Why employees leave

Why Employees Leave?

What is the #1 reason employees leave a company?  I ask this question in workshops for groups to discuss at their tables. Hint: They typically get it wrong. 

The data shows that 89% of managers think money is the #1 reason why employees leave. But in independent exit surveys, only 12% of employees say money was their #1 reason for leaving.

This data comes from the Saratoga Institute in the USA, based on more than 19,000 surveys of employees, and published in the book by Leigh Branham, “The 7 Hidden Reasons Why Employees Leave.”

Here are the top 7 reasons why employees leave a company. 

1. The job or workplace was not as expected
2. Person poorly matched for job requirements
3. Not enough coaching and feedback
4. Not enough personal growth opportunities
5. Not enough recognition and appreciation
6. Stress due to work-life imbalance
7. Loss of trust and confidence in leaders

In round numbers, only 10% of employees leave a company for more money (even if that was the generic reason they gave their manager when resigning).

90% leave for these 7 other reasons, and you need to mitigate these 7 factors if you want to optimize employee retention.

Let’s go through them 1 by 1, with some of my recommendations. 

Reason #1. The Job or workplace was not as expected
My Recommendation: Create a Role Scorecard for every role in your company

Everyone from the most junior entry-level role right through to the CEO should have a Role Scorecard that is updated every quarter with the current performance expectations for their role (including the metrics they need to achieve, the outcomes they need to deliver, the top 5 duties they need to perform, and the percentage of their time they need to allocate to each of these top 5 duties.) 

Role Scorecards not only help you hire the right person, but they also provide clarity for your current staff on how their performance will be assessed every quarter. Check out this free video excerpt from my training course Hiring A-Players. During this course, I teach you how to create robust Role Scorecards.

Once a person is hired, the company must provide the tools, training, coaching, and support the person needs to succeed in their role. In my experience, most managers do not spend enough time coaching their people.

Reason #2. Person poorly matched for job requirements
My Recommendation: Implement a disciplined hiring process

I teach clients a modified version of Topgrading, a disciplined hiring process to reduce your likelihood of making a hiring mistake, and increase your likelihood of hiring Drivers (A-Players) vs. Passengers (B-Players).

Reason #3. Not enough coaching and feedback
My Recommendation: Weekly 1-1 meetings with each of your direct reports

Here is the agenda I like for running 1-1 meetings. To make sure I don’t forget, I dedicate specific time in the agenda for 2-way feedback, or what I like to call “clearing conversations.” 

Reason #4. Not enough personal growth opportunities
My Recommendation: A training budget for each person 

Not every company is big enough to have a clear career path for every role, so at the very least, invest time and money to teach each person new skills that will benefit them in their current role and/or future career.

Even if the person leaves your company to work somewhere else, companies that have a reputation for providing good training and development are sought after as employers of choice. 

I was lucky enough to receive a lot of training in my first roles. As a young sales rep, I received formal sales training. Then, when I was on the management track, I received formal Sales management training. When I progressed to senior management, I received 1-1 executive coaching to help me be a more effective leader. 

Later on, when I joined the consulting industry, my colleagues sent me to conferences and training workshops throughout the USA to learn directly from the big-name business authors and thought leaders, and adapt their ideas into practical tools for our clients.

I am eternally grateful to the companies that invested in my personal growth. In case they didn’t know, I’ll tell them now. The training I received contributed to my staying longer at those companies than I would have otherwise.

Reason #5. Not enough recognition and appreciation
My Recommendation: Well, it’s pretty obvious. Praise people more

Find something the person is genuinely doing well and acknowledge it. There are nuances involved. Here is how to praise people the right way.

Reason #6. Stress due to work-life imbalance
My Recommendation: Once again, create a Role Scorecard for every role in your company

Work-life balance is a thorny issue. Other than being a good manager who demonstrates that you care about the health and well-being of your people, I recommend using a Role Scorecard to set clear expectations upfront during the hiring process so that people know what they are signing up for. 

Some industries and some companies are known for their hard work cultures. Think of Wall Street investment banks or consulting firms like McKinsey. They operate like boot camps. People don’t join these companies for work-life balance, they join because they want to get rich and are prepared to work insanely long hours to do so. 

My first sales rep job was selling sports supplements. The company said upfront that I would be traveling 3 weeks out of every 5, so if I wasn’t prepared to spend 60% of my life on the road visiting clients and living out of motels, don’t even bother applying!

I was a young single man at the time. All I did was work hard at my job during the day, and in the evenings after work, I would train at the nearest local gym in preparation for the Mr New Zealand bodybuilding competition. The company paid for my food when I was travelling, so my cost of living was low. Spending 60% of my time on the road suited me perfectly as a young man in my twenties. But if I were an older person with a family, that kind of work-life balance would be brutal.

And at the other end of the spectrum, some companies act like “adult day care centres.” I lived in San Francisco for 7 years prior to Covid, and at the time, Google had a reputation for being a place where employees got pampered with free food, free massages, sleep pods, meditation rooms, gaming rooms, fitness gyms, hairdressers, and dentists on site, and free shuttle buses to and from work. Google wanted their employees to feel so pampered that they would not dream of going down the road to work for Apple or Facebook.

Every employee has their personal definition of what work-life balance means for them. You can’t please everyone, but what you can do is set clear expectations upfront with a Role Scorecard so people know what they are signing up for.

Reason #7. Loss of trust and confidence in leaders
My Recommendation: A robust strategic plan, real core values, and achievable standards that you enforce consistently. 

People can lose trust and confidence in your leadership if you:
– Don’t have a clear strategy
– Change your strategy frequently without a compelling business case
– Chase the latest management fads just because everyone else in your peer group is doing it
– Flip-flop on your company’s top strategic priorities (and give your people whiplash)
– Set unachievable standards for financial budgets and performance metrics
– Let poor performers off the hook for not achieving mutually agreed-upon standards
– Fail to hold people accountable for living your stated core values
– Fail to make clear and timely decisions
– Fail to keep your promises

These are just some of the things within your circle of influence that can erode employee trust and confidence.

Of course, you can’t control the external business environment. If your operating environment changes significantly, and/or you need to change strategic direction for legitimate reasons, sometimes even good people will lose their jobs.

I’ve had to lay off people after acquisitions. I’ve had to lay off people during economic downturns. Through no fault of their own, good people lost their jobs on my watch. Sometimes you need to make tough decisions, and no doubt, the affected employees saw this as a breach of trust. It’s not fun, but that’s just part of being a manager.

In summary.

Be proactive and take all reasonable steps to mitigate the top 7 reasons why employees leave companies.

If you do this as well as pay people above market salaries for their roles to take the money conversation off the table, you’ll be far ahead of most companies in terms of employee retention. 

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Until next time…
Stephen