What a Young Business Learns When Someone Leaves

What does the way a startup responds to its first resignation reveal about the organisation it is becoming?

Two years ago (2024), I launched my fifth business with an enthusiastic young team of seven people. I have deliberately started several of my businesses with graduates because they bring current academic knowledge, energy, enthusiasm and a willingness to question inherited assumptions, and I bring the real-world experience. Part of my role there is to help them discover what business actually feels like: the decisions, uncertainty, mistakes, progress, disappointments and occasional exhilaration that cannot be fully recreated in a classroom. The exchange works both ways when their optimism and ideas challenge the limitations that experience can sometimes create, while my experience helps us recognise the difference between a temporary setback and something that genuinely threatens the business.

For all but one member of this particular team, it was their first experience of building a business together. We were seven people creating an organisation without inherited systems, established traditions or stories belonging to somebody else. We were creating many of those things for the first time, and learning how to work together as the business itself took shape. We shared an origin story, and we knew what the earliest days had felt like, we remembered the decisions that later employees would only ever hear about, and understood many of the informal ways the business worked because we had developed them together. That closeness was one of the team’s strengths however, earlier this year we discovered how deeply it also shaped our experience of change.

In February, just as we were preparing to recruit and grow the team, we received our first resignation. It was an amicable and entirely understandable decision, the kind of resignation that eventually occurs in every organisation as people’s circumstances, needs and ambitions change. At some point, an opportunity elsewhere becomes the right next step for someone. My experience allowed me to understand the resignation in that wider context, but for most of the team, there was no previous experience against which to interpret it. One of the people who had helped build the business had decided that their future would continue somewhere else, and the effect reached into morale, confidence and relationships.

The timing also created another layer of uncertainty. We were preparing to and focusing on recruitment because the business was growing, just as one of the original team decided to move on. Both things were true at the same time, although they created an uncomfortable question for people still learning how organisations evolve: if we were growing, why was somebody leaving?

I had experienced resignations many times throughout my career, yet this one taught me something new. I understood how to manage the practicalities of a resignation, but I had underestimated what the first one would mean to a young team with no evidence that the organisation could change shape and still continue successfully. I also underestimated how little opportunity I would have to influence that meaning before people began creating it for themselves. The resignation was unexpected, which placed me in a purely reactive position because I was absorbing the news, considering its practical implications and deciding what needed to happen next while everyone else was beginning the same process. I had intentions about how I wanted to communicate the departure, protect relationships and give the team confidence, but the event time frame moved faster than those intentions.

In the absence of an explanation, people do not postpone interpretation, they create their own. Even a short gap can fill with questions, assumptions and private conversations. The leader may still be establishing the facts while other people are already deciding what those facts mean for the business, for the team and for themselves.

My previous experiences gave me confidence that the organisation would continue, while my connection to the team meant I also felt the significance of the change. I had brought these people together and was part of the shared origin story myself. I was responsible for providing stability while processing some of the same emotions. This is where leadership becomes particularly human. The team needs honesty about the significance of the event, confidence in the organisation’s ability to manage it, and enough space for the leader to acknowledge that they are affected too. Experience provides perspective, though it doesn’t provide immunity.

Research into team membership change helps explain why one resignation can have such a substantial effect. A 2020 academic review led by Hayley Trainer, a researcher in industrial and organisational psychology, examined how teams respond when people join or leave. It describes each change in membership as a team-level event whose impact depends partly upon how novel, disruptive and critical it is. A first resignation in a seven-person startup carries all three characteristics: the team has never experienced one before, it alters several working relationships, and one person represents a meaningful part of the organisation as it currently exists. A wider academic review covering 133 studies found that changes in team membership can also disturb cognitive, behavioural and interpersonal systems, affecting who knows what, how work is coordinated, where people seek help and how the remaining members relate to one another. Adaptation requires the team to rebuild those connections and establish new ways of working.

In an early-stage business, the boundaries around each person’s contribution are often fluid. People carry knowledge, relationships, history and informal responsibilities that never appear on an organisation chart or job description. One person’s departure therefore removes more than their immediately visible work. In this type of situation, the team experience a genuine form of organisational loss. I would certainly use the word grief carefully, but a version of it feels appropriate. The person exiting was continuing their life elsewhere and our relationships with them could continue too, yet the organisation had still lost something it valued. We had lost the future we had unconsciously imagined in the team’s original form. Familiar conversations and routines would change, knowledge and responsibilities would have to move, and one of the people who could say, “I was there when we began,” would no longer be present in the business each day.

