee leaves is 21% of their annual salary, as a number of American studies has shown.

These costs are reflected in many ways, but the most significant breakdown is:

  • the reduced morale by the employee leaving and the team around her (productivity tends to sink in this situation)
  • the cost of recruiting (job postings, prescreening, tests, interviews)
  • the cost of training a new employee.

Depending on the position, the hiring costs alone can skyrocket to thousands of dollars if not handled properly.

It’s important to keep your best employees long-term

Many employers first get scared that their know-how (transferred to this employee) will be directly taken to the next company they go to.

In reality, there’s more to a good employee leaving that will affect your business directly.

You should worry about keeping the knowledge in-house to keep your business stability.

Moreover, long-term employees reflect a stable work environment, which will entice new employees to choose your company over others.

Without burdening it with costs that cause negativity, reduced morale and losing your know-how, invest resources into keeping your best employees and reap the benefits of a loyal team for more years to come.

Mike Thatcher is a Digital Ninja with a years’ long experience. Digital nomad by the place of residence, he is passionate about entrepreneurship and leading small businesses and startups. His current focus is helping businesses create better growth systems at JobRack.

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