Say It Ain't So

What to do when a valuable employee quits.
Magazine Contributor
7 min read

This story appears in the September 1998 issue of Entrepreneur. Subscribe »

Maybe he dropped hints, or maybe it came out of the blue. Either way, a valued employee has just resigned. What should you do? Wish him well and immediately show him the door? Make a counter-offer and encourage him to stay?

The answer depends on many variables, but you'll be better off if you've determined in advance how to handle such a situation, says Lynn Cottrell, president of IRC-The Employers Council, a nonprofit employers' advisory organization in Salt Lake City.

Long before you have to deal with a resignation, decide whether you need confidentiality or noncompete agreements. Not all companies do, but if there are sensitive aspects to your business, have the documents drawn up and checked by an attorney to be sure they're legal and enforceable.

When the employee tells you he's quitting, give yourself time to think things over before taking action. Don't try to respond on the spot, Cottrell suggests.

Points to consider include how valuable the employee is to the company; whether he's underpaid (either in his own opinion, in yours, or by industry standards); what kind of trade secrets he could walk away with; other issues--perhaps a personality conflict--that may be influencing his decision to leave; and whether making some sort of concession to entice the person to stay would set a precedent that could cause problems for you later.

Once you've considered your options, invite the employee into your office for a private meeting. This is the time to find out why he's leaving and where he's going. If you've decided you want to try to keep him on board, ask if there's anything you can do to change his mind. You should already know how far you're willing to go. Be wary about making offers to keep the person, Cottrell warns; you may regret a hasty decision later.

If he's made it clear he's not open to negotiation or that what he wants is more than you can offer, set the stage for a graceful departure. "Have the employee leave as a friend," says Cottrell. "We all have enough enemies. Why make a person feel poorly about leaving?" Also, he points out, you want the employee to leave on terms that would make it possible for him to return if circumstances should change in the future.

Should you let the employee work out his notice? Before you make this decision, consider his character, his motivation for leaving, and the access he has to computer files and other important information. Keep in mind that someone whose loyalties have moved elsewhere may be in a position to harm your company.

In most cases, Cottrell says, it's better to pay him for the notice period but let him go immediately. "Once somebody has given notice, their heart leaves," he says. "If you don't need them for the transition training, it's best to let them go." It's not necessary to treat him like a criminal by escorting him to his office and watching him pack, but be careful to get his keys back, change computer and other system passwords, and take any additional steps to protect your company's security.

Cottrell gives two reasons for paying employees even though they don't work through their notice period. One, terminating an employee because he or she resigned could leave you open to legal liability. Two, if you get a reputation for firing people who resign, no one will ever bother to give notice, which means you'll never have time for planning or making counter-offers.

Finally, if the resignation of a key employee took you totally by surprise, you might want to consider making changes so it doesn't happen again. Says Cottrell, "It should be a cause for reflection of whether you've been locked in your office or have actually been involved in the business, seeing what's going on around you."

Get With It

Nip your procrastination right in the bud.

If you tend to procrastinate or find yourself overwhelmed by your workload, there are steps you can take to get the situation under control. Shale Paul, a personal effectiveness coach in Tallahassee, Florida, offers these tips for taking action:

  • Take time to get organized. A cluttered workspace can be tremendously distracting. "Get rid of everything that is extraneous in your workplace or office, and have an assigned place for everything else," says Paul. "It takes time to get organized, but it pays off in less time wasted."
  • Begin the night before. Don't wait until Monday morning to plan your day or week. Paul recommends setting aside time on Sunday, when you're relaxed, to decide what you want to accomplish during the week and to plan your schedule for the next day. Then each evening, plan the following day so you start each morning knowing what you're going to do.
  • Prioritize your plans. Not all tasks are of equal importance, effort or duration, so keep your priorities in mind as you schedule your time.
  • Honor your personal work style. Paul believes each person has his or her own individual work style. "When are you most creative? When is the best time for you to do routine chores, exercise, study, communicate, even nap?" Paul asks. "Understand and honor your style, and you'll be more effective. Ignore it, and you'll work at less than optimum capacity."
  • Make the first touch a decisive one. The first time you touch a document, you need to put it where it can be dealt with. "Pick it up and make a disposition," Paul says. That could mean taking immediate action, forwarding it to someone else, or putting it in a "to be handled later" file.
  • Follow the WIFO principle. WIFO stands for worst in, first out, which is Paul's technique for dealing with those unpleasant tasks you'd rather avoid. Once you finally get the task done, Paul says, "Chances are, you'll find that you spent nearly as much time worrying and rescheduling it as you did actually doing it." So assuming the task meets your priority requirements, simply get it done and out of the way.
  • Schedule a weekly cleanup time. No matter how skilled you become at scheduling, prioritizing and delegating, there will always be times when you feel overwhelmed by too much work. "You may find it helpful to pick a time each week as a cleanup period," Paul advises. "This is the time you'll mentally review your priorities and dispose of all those little things that have built up during the week."

Temporarily Yours

Interim executives offer short-term solutions.

A hot trend in the temporary employment industry offers a great resource for growing small businesses: placing high-level executives in small companies to work for short periods of time.

"One of the key challenges small businesses face is how to access the best talent to help their companies grow," says Paul Dinte, president of Dinte Resources Inc., a retained executive search and interim executive appointment firm in McLean, Virginia. Dinte says an interim executive can handle a short-term project, such as testing a particular idea before the company makes a full commitment; managing a product development process; developing strategic plans; or anything else a senior executive would do, but on a temporary basis.

The advantage of hiring an interim executive instead of a management consultant is that the executive actually comes on board as a hands-on part of your company, rather than simply coming in long enough to make suggestions and then leaving you to deal with the implementation. Also, in a typical situation, Dinte says the interim executive will cost about two-thirds what a management consultant would charge for the same work. Fees for interim executives range from $75 to $250 an hour, depending on the level of expertise required.

Choose an interim executive agency carefully; not every temporary service firm specializes in high-level managers. Check the references of both the agency and the candidate. Dinte advises being very specific about what you need, what you expect to accomplish and how you'll measure the results. "When the parameters are properly laid out in the beginning, there's a greater probability of success," he says. "Be sure your contract includes a provision to deal with the situation if you find the compatibility isn't there or the project needs changes."

Contact Sources

Dinte Resources Inc., (703) 448-3300,

IRC - The Employers Council, 143 S. Main St., #903, Salt Lake City, UT 84111-1946, (801) 364-8479

Shale Paul, (850) 893-8327,


More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Are you paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.

Latest on Entrepreneur