Quitting Employees: A Domino Effect

Paul is witnessing a steady stream of his top performers leaving—not in large numbers, but enough to raise alarms. According to him, these departing employees believe they're moving to greener pastures—less demanding jobs, reduced oversight, and lower salaries. However, these assumptions are likely misguided.

He also mentioned that this exodus is adversely affecting the morale of the remaining staff, creating a scenario where they resemble a line of dominoes poised to topple. Paul is uncertain who will be the next to leave, nor does he know how to halt this cascading effect.

In a misguided attempt to address the situation, he gathered all employees for a meeting and delivered a "you're either with us or against us" speech, reminiscent of someone who has only ever coached a competitive amateur sports team. As a result, three employees resigned the following week. Paul viewed this as "progress," but I see it as the first three dominoes falling.

The Spiral of Blame and Poor Leadership

Let me be frank: every challenging employee situation can be traced back to leadership—either through poor hiring choices or failures in management. You might disagree, but the case of Better.com serves as a cautionary tale about the consequences of neglecting leadership responsibilities.

As external factors disrupt the market, companies often respond by blaming and laying off employees, leading to a cycle of blame and further terminations. It doesn't take a genius to predict the outcome of such a strategy.

Now, imagine you're a highly capable employee in this environment. What do you do next? How long do you remain in the background before you decide to leave? In this scenario, you become just another domino.

The Silent Majority

Having founded and led startups for over two decades, I can always identify a group of employees crucial to our success. In one of my earlier ventures, we retained every single employee for three years, only losing our first team member after reaching 50 staff. While not every individual was essential, I estimate about 60% were pivotal.

However, this doesn't imply that the remaining employees were unimportant. Corporations are not merely machines with good and bad components—especially when leadership begins to treat employees as interchangeable parts. This shift from a close-knit startup culture to a corporate machine mentality can alienate top talent, relegating them to the role of a silent minority. Eventually, they choose to leave.

The Roots of Poor Management

What leads to ineffective middle management? Perhaps it's a result of cultural influences from movies or books authored by individuals from a bygone corporate era. As companies grow—typically around the 50-employee mark—leadership often mistakenly believes they must scale employee relationships just as they do other business aspects.

This results in a hastily constructed management tier that reduces relationships to checklists and productivity to metrics. I've seen a variety of trendy solutions attempted, from casual Fridays to salary transparency initiatives, but none of these can replace the essential connections leaders must forge with their top performers.

While poor middle management isn't the sole reason good employees leave for seemingly better opportunities, in Paul's case, the CEO has distanced himself from employee relations, delegating these responsibilities to Paul. Meanwhile, he focuses on high-profile investors and clients.

Is there a solution? Likely not. The damage may be too extensive, and Paul has outright dismissed my perspective. However, I hope this serves as a wake-up call for those of you who might be on the verge of leaving or for leaders seeking to prevent further departures.

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A version of this post originally appeared in Inc. Magazine, where I write a weekly column offering startup and innovation advice.