Small businesses are typically made up of a tiny yet valuable staff. Each worker plays an essential role, and losing one employee can impact the entire company.
"Losing a valuable employee is always painful," said Chris Sier, ICF-credentialed executive coach and owner of Executive Potential Plus. "When they leave, their experience, skills and overall knowledge also leaves with them."
While no company wants to see its best worker leave, sometimes, it's inevitable. To make the transition run smoothly, employers must handle resignations in a professional and legally compliant manner. Here's how to proceed when an important employee decides to quit.
Stay calm
When one of your staff members quits, the worst thing you can do as an employer is to lash out in response.
"People rarely appreciate a 'how can you do this to me?' scene when they first give their notice," said Chuck Post, chair of the Labor and Employment group at Weintraub Tobin law firm.
The best thing to do is to remain calm and ask the employee why they are planning to leave, Post said. While it's not good to demand information or to put the employee in an uncomfortable or high-pressure position, you may be able to learn something that will help you craft a counteroffer, or find another means of retaining that person.
Issues might range from lack of growth opportunities to poor management. Some might be fixable, while others aren't specifically related to your company. Consider the best way to address the situation given the employee's explanation; dig deeper than the surface.
"People may think offering more money will solve anything, but … money only works for a very short time, and doesn't address an overall sense of unhappiness," said Sier.
Regardless, be considerate of their decision. If they insist on leaving, be cordial, wish them well, and ask them if they'll stay for an appropriate amount of time to make a transition (usually two weeks).
Review your legal obligations as an employer
If the employee decides they are definitely leaving the orginzation, the next step is to make sure you're in compliance with all employment laws concerning termination.
"Legally, termination of employment can be a source of liability," said Post. "It is prudent … to ensure that the employer has fulfilled all mandated end-of-employment obligations."
Post noted that the legal obligations owed to a departing employee are as follows:
- Pay all accrued wages.
- Disburse any accrued benefits that must be paid upon termination (either under law or company policy), or document the employee's non-entitlement to said benefits.
- If applicable, account for and establish a schedule for commission or bonus payments that will be made after the termination. This is usually governed by law and the terms of bonus and commission plans.
- Provide the employee with the required legal notices (COBRA benefit continuation, unemployment and workers' compensation notices, etc.).
If the employee has signed confidentiality notices, noncompete/nondisclosure agreements or other legal documents protecting your company's intellectual property, these should be reviewed as well so that both you and the employee are clear about the terms of these agreements once they leave the company.
Conduct an exit interview
Holding an exit interview, whether face-to-face or via email/online survey, is more than a way to gain insight into an employee's personal experience with your company. When you speak with a departing staff member, you also take an important step to tie up any loose ends and potential problems down the line.
"Employers should take reasonable and lawful actions to ensure that all that leaves the company is the employee, and not information or customer relationships," Post said.
During the interview, Post advised confirming and documenting that the employee has returned all company property; that they have not taken, copied or transmitted any intellectual property or sensitive company information; and that they are aware of any continuing obligations not to use or appropriate your company's business information.
Your exit interview can also help you shape your strategy for the future of that particular position.
"There can be an effect on morale to consider," said Sier. "If the person leaving is unhappy, the team may also be unhappy. Implementing change based partly on feedback by the outgoing employee and conversations with the team is essential in creating a better workplace environment and a stronger team."
Here are some questions to ask and formally document in the exit interview, outlined by Sier:
- What are your reasons for leaving the company?
- What did you like about the company?
- Are there things we can do differently as a company?
- What did you like about your job?
- What didn't you like?
- What was your relationship like with your supervisor?
- What could your supervisor have done differently?
- Were your expectations met with the goals you were given?
- Were your goals clearly stated and measurements given on what constituted achievement?
Find a way to fill the gap
Whether you're planning to directly replace the departing employee or changing someone else's role internally, you're going to have some gaps to fill. But hiring the first new candidate who expresses interest may not be the best solution, despite the immediate, perceived benefits to your company.
"Create development plans for the team according to their goals in alignment with the goals of the organization," said Sier. "The important thing is to ensure follow through of those plans."
You should also develop a succession plan to prevent the same issue in the future. That way, the position can easily be filled temporarily or permanently, even on short notice, said Sier.
Additional reporting by Nicole Fallon. Some source interviews were conducted for a previous version of this article.