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Lead Your Team Managing

What to Do When Your Best Employee Quits

What to Do When Your Best Employee Quits
Losing your best employee can be a blow for small businesses. Here's how to handle it. / Credit: Red chair image via Shutterstock

In a small business or startup setting, every employee is an essential member of the team. It's hard to imagine how the business would keep functioning if one person had to take a short leave of absence, let alone if that employee quit altogether. But the departure of key employees is an ever-present risk for any company, and it's important that employers be prepared for the loss.

"You have to have a talent pipeline in place," said C.J. Reuter, senior director of global client success at social recruiting solution Work4. "You can get hit with someone's [resignation] notice at any time, and if that happens, you need to have two or three people ready to step up."

While no company wants to see its best workers leave, to make the transition go smoothly, it is important that employers handle resignations in a professional and legally compliant manner. Here's how to proceed when an important employee decides to quit. [5 Ways to Keep Your Best Employees Happy]

Stay calm

When one of your staff members quits, the worst thing you can do as an employer is to lash out in response.

"When a key employee leaves, don't panic," said Alice Bredin, a small business adviser for American Express Open. "No one employee's departure will mean the demise of your company, even if it feels that way."

"People rarely appreciate a 'how can you do this to me?' scene when they first give their notice," added Chuck Post, an employment attorney at Weintraub Tobin law firm.

The best thing to do is to remain calm and ask the employee why he or she is planning to leave, Post said. While it's not good to demand information or to put the employee in an uncomfortable or high-pressure position, you may be able to learn something that will help you craft a counteroffer, or find another means of retaining that person.

Review your legal obligations as an employer

If you're unable to reach an agreement, or the employee won't change his or her mind about leaving, the next step is to make sure you're in compliance with all employment laws concerning termination.

"Legally, termination of employment can be a source of liability," Post told Business News Daily. "It is prudent, where possible, to ensure that the employer has fulfilled all mandated end-of-employment obligations."

Post noted that the legal obligations owed to a departing employee are as follows:

- Pay all accrued wages.
- Disburse any accrued benefits that must be paid upon termination (either under law or company policy), or document the employee's nonentitlement to said benefits.
- If applicable, account for and establish a schedule for commission or bonus payments that will be made after the termination. This is usually governed by law and the terms of bonus and commission plans.
- Provide the employee with the required legal notices (COBRA benefit continuation, unemployment and workers' compensation notices, etc.).

If the employee has signed confidentiality notices, noncompete/nondisclosure agreements or other legal documents protecting your company's intellectual property, these should be reviewed as well so that both you and the employee are clear about what the terms of the agreements will be once he or she leaves the company.

Conduct an exit interview

Holding an exit interview, whether face to face or via email/online survey, is more than a way to gain insight into an employee's personal experience with your company. When you speak with a departing staff member, you also take an important step to tie up any loose ends and potential problems down the line.

"Employers shouldtake reasonable and lawful actions to ensure that all that leaves the company is the employee, and not information or customer relationships," Post said.

During the interview, Post advised confirming and documenting that the employee has returned all company property; that he or she has not taken, copied or transmitted any intellectual property or sensitive company information; and that he or she is aware of any continuing obligations not to use or appropriate your company's business information.

Your exit interview can also help you shape your strategy for the future of that particular position.

"[An employee's departure] is an opportunity to revisit the role and find the right fit," Bredin said. "That person may have been Mr. or Ms. 'Right Now,' but who is really the right person? What can you do better next time?"

Find a way to fill the gap

Once an employee gives his or her initial notice and the dust has settled, your priority is to find a way to fill in the talent gaps. As Reuter pointed out, having a backup plan in place can help you spring into action right away and line up someone to take over.

"It's really tough to replace" [key employees], Reuter said. "The solution is to have somebody waiting and have clear career paths internally. You want to have everyone on your team to be interested in every job so they can step up."

Whether you're planning to directly replace the departing employee or changing someone else's role internally, you're going to have some gaps to fill. But hiring the first new candidate who expresses interest may not be the best solution, despite the immediate, perceived benefits to your company.

"A hire takes a while and you don't want to rush," Bredin said. "Be strategic. Use a contract employee [or freelancer] in the short term to ease the pain of the busy work while you take your time and find the right person. You'll pay more for that person, but it will be worth it."

Originally published on Business News Daily.

Nicole Fallon
Nicole Fallon

Nicole Fallon received her Bachelor's degree in Media, Culture and Communication from New York University. She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. She currently serves as the assistant editor. Reach her by email, or follow her on Twitter.