Why Good People Leave (and What It’s Really Costing You)

Hiring great people can feel like a win. Keeping them? That’s where the real challenge lies.

Just when you think you’ve finally found the right fit, their resignation lands in your inbox, and the sinking feeling kicks in.

Sound familiar?

While losing any team member hurts, losing a good one hits harder. The costs stretch far beyond recruitment fees and replacement ads. The real price is in the disruption, the lost momentum, and the morale damage. Most business owners dramatically underestimate just how much turnover is costing them, and more importantly, why it's happening in the first place.

Let’s dig into the real reasons great people walk away and what it’s actually costing your business.

The Hidden Costs of Staff Turnover

Replacing an employee isn’t just about hiring someone new. It's a process that quietly drains time, energy and money in ways many don’t fully appreciate.

Here’s what turnover really looks like behind the scenes:

• Productivity takes a hit early: From the moment someone decides to resign, their output drops. They've already mentally checked out. Even before they hand in their notice, you’re losing performance.
• There’s a long road back to full speed: Once they leave, the role often sits vacant for weeks. Even when the replacement arrives, there’s onboarding, training, and a slow ramp-up before they reach full productivity.
• Your time gets chewed up: Recruiting, shortlisting, interviewing, onboarding and managing the fallout with the rest of the team eats into your time. That’s time you could be spending growing the business or supporting the broader team.
• Team morale suffers: Good people leaving raises eyebrows. Others start asking questions. Am I next? Is this place stable? It chips away at motivation and trust, especially if it becomes a pattern.
• Your leadership reputation takes a hit: When people see poor behaviour go unchallenged, or sense that you didn’t see the resignation coming, it can damage the trust they have in you as a leader.

By the numbers, turnover typically costs between 50% to 150% of an employee’s salary. That means losing someone on an $80k salary could easily be a $40k problem, and that’s a conservative estimate.

Why Good People Actually Leave

There’s a common misconception that resignations come down to salary. It’s rarely the case.

Here’s what really causes good people to walk out the door:

1. Poor Leadership

A-players won’t stick around if they’re working under B-grade leadership. Inconsistent direction, broken promises, micromanagement and lack of feedback are all major turnoffs. Research has shown that more than 30% of people resign due to leadership behaviour.

And here’s the hard truth: in many small businesses, that leader is the owner. Not out of bad intentions, but often due to a lack of structure, self-awareness or leadership development.

2. Not Feeling Valued

Being appreciated is not a fluffy bonus. It’s essential. A lack of recognition is one of the top reasons people resign. This isn’t about throwing around expensive gifts. It’s about feeling seen, acknowledged and genuinely appreciated for the work they do.

3. Lack of Direction

Today’s team members want more than a job. They want purpose, growth and clarity. That doesn’t mean everyone expects a promotion every six months, but they do want to know what the future could look like for them. Without that, people start exploring other paths.

4. No Room for Autonomy

Micromanagement is one of the fastest ways to lose a strong performer. It sends the message that you don’t trust them. People need ownership. When they have it, they’re more engaged and less likely to leave.

Even if things are busy, even if you care deeply about the outcomes, you’ve got to stop swooping in and start letting people own their work.

How You Might Be Pushing People Away (Without Realising)

Most turnover doesn’t happen because someone hates their job overnight. It builds over time, and often it’s avoidable. Here are four of the most common ways business owners unintentionally push great people out the door:

1. Constant Firefighting

If your business feels like it's always in crisis mode, that instability creates stress and fatigue. People never feel like they’re on solid ground. Even in fast-paced industries, your job as a leader is to create some sense of certainty and direction.

2. Avoiding Difficult Conversations

Letting poor performance slide, ignoring issues or hoping things will magically improve only sends one message: low standards are acceptable. Your best people will notice. And if they don’t feel you’re protecting the culture, they’ll start looking for somewhere that will.

3. Micromanaging or Swooping In

You assign a task, then take it back halfway through or redo it yourself. It might come from a place of caring or wanting to protect quality, but it chips away at trust and confidence. Autonomy matters. Let people take ownership, even if it means they do things a little differently to how you would.

4. Failing to Recognise Contributions

If you don’t say anything, silence starts to feel like disapproval or indifference. Recognition doesn’t have to be over the top. Just saying “great work on that project” or “thanks for handling that so smoothly” goes a long way.

Research shows regular, specific recognition can reduce turnover by up to 29%. That’s not just a nice-to-have, that’s a strategic advantage.

Structure Is the Secret Weapon

The good news? You don’t need to overhaul your leadership style or change your personality to become a great leader. What you need is structure.

Put simple processes in place that make feedback, communication and consistency part of the rhythm of your business. A monthly recognition check-in. A regular team huddle. A plan for what growth looks like in your business, even if it’s not a traditional promotion path.

Structure doesn’t remove your individuality. It supports it. It makes it easier to lead well, and harder to drop the ball when things get busy.

It’s Not Just About Being a Good Boss

Great people leave average workplaces all the time. The difference between retention and churn is not luck. It’s leadership. Not just in title, but in the everyday actions that show people they’re trusted, appreciated and heading somewhere worth sticking around for.

So the next time a great person hands in their notice, resist the urge to blame it on money or competitors. Take a look at the environment they’re leaving behind, and ask yourself what it might be telling you.

Because once you start leading with clarity, consistency and care, you won’t just find good people. You’ll keep them.

An Invitation

If you’d like to connect with other business owners, leaders and managers, I’d love for you to join us inside our free Facebook Group where you can connect with other like minded business owners, leaders and managers to discuss all things HR: https://www.facebook.com/groups/hrsupportaustralia