What To Do When A Key Employee Resigns

April 17, 2018

A key employee just resigned. You’re stunned. You never thought this would happen. After the shock settles in, the questions begin. What should I do now? How do I replace one of my key employees? Is it best to promote from within or find a replacement outside of the business?

Why Did the Employee Leave?

Although feelings can be hurt when a key employee resigns, owners must realize that these situations occur. They have in the past and will continue in future. Employees resign for many different reasons. It is important when this happens to determine why the employee is leaving, learn from the situation, and try to prevent future key employees from leaving. Is it pay, benefits, working conditions, business culture, responsibilities (or lack of responsibilities), communication, job or business stability, growth possibilities, etc.? 

Now, a decision has to be made. Should the owner try to convince the employee to stay? Depending on the reason for leaving, there might be instances in which the owner might try to change the employee’s mind. Perhaps, pay could be increased, working conditions changed, or responsibilities increased. Convincing the employee to stay must be based on why the employee decided to leave in the first place.

For whatever reason the employee decided to leave, it is important to remember that most of those reasons will not change significantly enough in the future to keep the employee satisfied over the long-term. The factor or factors that caused the current dissatisfaction will most likely occur sometime in the future… causing the employee to again question whether to stay or leave.

Convince the Employee to Stay?

So, there are two schools of thought when it comes to enticing an employee to stay once the decision has been made to resign. One is to “up the ante” within reason for whatever the employee demands to keep the employee on board. The other is to wish the employee the best of luck, learn from the resignation, and try to prevent future key employees from leaving. 

One thing is certain and that is to never make disparaging comments about the departing employee to others. This produces no positive results as the employee leaving might have developed very close relationships with other employees. When critical comments are made about a friend, it is natural to come to the friend’s defense. So instead of simply losing a key employee, the owner now has a disgruntled group of remaining employees. A bad situation has just gotten worse.

An Exit Interview

Conducting a proper exit interview with an open mind can be an “eye opener” for an owner. Open and honest dialog between the owner (after the shock has worn off) and the employee can have positive results for the future of the business. Small businesses and SMEs can certainly be at a competitive disadvantage compared with larger companies when it comes to employees…pay, benefits, vacation, and job growth. It is imperative, therefore, for small businesses to concentrate on providing the most job satisfaction possible for employees.

The Owner’s Choice

There are several courses of action that a small business or SME owner can take when a key employee decides to resign. Some choices are professional and good; others unprofessional and foolish. The action taken can chart the future of the business in different ways. What is learned from the departing employee? How will other employees react to the resignation? Will a promotion come from within or a new person hired from the outside? Will the transition be easy?

Regardless of the reason that a key employee resigns, one critical lesson to be learned is that this situation will probably happen again and businesses need to be prepared for this common occurrence. Training, cross-training, and mentoring employees at all levels are important factors when planning for the future of a business regardless of size. Resignations of key employees are an ongoing threat to every business; however, proactive planning can mitigate the negative effects of such resignations. Don’t wait until a resignation takes place and then decide what to do. Plan in advance for departing key employees as the time will most likely come one day in the future.