Every employee is part of a network through which knowledge, trust, communication and cooperation flow. Studies of turnover and social capital have found that when someone leaves, the organisation looses part of this network alongside the person’s productive contribution. More recent research has also found that departures can interrupt communication between the people who remain, particularly where the departing colleague previously connected others. An intelligent organisation recognises this sense of loss, allows people to experience it and understands what it represents. The team can feel the departure deeply while the business itself remains healthy. Acceptance helps people separate their sadness about the change from their confidence in the organisation’s future.

The first resignation also introduced departure as a visible possibility for everyone else. Before anyone had resigned, leaving belonged to an imagined future. Afterwards, the team had watched someone consider their choices and reach a decision and continue elsewhere. That experience naturally invites people to examine their own relationship with the organisation, even when they remain committed to it.

A colleague’s resignation can also prompt others to reconsider their own future. Researchers describe this as turnover contagion, where coworkers’ attachment to the organisation, conversations about opportunities and job-search behaviour shape how others view their own position. One resignation does not determine another person’s decision, but it can make previously unconsidered choices feel real. This makes the leader’s communication particularly important, even when the initial communication cannot offer a complete solution. The first message can establish what is known, what will remain confidential, what happens next and when the team will hear more. It can acknowledge the effect of the resignation while giving people confidence that the practical consequences will be addressed, and clarity gives the team something more reliable than assumption from which to form its interpretation. Acknowledgement matters too. Telling an experienced leader that resignations are normal may offer perspective, but a team experiencing its first departure needs room to recognise that this particular resignation has changed something it values. Stability comes from helping people understand and absorb the change, allowing confidence to rebuild upon reality. The way the departing person is treated also sends a powerful message to those who remain. People notice whether their colleague’s contribution is remembered, whether their decision is respected and whether the organisation continues to speak about them fairly after they have gone. As employees watch somebody else leave, they are also learning how the organisation might one day treat them.

With hindsight, I could have prepared the organisation more deliberately for the reality that its membership would eventually change, even though I could never have prepared for this particular resignation or predicted when it would inevitably happen. That preparation begins culturally. A healthy organisation can create strong belonging while accepting that careers develop, personal circumstances change and people eventually make different choices. Commitment describes how someone contributes while they are part of the team; it does not need to become a promise of permanence. Preparation also has a structural dimension. Knowledge, customer relationships and responsibility need to move gradually into the organisation rather than remaining entirely attached to individuals. More than one person should understand essential work, important relationships should have more than one connection point, and the organisation should know where the loss of a particular person would create the greatest difficulty.

Processes and documentation help preserve continuity, although relationships and experience can never be completely captured on a page. The aim is to reduce unnecessary vulnerability while continuing to recognise the distinctive value each person brings. Emotional preparation matters as well. Teams benefit from understanding that organisations evolve, new people join, established people leave, responsibilities change and every stage creates a slightly different version of the business. A shared origin story provides strong foundations while leaving room for other people to join and contribute to what comes next.

Further studies following teams after someone leaves show that the effects tend to unfold in two broad phases: disruption followed by recovery. Recovery involves more than filling the vacancy. The team must redistribute knowledge, form new relationships and develop a revised understanding of how the relationships within, and the organisation itself works. Over time, the organisation reaches a new equilibrium shaped by both what it retained and what it learned. That is where the experience can contribute to greater organisational strength. The resignation revealed where knowledge was concentrated, which relationships depended heavily upon one person, how quickly uncertainty became interpretation and what the team needed from its leaders when there was no prepared answer. It also revealed our capacity to acknowledge difficult emotions, accept the change and continue building. Organisational maturity develops through many indicators and across many different dimensions: leadership, decision-making, financial discipline, processes, accountability, shared knowledge, adaptability and the ability to operate beyond dependence upon particular individuals, not just operationally but perhaps more importantly, emotionally. A resignation offers only one lens through which that development can be observed. For us, it became one meaningful moment in a much longer journey.

So, what does a young business learn about itself when one of its first people decides to leave?

It learns that the people who helped create it matter, and that their departure can leave a genuine sense of loss. It learns that experience cannot prevent surprise, but can provide perspective when surprise happens. It learns that resilience includes feeling the effect of change, understanding what the change has revealed and finding the confidence to continue in a different form.

Most importantly, it learns that it can accept what has been lost, preserve what still matters and use the experience to grow stronger.

Mark Jarvis