How Do You Keep Employee Turnover Low?

Happy businessman

“The minute you tell your employees they’re going to minimum wage, they’re going to start looking,” my friend and mentor Dave said to me.

Earlier that day in our board meeting, one of our investors suggested that we shut the company down because we were out of money. We already had one new investor committed to investing in our next round of funding, and we had four other investors just about ready to commit.

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However, none of that mattered to ‘Raul”. I was not expecting Raul to suggest shutting the company down. However, I was in the moment, and I suggested that we move everyone to minimum wage for the next six weeks.

Then, I kinda sorta begged. I said, “It will drive me insane for the rest of my life if we stop now when we are so close to closing the round. We will be able to play out our hand with these potential investors over the next six weeks if we keep going.”

I held me breath, waiting for the response. Much to my surprise, the investors agreed to my request.


We had six weeks to save the company. But how many people would leave because we were going to minimum wage, I wondered?


The next day we had an all hands meeting. I explained to the team the situation we were in.

I said, “Our investors have supported us since we started. Now it’s our turn to support them.” Then I spent the next hour answering the team’s questions.

The questions mostly centered around how we would manage through this six week period , and how we resume normal operations again. The toughest question was, “What happens if we don’t get funding in the next six weeks?’

My answer was, “Then we will shut the company down.”

I assumed we’d lose about 10% of our staff during the six week minimum wage period. Instead, we lost no one.


Create a great work environment, and your turnover will be minimal.


I think we did a really good job of honestly telling our team what was going to happen. But it was really all the work we did in the years since the company started that led to low turnover throughout our existence.

The steps are pretty simple:


Step 1: Hire really good people.


I know I’m a broken record, but if you want to reduce turnover then hire really good people. You want to hire people that are smarter than you are, and you want to hire people that are experts in their respective disciplines.



Step 2: Pay your team fairly.

I'm not suggesting you pay your team at the top of the scale.  If you do that, you're likely to end up with mercenaries.

And I'm not suggesting you pay your team at the bottom of the scale either.  You will not be able to hire the best people if you do that.

Instead, I am suggesting you pay your team median salaries for their positions.  That strategy, coupled with a generous stock option program, will keep your team financially motivated.


Step 3; Create a great culture for your team.


You’ve hired a great team. The first step to keeping your great team from leaving is creating a great working environment for your team.

Be transparent with your team all throughout your company's life.  In our case, the transparency we had created trust.  Then, when we needed to cash in our trust during the minimum wage crisis, our team believed in us.



Step 4: Give your great team exciting work to do.


Great people want to work on exciting stuff. So give your team cool and exciting work to do. And while you’re at it, delegate as much as you can down into the organization.



Step 5: Get rid of any brilliant jerks you’ve hired.


Even though you’ve built a great team, it’s likely that you’ve got a brilliant jerk or two on the team. Brilliant jerks are the people that are really good at what they do, but for every one good thing they do, they set your organization back even further.

Brilliant jerks are never worth it. Ever.

If you take these five steps from the start of your company, your turnover rate will be really low too.

For more, read: How Do You Fix Your Bad Workplace Culture?


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