Don’t Be Surprised When Your Employees Quit

I recently wrote a post about the financial cost companies incur from losing talented employees. My hope was to illuminate in concrete terms just how expensive it is to lose good employees. In this post, I’ll discuss how you can keep them.

Fundamentally, it starts with empathy. The employer-employee relationship is just like any other personal relationship; strengthening it requires putting yourself in the other person’s shoes.

Companies need to start by thinking; why would an employee quit? From there they can improve their organization to better retain top talent.

tl;dr
The most common reasons employees leave, and how to address them
Reason 1: Bad managers ruin everything
Solution: As a company, be obsessed with the quality of your managers
Reason 2: Changing jobs is a great way to make more money
Solution: Mark your employees’ income to market and don’t force them to make this trade off
Reason 3: People leave when they don’t see opportunities for growth
Solution: Know your employees’ long term goals and work to show them a path there

Reason 1: Bad managers ruin everything

“People leave managers, not companies.”

Many of us who spend time thinking about management have heard that phrase.

As it turns out, it’s true.

Of all the reasons people leave companies, having a bad manager tops the list. According to Gallup polls, a full 50% of employees who quit cite their manager as the reason.

People might join a company for the compensation, growth opportunities, or mission, but they frequently leave because they don’t have a good relationship with their manager.

Unsurprisingly, the manager relationship is highly correlated with employee engagement. A good proxy for the strength of the relationship is how comfortable an employee is approaching their manager with any type of question. The responses to this statement has a clear relationship with employee engagement:

And why shouldn’t an employee place substantial value on her relationship with her direct manager?

A good manager will give you the freedom to grow, mentor you to be better at what you do, and make your daily work enjoyable. A bad manager, by contrast, can hold you back professionally, developmentally, and make you unhappy.

Solution: As a company, be obsessed with the quality of your managers

The cost of a bad manager is too high to tolerate. Not only will people quit much more often, but they’ll be much less productive before they do.

Being a good manager isn’t rocket science, but it takes work. And unfortunately, a lot of managers don’t put the same dedication into the craft of people management as they do into the craft of what they consider their “real” work.

Good management takes effort and experience, but it’s really pretty straightforward.

These differences make a huge impact. Looking at just one example of a basic management function, goal setting, shows this. When employees were asked to rate their feelings on the statement “My manager helps me set performance goals”, 69% of employees who said “strongly agree” were considered engaged in their work, compared to 8% said “disagree” or “strongly disagree”. (Source: Gallup poll)

The other basic principles of management are similarly important; these are tried and trued foundations for how people work well together.

So companies, beware: a bad manager is much more detrimental than you think and needs to be correctly as quickly as possible.

Reason 2: Changing jobs is a great way to make more money

An uncomfortable, under-discussed truth is that changing jobs is often a great way to increase your income.

How much different, on average?

While the national average salary increase at American companies is 3%, studies show that changing jobs every couple years results in an average pay increase of about 15%, and sometimes much more.

Over the course of a 15 year career with a job change every 2 years, the long term difference becomes quite substantial:

Let’s take a look at why this happens using a quick thought experiment.

Imagine you hired someone in at a relatively junior level who had raw talent but not much experience. Over a 3 year tenure at your company, she grew from a junior employee into a force to be reckoned with.

In your mind, she’s still a version of that person you hired, albeit a top performer, and so maybe you give her a 5% raise each year.

But in the free market’s unbiased eyes, she may look like a full blown marketing leader ready to lead a team at a fast-growing company.

So a recruiter reaches out to her, and out of curiosity she agrees to listen to what they have to say. She learns that the other company wants to pay her 40% more than you currently do. What is she going to do?

She’s going to feel undervalued by you, appreciated for what she’s worth by the new company, and, of course, interested in the meaningful pay boost.

At first she probably won’t say anything to you directly, but instead will talk to her friends and family about the new opportunity, who will help convince her that this a way to accelerate her career at an exciting new company that understands her real worth.

By the time she comes to you to let you know she has an opportunity she can’t pass up, you might panic and realize that of course she’s worth the extra 40% salary. But at that point it will probably be too late.

Solution: Mark your employees’ income to market and don’t force them to make this trade off

What’s the solution to the problem illustrated above? Don’t let it get there in the first place.

Your employees should have their compensation evaluated on a regular period, and you should be willing to pay them what they’re worth before they force your hand with a competitive offer.

This doesn’t mean paying exorbitant salaries. It means paying people their fair market price if they’re great, or asking them to work at another company if not so you can make room for the team you need.

The Netflix culture deck has some great advice for this:

Managers should ask themselves often how much they’d be willing to pay to keep their top talent, and adjust accordingly. For the people they wouldn’t fight hard for, the right answer is often to “give them a generous severance package”, as Netflix says.

There’s no perfect methodology for paying people their true market rate, and every situation has its own circumstances. But there is a lot of information available online, and if deep down you feel like you’re getting a steal on a great employee who you are underpaying, remind yourself that ultimately you are just screwing yourself.

In summary: make your company mimic the free market for your employees not just when you hire them, but on a continual basis. Don’t make your top performers look somewhere else to get paid what they’re worth, and don’t let your bottom performers stay around and prevent you from doing that.

Reason 3: People leave when they don’t see opportunities for growth

Everyone craves growth.

This is true for many reasons. People have unique personal ambitions and life plans, the novelty that comes with change is inherent enjoyable, and there is social pressure to keep up with whoever you see as your peer group.

Of all the job attributes young people value, “opportunities to learn and grow” comes in at number one. 87% of millennials say development is important to them, and of that group, two thirds say it’s extremely important (source).

If you aren’t careful with how you construct your company and its culture, you can inadvertently put top performing employees in positions where finding paths for growth is hard or impossible. And if they can’t find growth inside your company, it’s only a matter of time before they’ll look outside.

Solution: Know your employees’ long term goals and work to show them a path there

Growth comes in many forms.

It can mean acquiring new skills, increasing responsibility, managing people for the first time, or making a functional switch.

In order to line up the right growth opportunity with the right person, you need to know your employees’ personal goals. Otherwise, the growth opportunity you are working to offer them may be falling on deaf ears.

For example, does the engineer on your team aspire to be a lead developer, an engineering manager, or maybe even switch over into product management? Any of these can be great, but if you don’t know what that person’s goals are you’re unlikely to be able to provide them with a well-aligned path forward.

By having the conversation about personal career goals openly and often with your employees, you’ll be able to do everything within your power to align their growth plan with what they’re looking for. This way, when you have an account manager whose real aspiration is to work in people operations, you won’t mistakenly offer him development opportunities that have nothing to do with his real goals.

The key here is simple: make sure that your company is deliberate about knowing your employees’ aspirations. From that starting point you’ll be much better prepared to help them and keep them happy and engaged.

Final thought: fix these problems early

By knowing these key reasons why employees leave and taking preventative steps to address them, you can avoid being surprised by a great employee giving you bad news.

By the time an employee tells you they’re ready to move on, it’s usually too late. You might be able to get them to stick around for a little while, but most of the time their head is already somewhere else. They’ve already told their friends and family and gone through a lot of back and forth, so the odds of you truly turning it around at that point are low.

Don’t take your employees for granted; they’re the most valuable asset you have.


Originally published at www.forbes.com on February 22, 2017.