Expect High Employee Turnover In 2014


Over the last 30+ years in business, and having lived through a half-dozen recessions, I found that during an economic recovery personnel turnover was at its highest.  Not just by a little bit, but double or triple.

When times are bad, your people don’t receive job offers and they hang on to the job they have.   When times are booming, existing companies expand, and new companies emerge and need to staff up.  Everybody wants to woo away your best people.   And they will, with money, benefits, stock options – usually before you even have a chance to match the offer.   

For small to medium businesses, controlling salaries is difficult in the best of times.  Small businesses generally don’t have the resources to compete with the benefits a bigger company can offer.    

Losing an entire tech support department in six weeks

In the 1990s I was running a software company in NJ.  We had a dozen tech support people. The average salary was about $33,000 at that time.   Health care was paid in full for a single person.    

One day, Verizon decided it needed to expand it’s support department as they expanded their Internet services.   They set out to hire hundreds of technicians.  They were offering around $37,000 in salary, slightly better benefits, AND they would pay for a technician to get Microsoft certified (it was about $1,000 per certification).    Well, first they recruited my weakest tech – who we were getting rid of, but keeping on part-time while he looked for another job.   Then, within six weeks, they recruited most of my tech staff –  how did they get them?  They paid the first guy a bonus for every person he recruited.   Bam.  We went from having about 40 years of collective experience in POS technical support, to having very little.  letter-resign

This happened several times over the fifteen year period I ran the company.  Every time a big company expanded, they shifted the playing field.  The ramp up in the few years before Y2K was one of the worst – it was a boom cycle for programming and technicians.  Of course, after the “dot com” bust, technicians and programmers came to my door looking for work.   

But, it gets worse. 

In today’s world, not only does small business compete with the Fortune 500, but also with the startups, often over-funded, who are throwing money and options at people in order to get them.    And many of those startups will operate at a loss for years!!    It doesn’t work well for maintaining employee stability in small businesses.    

The venture capital companies (VCs) have been pouring money into point of sale, and mobile payment startups – and big companies are doing acquisitions at big valuations.   It involves hundreds of millions of dollars annually.   The last few decades show us that the VC business has a boom and bust cycle and this time will be no different – if you can wait it out.

With our economy recovering, and VC’s heaving amazing (absurd?) amounts of money around, my guess is that 2014 will be a VERY challenging year for the small business in general, but especially for companies in the retail technology industry.  


Some recent news about VC money

Loop Mobile Wallet Oversubscribes $10M Angel Round

Paydiant Mobile Wallet Receives $15M in Funding

Many other companies have been launched and funded in the last three years including Square.   Groupon, Intuit, First Data, Google  – etc… all are positioning themselves and building product or buying talent for the mobile payment trend.





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