Every Employee Exit Should Be Regrettable | Mark MacLeod

June 28, 2022 - Mark MacLeod

Every Employee Exit Should Be Regrettable

In the rush to create shareholder value, raise more capital, get to an exit, break even – or whatever the next milestone is for your business, we often get de-sensitized to what is happening – both to ourselves and our businesses.

We take it as a given in the high-tech world that our industry has a lot of employee exits and high turnover. We just accept it. In the pre-COVID days, San Francisco startups lost 1/3 of their staff every year! I am sure that with the move to remote work and the recent salary inflation, San Francisco has now given startups elsewhere this same employee virus…

There are many factors behind this. For one, the laws of supply and demand. There are so many startups that have raised so much capital – all competing for the best talent.

In my work coaching CEOs, I see it as our shared goal to make sure that the CEO is always growing faster than the business. If the business is doubling each year, then the CEO needs to grow her leadership capabilities by at least double each year. Otherwise, she will be left behind.

The same is true for staff at all levels. The marketing manager who crushed it last year won’t do so this year if she doesn’t grow her capabilities in lockstep with the needs and growth of the business.

Parting ways with people who can’t keep up is perfectly acceptable. What I would like to focus on is employees who are keeping up and have room to grow, but choose to leave your company for greener pastures.

Regrettable turnover vs. non-regrettable turnover

Companies often bucket these departures into regretted – staff that the company really felt had an impact, current and future potential, and non-regretted – where it’s not such a big deal that they left.

I think this is B.S…

It takes so much time to hire the best people. Salaries are almost always the biggest expense in a company. Why would we tolerate having someone in a role where we don’t really care if they leave???

I get that not all roles are created equal. It is easier to replace a support rep than a CMO. But… if you tolerate good (or worse) people in any role you are sending an unintended message to everyone else in that role (or who interacts regularly with the person in that role) that good is good enough.

As Jim Collins says – good is the enemy of great.

Given the time, effort, and money required to hire people and get them productive, not to mention the expectations attached to all the capital you have raised, I strongly believe that every person in your company should be great for their role.

As a result, every employee exit should be regretted. It should hurt.

Focus on minimizing regrettable attrition

I don’t expect 0% departures. That is not a realistic goal. But it is a great mindset to have. If you are focused on minimizing the turnover of great people it will impact every aspect of your people practices. You won’t wait till they tell you they have an offer to look at their career trajectory, promote them, give them new skills, pay raises, etc. You will have a roadmap for your team members in the same way as you have one for your product.

All employee exits should matter. If they don’t, then you have work to do…

Questions to consider

What is our rate of employee departures?

How do employee exits break down between ‘regretted’ vs. not?

Am I happy with those definitions? Does the bar or definition for regretted make sense?

How do I feel about the % of non-regretted turnover in my company?

What is the collective annual salary of those people?

How much did I spend to recruit them?

Did I just waste those $?

What can our company do to lower the % of non-regretted turnover?

What can our company do to lower the % of regretted turnover?

What changes do we need to make across our company so that employee development, growth, and retention are among our strongest competencies?

Photo by Israel Andrade on Unsplash

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