When an employee leaves

If you’ve run a company for a long enough period of time, chances are that you’ve had to deal with an unexpected departure of a valuable team member. As a CEO, this can feel like a gut punch. It can feel like they are leaving you, not just the company. With these feelings in mind, you might treat that employee poorly on their way out. Unfortunately, I experienced star employee departures many times during the up and down roller coaster of running my company. I’m disappointed in myself for how I handled some of these departures. With hindsight, I’ve put together some thoughts on what I wish I had known then to help manage the response to this moment. 

The first question to ask when a star employee leaves: are they going to a bigger or better role? It can be hard to objectively consider this question as the founder/CEO of the company they are leaving. However, taking a step back, did the employee gain valuable experience and skills that made them appealing to a larger company or a company willing to give them a larger scope than what they have today? If the answer to this is “yes,” then at least as a manager and company builder, you should take pride knowing that your employees are growing along with the company. Great talent does not want to work for a company where they are stagnant.

The second question is: relative to when the employee started, is the company better off? Did they meaningful impact the company? If the answer to this question is also yes, then not only did the employee gain valuable experience at your company but they contributed in a meaningful way to the success of the company. Not all things are meant to last forever. The employee did their tour of duty and may be completely justified in looking for a new challenge. No reasonable person could expect an employee to stay forever. If they are better off and the company is also better off, then the right thing to do is to show your gratitude for the value they created. Celebrating their success may feel odd but will be remembered by the whole company.

Remember that the company is watching how you react. These are moments when the CEO must lead by example. Act in the way that you want other mangers in the company to emulate. Your team will be watching how you interact with the departing employee. They will take note of smiling faces, hugs, or the silent treatment and your body language may set the tone of the rest of the team. 

Tactically, once an employee has given their notice, there are a few things you can do to ensure continuity of your day-to-day operations. The most important thing is to figure out where that person’s responsibilities will live in both the short term and long term. Will you hire a replacement immediately? Will their role be split up and handled by multiple individuals on the team? These are all important considerations and may be worth having answers to before announcing the employee’s departure.

Next, once you know how you will handle the role going forward, you want to start on a process of knowledge transfer. Ask the departing employee to list resources, vendors, and key contacts they engage on a regular basis and transfer those to the new team. In the employee’s final weeks, you may find it helpful to have them document some of the tasks and projects they are involved with so that the documentation can be referenced later.

Before the employee leaves, it can be very helpful to conduct a formal exit interview. People leave companies for a variety of reasons. It’s important to get an understanding of why they left in order to understand how to address potential issues that may limit your ability to retain top talent in the future. Conduct these exit interviews with an eye towards setting up a better future. Star employees will usually have ideas on how to improve the company - it’s important to get to those ideas rather than to dwell on the past.

In some cases, you may consider making a departing employee an advisor to the company. Often when a top executive leaves, a company will consider giving them an advisory role in the company to ensure continuity. Sometimes this formal title is not necessary but it is one of the tools a CEO can use to keep a departing team member engaged beyond their employment. 

Lastly, even if not relevant in this situation, you may want to create a policy on counter offers. Eventually a situation will arise when an employee receives a competitive offer and might ask if you can or will counter-offer. I am strongly against counter-offers but every company should come to the right conclusion for their business. I don’t encourage counter-offers because this practice sets bad precedent and puts the wrong incentive around comp / performance management. In an ideal world, CEOs should be checking in with top talent on a regular basis and your exec team should be making sure the best people are being given expanded responsibilities along with competitive comp before a counter-offer situation comes up. 

I hope this helps give some structure for how to manage an unexpected employee departure. If you’re facing a unique situation in this domain and need someone to chat through it, please drop me a line (gautam at m13.co).