Why Top Employees Quit

It’s like clockwork. Every year a portion of our top talent decides it’s time to move on. Once those bonus or holiday checks are cashed, the flood gates open and the resignation letters start flowing in.

I work in a large company and this is a problem that we have with our IT and Sales groups in particular. I reached out a to a few peers with other companies (one is an IT exec and one is actually a Group President) and as an exercise, we took a bunch of historical data and started identifying the factors that led to the annual exodus. We focused only the top 20% of the employees from a performance standpoint. It’s not that the remaining 80% is unimportant, however, from a productivity, growth, and brainpower perspective, the top 20% of any group is critical. Moreover, these are the employees that are very difficult to replace.

To do this, we reviewed notes from exit interviews, cross referenced annual reviews and ultimately came up with 178 voluntary terminations from people that would have been considered in the top 20%.

To try and keep focused on macro issues, we consolidated the responses and placed them into categories:

• Money
• Unchallenged
• Too Challenged
• Dead Company
• Watch your Levels (and the BS)

Here is the breakdown of the categories. I know someone is bound to ask why it doesn’t add up so… Please keep in mind that this will not add up to 178 because several people insisted on listing 2-3 reasons when the question only asked for 1 reason.

• Money: This one was obvious however we found some interesting nuggets of information:

The Stats:

• Of the 178 files, 83 people listed money as a reason for leaving.

• 62 listed it as the only reason

• In those 62 cases, only 8 were at the top of their pay scale – so there was still room to earn more.

Roughly 46% of the employees that left did so because of money concerns. To be honest, I thought this would be a much higher percentage. I think the most alarming stat to me here is that only 8 out of 83 (9%) people had maxed out their pay potential. Keep in mind that these are top employees that would have received above-average pay increases. My assumption is that they viewed changing companies as the faster path to higher earnings despite the fact that there may have been additional promotions available (which was the case several times).

This may mean a few things:

• We are not watching the market rate for these positions closely enough – our “pay potential” might be way too low

• Our pay scale doesn’t increase at the same rate as the market rates

• Star Employees know their value. If you won’t compensate them for it, they will look elsewhere in a heartbeat

• We are not doing a good enough job at drawing the line towards advancement. If the employee actually sees advancement as a sure possibility as opposed to a pipe dream, it may slow their decision to jump to another company.

Just because a engineer was hired 3 years ago at $70K and currently makes $77K does not mean that is the going rate simply because you built the comp plan that way. If your HR group is not benchmarking what these positions are really making in the world, you better.

• Unchallenged: At what point does workplace monotony kill someone’s drive?

The Stats: 42 records (23%) showed this was their #1 reason for leaving.

One of the forms was completed by an employee that had the exact same job function for 3 years. He is a great example of this point. This employee was in the 20% tier because he had mastered his position and was viewed by many as someone literally doing the work of 2 people. His performance reviews were flawless. BUT – and here is the killer, he didn’t feel that way. He thrived on pressure and having a huge workload was natural to him. Although his manager didn’t see it, this guy was bored out of his skull and wanted more. Year after year he exceeded every expectation on his review and he was compensated for it but that was it. In this case, it wasn’t a matter of compensation, it was strictly responsibility.

One might blame this particular employee for not making his own opportunities and being more aggressive. However, one may also blame the manager for not fully understanding his top employee’s goals, motivations, or attitude. It is incredibly important to have a clear understanding on what your star employees think. The best way to understand this is by simply talking to them. I am not saying you have to be best friends but as a manager, you have to know how the employee feels. In fact, it’s kind of easy to test for. If there is an employee killing all his goals, try giving him more responsibility. It could be as small as becoming a mentor for a new hire, or asking him to interview someone for you. The goal is to keep a star challenged without crossing the line.

• Too Challenged: Toss ’em in and see if they swim.
  The Stats: 38 records (21%) showed this was their #1 reason for leaving.Remember we are only talking about the 20% tier so the people that listed this reason, are not the lazy people of the bunch. They are the ones fed up with bureaucracy, hiring freezes, lack of cooperation, undefined goals, and poor technology. You cannot ask someone to complete 20 tasks and then give them inferior tools and personnel. A lot of employees will struggle through these problems because of their dedication to the company, however, at some point, the fight is no longer sustainable. The employee will either leave, OR , become so unmotivated that they lose their star status and become a normal employee and thus under perform.You can not always depend on an employee to come to you with concerns. I don’t care how often you proclaim you have an open door policy – it simply is not going to happen on a regular basis. To kill two birds with one stone, you could ask key employees for their views on the department, projects, etc. You can also ask for their solutions to the problems they present. Sure, their solutions may not always be implemented but at least they are involved and you know how they feel. When people view themselves as part of a solution, they are less likely to become disgruntled thus delaying the boiling point that forces them to leave.

• Dead Company: AKA Death by Boredom
  The Stats: 38 records (21%) showed this was their #1 reason for leaving

If the leadership team of your company is constantly drab regardless of the company’s growth or the goals achieved, you are in trouble. All employees want money and to be challenged but they don’t want to have to self-motivate 100% of the time. For example, I worked for a small company that hadn’t created a new product in 10 years. Nothing ever changed and to make matters worse, the executives were all stiffs. I don’t believe I ever saw an executive smile and that attitude trickled down the food chain. $30K a year with a company full of stiffs is worse to me than $28,500 with a fun energetic company. You can help take this burden off their plates buy injecting a little upbeat atmosphere. I am not talking about whirley ball, acting like a clown or naming Friday as “Beer in the office day”, but your attitude speaks volumes. I will say that I was surprised that this percentage was just as high as those that felt “Too Challenged” from above.

• Watch your Levels and the BS

The Stats: 51 people added something random to their primary reason of leaving.

Just because you are an Executive and depend on mid-level managers to do the day-to-day managing, does not mean that you should be ignorant to what is going on. We added this category after seeing the huge number of people having issues that appeared small, but were large enough for them to leave the company. So think of this as the micro managing managers, peer conflict sessions gone awry, crying employees in the bathrooms, process trolls, etc. Let me give you an example:

We saw one case where a department had 2 people leave because they disagreed with the same policy. So on a team of 9, the 2 strongest people left. Doesn’t that indicate to management that the policy may be flawed? If I had been the VP or executive, I would have certainly been asking the group manager for a huge explanation. As it stood, the employees left and the policy stayed.

The key here is that your best employees are the best for a reason. When policies are changed, there is no one better than your star employee to consult with. This category actually reminds me of a post that Frank did a few weeks back listing 50 Ways a manager can get employees to quit. Basically, we saw half of these reasons on these forms and they are all things to at least be aware of because managers and team leaders do them all the time.

If you have good ways of keeping your great employees happy and productive, let me know. Better yet, tell me what you are getting from your manager today that would make you think twice before jumping ship.

– Jay