Why Your Startup Turnover Is So High and What to Do About It

By Rachel Ernst

May. 5, 2017

Startups are notorious for having a high attrition rate, and HR is tasked with difficult job of retaining and engaging existing employees.

At an early stage, a startup will typically attract highly creative, strategic, future-oriented thinkers who defy boundaries.

Despite their best efforts, attrition continues.

The repetitive cycle reminds me of Albert Einstein’s definition of insanity: “Doing the same thing over and over again, but expecting different results.”

What if we thought about retention differently? What if we said, “Let’s accept and work with attrition rather than against it?” To do that, we must first understand what causes turnover in startups.

In my experience, the cause is due to two key factors: the profile of people who are attracted to work at startups, and evolution of that profile as the company grows.

The profile of candidates who flock to startups tend to be more risk-tolerant professionals interested in making a big impact, and they’re focused on growing quickly. Because successful startups go through various phases of growth, the type of person interested in contributing at one stage is different from the one attracted to the next stage.

For example, at an earlier stage, a startup will typically attract highly creative, strategic, future-oriented thinkers who defy boundaries. As it grows in number of employees, processes are needed to help create structure, which changes the kind of work needed, hence changing the candidates the company attracts.

It is up to HR to understand this evolution and work with the reality rather than against it. Working to “prevent” turnover is virtually impossible, and leads only to great frustration and wasted resources. Instead, here are three strategies to work with the reality we live in:

  • Get ahead and keep communication open. Providing multiple modes of communication among managers, employees and leaders is essential to understanding when and where the turnover will happen. These might include polling, surveys, All Hands, 1:1s, team meetings, stand ups and informal “drive bys.” Equip managers with tools to have open dialog with employees to learn what their motivators are, and how their work and environment currently or could fulfill that. Encourage the question “When you leave here, what do you want to have learned?” Managers may shy away from this kind of conversation, yet when they open up the dialog and build the right level of trust, employees welcome the ability to speak openly. By learning where attrition will happen through these modes of communication, organizations can much better plan for the attrition they will inevitably face.
  • Link your ideal candidate profile to your company growth phaseLet’s face it: when we need to hire quickly, hiring managers create a description quickly and after a brief review by a recruiter, it is posted. Aside from the skills and experience needed, not much time is spent thinking about the kind of candidate profile that’s needed for that particular stage of the company. Candidates with only very large company experience struggle with the often very little structure that exists in a startup. They also tend to be less risk-tolerant and therefore can sometimes stand in the way of innovation. Candidates who have jumped around to different startups will likely be frustrated with the structure in place for companies with 500 employees or more. The moral: be mindful of where you are in your growth, define the profile of a successful candidate for each stage and make sure your recruiting strategy evolves with your growth.
  • Maximize on your employeestalentsHow much happier would your employees be — and how much more could they contribute — if everyone agreed? Using Gallup’s simple Strengthsfinder assessment can help your employees learn about their best talents, and their managers can use this information to align those talents with work. Each time I’ve run Strengthsfinder sessions with employees, their eyes light up as they discover what truly drives them. Managers can then take this information and allocate work according to each team members’ strengths, thus maximizing the output of each individual.

The purpose here is not to say that engaging employees and ensuring overall employee health and happiness isn’t important. In fact, it is extremely important. However, at the pace that startups grow, the reality is that different people are attracted to, and do their best in, different stages. So, instead of wringing our hands over attrition and trying to coerce everyone to stay, let’s capitalize on the fact that each individual performs differently depending on the situation by changing how we attract and develop talent each step of the way.

Rachel Ernst is the head of employee success at Reflektive. Comment below or email

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