Why Your Best Employees are Leaving

Easily establishing and sustaining a competitive team has become increasingly difficult for companies. In addition to operational costs, replacing and training new employees is expensive. On average, replacing an employee costs 33% of their salary, which can increase if they are more experienced or specialized. With this in mind, it is unsurprising that retention consistently tops the list of CEO concerns.

Considering that companies can expect about 10% turnover in any given year and that voluntary attrition of high performers continues to grow, the amount spent on replacement can take a chunk out of the bottom line. So, why do companies continue to struggle to retain their talent? Harvard Business Review tackles this question in their November – December 2024 article Why Employees Quit. It discusses the push and pull people feel that compels them to leave a job. However, people rarely feel that push or pull without underlying issues. Today's two biggest drivers are a lack of management transparency and employees feeling ignored.

Early in my career, I learned that people would tell their own stories if they did not know what was happening. Often, their stories and the company's stories are misaligned. When I work with my clients or newer managers, a large part of the discussion is about?what to communicate and how to communicate. Managers often avoid telling employees things or sugarcoating them because they worry about their reactions. Let me tell you a secret: Employees leave not because of what you tell them but because of what you do not tell them. Once someone has told themselves a story, it is not easy to adjust their narrative. ?

I worked with a toxic company several years ago. Rumors were widespread about the company's direction and whether people would be let go. Those stories began to take hold, and people started looking for new jobs. The management team did not do much to alleviate anxiety. The culture at the company was authoritarian, with the belief that because a manager said to do something, it should be done. There was no room for criticism or questioning of management, although managers had no problem criticizing their employees. I was often in meetings where managers would yell at employees and be dismissive of concerns. Today, that company's stock has dropped 25% in the last four years, and they are ranked in the bottom 40% for retention compared to companies of the same size. Instead of addressing the problems with the leadership team, the company loses employees, and the costs associated with attrition continue to hit the bottom line.

In contrast, I worked with a company going through an acquisition. During mergers and acquisitions, employees can feel vulnerable. The fear of the unknown is a real thing that causes anxiety and stress for newly acquired employees. Studies show that 33 percent of acquired workers leave after an acquisition. The company I worked with did not run into an attrition problem. The leadership team worked with stakeholders to prepare a communication plan to avoid rumors taking hold. They had an open dialogue that allowed employees to express their thoughts and feelings on the acquisition. Because the leadership team embraced transparency, stories could not take root, and 100% of employees stayed through the acquisition.

People feeling their managers are not hearing their voices is another reason I see someone leaving their company. Employees in most major companies have either a bachelor's degree or substantial experience. Part of the reason we hire them is because they understand and will be capable of their jobs. However, when things start to veer off course or teams run into roadblocks, management does not always listen to those same employees. Companies often think that money can solve employee unhappiness. Money is an entry fee for employees, but feeling like you have a seat at the table and are understood is invaluable.

People have discussed The Great Resignation during the COVID-19 pandemic ad nauseam. When Pew Research released their survey of why people left their jobs, most were because they felt disenfranchised. The highest-rated reasons, "Pay was too low," "No opportunities for advancement," and "Felt disrespected at work," are all things that leaders can address through good communication. I have never worked at a company where it was surprising that people were unhappy. Managers can only sometimes fix problems like pay and opportunities. I have worked at companies with tight headcounts, and promotions were heavily scrutinized. ?There were a lot of hoops to jump through to advance someone or to give raises, and in times of economic uncertainty, it was nearly impossible. However, managers can talk to their employees and create a shared understanding that their concerns are heard and understood. Sometimes, that's all someone needs.

Whether an employee feels their management team is un-transparent or not listening causes a similar reaction—feeling unsafe. When people don't feel safe, they become guarded and check out. They need to find something safer (the push) or are ready to jump when something new comes up (the pull). As a leader, it's your job to find the message to keep your employees comfortable and at your company.

There are times when 100% transparency is not possible. During those times, embrace candor with your employees. Tell them what you can do to assuage their fears. Show empathy for them by considering how you would feel in their situation. Remember what it is like to feel uncertain about something important. Once you have welcomed vulnerability, crafting a message enabling employees to feel safe without giving away confidential information is much easier.

Another thing that all leaders need to do is build an open and trusting environment. Employees and leaders should have an open dialogue and embrace healthy conflict. Go into every situation assuming good intent. Before heading into a stressful situation, think of people's different questions and reactions and plot out how you will handle them. These mind maps will help keep you calm and allow your employees to feel heard.

As a leader, building a culture that fosters retention is imperative to your company's long-term success. The costs associated with losing employees are a compelling reason, but creating an environment of safety will have additional benefits.

Margaret Korpak is a Managing Director at Motion Consulting Group with an unwavering passion for creativity and innovation. Her diverse background spans multiple industries. She uses her talents to lead clients to set and meet their goals.