9.9: Losing Valuable Employees

When a valued employee quits, the loss to the employer can be serious. Not only will the firm incur substantial costs to recruit and train a replacement, but it may also suffer temporary declines in productivity and lower morale among remaining employees who have to take on heavier workloads. Given the negative impact of turnover—the permanent separation of an employee from a company—most organizations do whatever they can to retain qualified employees. Compensation plays a key role in this effort: companies that don’t offer competitive compensation packages tend to lose employees. Other factors also come into play, such as training and development, as well as helping employees achieve a satisfying work/non-work balance. In the following sections, we’ll look at a few other strategies for reducing turnover and increasing productivity.^[1]

Voluntary Employment Termination

Voluntary termination is when an employee chooses to leave their job of their own accord, without pressure from their employer. It’s also known as voluntary resignation.

As important as such initiatives can be, one bad boss can spoil everything. The way a person is treated by their manager may be the primary factor in determining whether an employee stays or goes. According to the Indeed Career Guide, employees quit for many reasons, a few of which are listed below:^[2]

• Needing more of a challenge
• Seeking a higher salary
• Wanting to feel valued
• Seeking a better management relationship
• Moving to a new location
• Feeling conflicted with workplace policies
• Needing a better work-life balance
• Looking for more recognition

Holding managers accountable for excessive turnover can help alleviate the “bad-boss” problem, at least in the long run. In any case, whenever an employee quits, it’s a good idea for someone other than the individual’s immediate supervisor to conduct an exit interview to find out why. Knowing why people are quitting gives an organization the opportunity to correct problems that are causing high turnover rates.

Involuntary Employment Termination

Involuntary termination is when an employer ends an employee’s employment without the employee’s consent. It can happen for a number of reasons, including poor performance, unprofessional behaviour, policy violations, economic factors, and organizational changes.

While voluntary separations can create problems for employers, they’re not nearly as devastating as the effects of involuntary termination on employees. Losing your job is what psychologists call a “significant life change,” and it’s high on the list of “stressful life events” regardless of the circumstances. Sometimes, employers lay off workers because revenues are down and they must resort to downsizing, cutting costs by eliminating jobs. Sometimes a particular job is being phased out, and sometimes an employee has simply failed to meet performance requirements.

A good practice in managing terminations is to maintain written documentation so that employers can demonstrate just cause when terminating an employee. If it’s a case of poor performance, the employee would be warned in advance that his or her current level of performance could result in termination and then be permitted an opportunity to improve performance. When termination is necessary, communication should be handled in a private conversation, with the manager explaining precisely why the action is being taken.