human resources

Losing a Key Employee: What You Need to Know

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Losing a Key Employee: What You Need to Know
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Losing a key employee can impact your business on so many levels. Often it seems to come out of nowhere, leaving managers blindsided… and unprepared. It is at this point that things can easily snowball.

There are multiple obstacles that can arise when losing a valuable employee. You may notice that it decreases the morale as other staff members adapt to life in a company without close work friends.It’s not the first thing many managers think of when losing an employee but data shows just how important it is for morale.

According to one study, 70% of employees say that having a friend at work is the most crucial element to a happy work life. What’s more, 50% of employees with a close friend at work reported feeling a stronger connection to their organization.

There are various other problems that may arise and expenses are another thing to consider. A high employee turnover is costly. You will need to invest in recruiting, training new employees and also factor in the possible costs of having to pay other staff overtime to take over the added workload. In fact, some studies have revealed that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average.

How does this add up? Here is a breakdown of the costs involved in hiring a new employee:

  • Recruiting costs: This includes advertising, interviewing, screening, and hiring.

  • Onboarding costs: This includes training and management time.

  • Lost productivity: It may take new employee days, weeks, months and even one to two years to reach the productivity of the other person

  • Customer service and errors: New employees take longer to complete their work and may also be less adept to do their work

  • Training costs: A business can invest up to 10% to 20% of an employee’s salary or more in training over two years.

In addition to these factors, decreased productivity is another obstacle you will likely encounter when losing a key employee. The obvious reason for this is because you have fewer team members to get work done, which could lead to remaining staff feeling overwhelmed, stressed out and less likely to perform at their best. But this is only the surface.

In many scenarios, especially with small to medium-sized businesses, one person has all the knowledge of how to do their job stored away in their own heads. No one else knows about it. Compounding the situation is if they have a certain system that makes sense to them but no one else. For example, when employees create complex spreadsheets to help them do their job, then they leave and no one knows how to use them. Their former colleagues are then left scrambling to make sense of it all.

This is seen time and time again in HR, when a person manages a leave spreadsheet but when they leave no one has any idea how it works, causing much confusion… and stress!

A simple solution would be to incorporate an online leave management system, which stores all the information, is easily accessible, and eliminates all the paperwork and hassles involved. More and more companies are implementing an online leave management system into their day-to-day functions and it’s easy to see why- An online leave management system can help you avoid this exact issue when losing a key employee who is in charge of managing leave.

The next step

There are two ways you can approach the scenario of losing a valuable employee. You can try to prevent it from happening by applying best practices for employee retention, or you could deal with it as it arises. In order to do the former, you may want to consider growing your company work culture by:

  • Implementing employee benefits that give you one up on your competitors
  • Offering flexibility and a work-life balance
  • Providing recognition and rewards where due
  • Establishing a strong team relationship through activities like team building
  • Listening to what employees have to say
  • Promoting a sense of trust

When an employee does resign, there are ways to handle it to make the best of the situation. First things first, Priscilla Claman, the president of consulting firm Career Strategies tells the Harvard Business Review that it’s important to engage in a “warm and friendly conversation about the person’s future plans,” adding that it’s essential to maintain relationships in the business world and not leave things on a bad note.

You could also try to establish why the person is leaving and make a counteroffer. This depends on how critical they are to your company but tread lightly here.

“It’s like being on the verge of divorce and then reconciling,” says Claman. “Once the other person has gone through the thought process of leaving, it’s hard to fully trust them again.” A better strategy is to “retain a relationship” with the departing employee and then “re-recruit them in a year,” she adds. “Say: ‘We’ve missed you. And we would love to have you back.’”

The next step is to transfer the workload. This is tricky, which is why it’s important to communicate with staff and acknowledge that the team will have a workload problem for a time and may feel overburdened. That being said, this is a chance to chat with employees about opportunities for growth.

“Say, ‘Frank is leaving. I want to talk about what that means for you. Is there something that Frank does that you have an interest in learning or trying?’” Claman advises. You can then set up a shadowing program during the exiting employees’ notice period.

After all is said and done, there may still be no other option but to hire someone new, which is why it is important that you coordinate with HR to formally list a job opening as soon as possible.

“This helps people on your team understand that this is temporary,” Claman says. Ask employees for input on what skills, experience and qualities they would like to find in the new hire.

Once things have calmed down a bit it helps to take time to reflect. Ideally, you should never be “truly surprised” when an employee announces their intentions to resign

“As manager, you need to be aware of people’s interests and needs,” says Claman. “You should know what they want to do. And you should be able to tell when someone is tired of her job, has aged out of it, is not engaged, or has life changes afoot — like a move or a spouse transfer — that make a resignation likely.” If this news did indeed blindside you, “it is incumbent on you to start having more contact with your team so that you know what they want for their future” and can predict or prevent these situations going forward.

LeavePro is offering a 14-day free trial, all you have to do is sign-up. You can also book a demo and we’ll show you how the system works and answer any questions you may have.