High Attrition Rate for Startups: The Causes & How to Fix It

Startups are notorious for having a high attrition rate.

A startup will attract highly creative, strategic, and forward-thinking people early.

However, regardless of their best efforts, attrition persists. And so does talent poaching.

The cyclical pattern of hiring, building a team, to then start again, reminds us of Albert Einstein’s definition of insanity:

“Doing the same thing over and over again and expecting different results.”

What if we approached retention differently? What if we say, let’s accept & work with attrition instead of against it.” To do so, we must initially comprehend what causes startup turnover.

The Keynote: Employee turnover rates ranging from 15 to 58 percent are perfectly acceptable for fast-growing tech startups. It means that goTenna, with an average attrition rate of 32.5 percent over its seven years, is typical of similar-sized businesses. It isn’t ideal, but it isn’t out of the ordinary.

But, what are the elements that contribute to a high attrition rate? Let’s study

The Causes

1. Offered Low Salary as per Skills

Employees may believe that they are not being compensated adequately for the amount of work they are performing. Because the economy is booming, a talented IT professional will gladly leave your company if a competitor offers him a higher salary.

2. Failure to Recognize

Another factor that may sour employees’ feelings is that their successes and accomplishments are not even acknowledged. Create an internal employee recognition program that recognizes and rewards employees for their efforts.

Quick Plug: The development team at Netsmartz helps you reduce employee attrition by concentrating on employee engagement through dedicated teams. By first understanding your business well, our skilled team aims at delivering meaningful work with goal-setting and seamless communication.

3. Being Overworked

Employees may believe they are being forced to do far more work than they should or not being compensated adequately. Overworked employees may experience emotional and physical exhaustion and more daily stress than is tolerable.

4. Toxic Working Conditions

Some argue that the only worse company that curtails personal development affects the bottom line. Being treated as an object, unprofessional behavior by other employees, constant and incessant gossiping, and workplace bullying are all reasons for anyone to want to leave.

Inadequate Opportunities for Advancement

Developers who believe they have reached their full potential may no longer be motivated to stay at their current job. Mentoring and cross-skills training should be made available to interested employees. Encourage employees to take on new projects and move up the ranks.

The Solution to Fix the Attrition

1. Offer Pay Raises

To avoid high labor turnover in your company, make sure your pay rate is competitive and in line with industry averages. Perks can influence job satisfaction. Consider other ways to compensate employees if you don’t have a budget for significant pay raises or benefit packages. Paid time off, compensation time, and flexible time are all tools that small-business owners can use to compete with giant corporations.

2. Improve your Hiring Process

Your recruitment process can play an essential role in reducing future turnover and increasing employee tenure. Recruiters should thoroughly examine an applicant’s resume and background, but they should also consider attitude and willingness to learn. They may look great on LinkedIn, but they may leave if they aren’t passionate about your ideas.

3. Improve your Team’s Communication

It’s critical to deliver essential messages if you manage a hybrid or remote development team or even if you manage an on-site team. Using a single cloud communications app is one low-cost way to ensure that everyone receives the message. Using tools such as Spark, Skype, and Microsoft Teams, everyone can be on the same page via messages and audio/video calls.

4. Make your Job Enjoyable

Tedious, monotonous, repetitive tasks stifle employees’ creativity and passion, eventually leading to inefficiency. Check to see if the job is stimulating and challenging. Jobs that are something to look forward to rather than something to dread sound fantastic.

5. Award their Achievements

When your team achieves a goal, show them how much you value their efforts. When a staff member breaks a record, give him the credit he deserves. When a member of your development team achieves breakthrough success, recognize them. Finally, let your employees know that their efforts are not being overlooked, ignored, or taken for granted.

Let’s consider an alternate ballpark now that we are in the premise of attrition.

Could there be additional ways for your startup – bootstrapped, funded, or scaling – to counter attrition and maintain a steady operational workflow.

Maintain code output and velocity…

Maintain and deliver iterations, features, and usecase based functionality…

If not, then you should consider opening up your hiring avenues and plug into dedicated remote teams.

Much like what Netsmartz has been offering Startups since 1999.

A dedicated team, much like your in-house team consists of skilled folks who are good at their job.

Except, they are hirable on-demand.

They are pre-vetted, and experienced.

They are available everywhere.

And don’t cause a fortune to hire and train.

So while we’re in the attrition premise – why not consider a means to an end and hire dedicated teams to bolster your output.

Or furthermore, deploy a dedicate remote software development team to guide you from step to step – right from MVP development to rollout.

Food for thought!

To Wrap Up

If your small-business workforce is experiencing high turnover, it’s time to consider what’s causing the exodus. Employees leave jobs for various reasons, but a significantly high turnover rate indicates that something in your company is driving developers and engineers away.

Examining the potential causes mentioned above and solutions for overcoming them can help businesses stem the tide before it has an adverse financial impact on their business.


High Attrition Rate for Startups: The Causes & How to Fix It
Anup Mehrotra
Published on
March 28, 2021

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