What’s the Hidden Factor Driving Your Top Talent Out the Door?

A few months ago, a founder I mentor called me in a panic. He had just lost his lead developer — the third person to leave his startup in six months — and he was struggling to understand why.

“We have a great culture,” he said. “Flexible hours, team lunches, even off-sites. But people keep leaving.”

I asked him a simple question: “Are you paying them well?”

There was a long pause. Then he admitted something I’ve heard from more founders than I can count: “Probably not. I figured they believed in the mission.”

Don’t get me wrong — mission matters. So does flexibility, culture and all the other perks we try to offer. But if you’re not compensating your best people fairly, none of that will matter for long.

I see this mistake often, especially in early-stage startups where cash is tight and optimism is high. Founders assume loyalty will come from belief alone. But belief doesn’t pay rent. It doesn’t build loyalty. And when a great employee walks out the door, they take far more than their job title with them.

The truth is simple: If you want people to stay, you need to pay them like it.

Related: Your Employee Wants A Raise. Here Are 7 Ways You Can Afford It.

The real cost of not paying enough

When a talented employee leaves, it’s easy to write it off as a hiring problem. You’ll just find someone new, right? But in reality, the cost is much higher — and harder to quantify.

You may have heard the oft-repeated statistic that losing an employee can cost a business up to two times the employee’s salary. Factoring in lost productivity, recruitment time and onboarding, I’ve mostly found this to be true. From a purely financial perspective, that “money saved” on salary is a dubious tradeoff at best.

But the financial hit is just the beginning. You’re also losing institutional knowledge, project history and an established understanding of your company’s idiosyncrasies.

Moreover, the effects of turnover spread well beyond the specific person who left. On small teams in particular, one departure can set off a chain reaction. Projects stall. Morale dips. Colleagues start wondering whether they should be updating their resumes, too. It’s not easy to overcome that type of disruption — it takes months to re-train, rebuild trust and get your team firing on all cylinders again.

Put simply, underpaying talent might save you in the short term — but it almost always costs you more in the long run.

Fair payment is pain

So how do you know if you’re paying your employees adequately? I have a simple rule of thumb: It should hurt a little.

What I mean by that is that if their salary feels entirely comfortable to you — if it doesn’t make you hesitate even slightly — you’re probably not paying them enough.

That discomfort isn’t a red flag. It’s a sign that you’re treating compensation as an investment, not just a line item. And it’s the price you pay for long-term loyalty, trust and performance.

In the early days of Jotform, I lived by this rule. As a bootstrapped founder, I was pouring everything I had into the business. At the end of the workday, my employees would hop in their cars and drive home. I’d walk two kilometers to the bus station. Not because I couldn’t afford a car, but because I chose to spend that money paying my team well.

Some of them were fresh graduates when they joined. Within a couple of years, they had their own cars. That wasn’t just a milestone for them. It was a signal that I was building a workplace worth staying in.

And many of them did stay — five, 10 years or more. That kind of loyalty doesn’t come from ping pong tables or company swag. It comes from being paid — and valued — like a professional.

Related: People Really Only Care About These 3 Things at Work — Do You Offer Them?

Beware of your blind spots

According to recent research from Gallup, self-reported employee turnover risk is at its highest level since 2015. Leaders are often blindsided by these departures, especially because they assume employees will say something if they’re unhappy. In reality, they often don’t, with 36% of voluntary leavers reporting that they didn’t talk to anyone ahead of their decision to resign.

In my experience, top performers in particular don’t want to appear ungrateful. Plus, they’re often too busy doing great work to raise the issue. But even the most purpose-driven employees have bills to pay. When they feel undervalued financially, it doesn’t take long for that dissatisfaction to turn into a job search.

While many factors determine employee happiness, failing to recognize compensation as a lever of retention is a major missed opportunity. When you proactively reward excellence, you send a clear message: We see you. We want you to stay.

You don’t need a million-dollar budget to get this right. You just need to shift your mindset. Paying fairly isn’t a luxury reserved for when you’re profitable — it’s how you build the kind of company that gets there.

A few months ago, a founder I mentor called me in a panic. He had just lost his lead developer — the third person to leave his startup in six months — and he was struggling to understand why.

“We have a great culture,” he said. “Flexible hours, team lunches, even off-sites. But people keep leaving.”

I asked him a simple question: “Are you paying them well?”