The financial services industry in general, and advisory firms in particular, are experiencing an acute talent shortage. The best people are very much in demand, and most firms will eventually lose key people. Good people come and go. It’s always hard to swallow–but best not to take it personally.
There will always be opinions as to why someone left. Familiar culprits include: The culture is dysfunctional; the boss’s grip is too tight; the decision process is stifling; there’s no clear strategy; nobody works as hard as I do and I should get paid more. Learning why somebody quit your firm is important. It can help you to improve the way in which you manage, develop, and empower people–and fix the firm’s employee experience for those left behind. The departure of a key person may also mean it’s time to re-examine your compensation plan to determine if it is competitive. There are plenty of benchmark studies available with which to compare your firm against.
But it is equally important not to overeact, and infer that a single departure is evidence of something chronic or more sinister. Overreacting can throw your business off kilter. First, sort through legitimate criticism from disgruntlement. Perhaps the person leaving is just not that into you anymore. Perhaps he is no longer challenged and is now seeking something new. Maybe the person is a mercenary just looking for a bigger payoff. Alternately, the departing employee may be realizing that you’re unhappy with his work and simply heading off the inevitable.
Whatever the reason, when employees entertain offers from other firms, they have drifted to a negative place. At this point, it is very hard to bring them back. Left unchecked, these employees become carriers of a virus that infects the rest of your organization, especially if they are good at building relationships with co-workers. Before long, they’ve created a subculture that challenges the way things work and the way you manage, and it pits people against their colleagues in a very unhealthy way.
Beware of Counter-Offers
There’s one thing I have come to believe that is almost always true: by the time an employee has decided to leave, the decision is probably right for both of you. As a result, I am not typically supportive of counteroffers to keep an employee unless you had been considering a larger role and a larger paycheck for that individual all along. On the other hand, if you are just reacting to somebody else’s offer and your only hope of retention is to propose a raise or new title, then the dynamics will be difficult to manage going forward.
Throwing money at unhappy people does not make them happier. It certainly doesn’t make them glad they stayed. The undercurrent of whatever they were feeling about working in your business will persist. The money or the promotion is often a means of appeasement that merely defers their decision, temporarily muting their dissatisfaction with you and where they work. The criticism and rancor will likely persist, albeit more quietly. Instead of saying, “For what I contribute here, I’m woefully underpaid,” they will say, “It took the threat of me leaving for them to realize my value.”
This scenario has a way of sowing seeds of doubt and distrust among your other associates. By overreacting to the threat of somebody leaving, you risk …