One in three employees at small and medium-sized businesses (SMBs) in the UK have quit their job after a colleague resigned, new research shows. Nearly half say they would consider doing the same if someone in their team left.
The findings come from a study by HR platform HiBob that shows how departures can destabilise smaller organisations where close relationships are a key part of working life.
With more than half of SMB employees considering leaving their job in the next year, and one in 10 already looking for a new role, the impact of staff turnover could be severe for employers.
Close ties bring big consequences
SMBs depend heavily on culture and personal relationships, and the research found that three-quarters of staff enjoy their work because of the team environment and sense of purpose. Meanwhile, 77 percent describe close ties with colleagues. Nearly as many, 74 percent, say those connections have developed into friendships outside work.
That closeness makes departures especially hard felt. Seventy-one percent of employees say losing a colleague feels like losing a friend, while 60 percent say it has a significant personal impact. For 62 percent, it is the people around them who motivate them to perform at their best.
The cost of people leaving
Turnover is also expensive. One in seven managers at SMBs said their organisation saw workforce turnover of 40 percent in the past year, while nearly a third reported that replacing one employee cost more than £10,000.
Delays in recruitment add to the pressure. Seventy-one percent of hiring managers said such delays damage morale and work–life balance, and 61 percent said rising employment costs mean they expect more from the staff who remain. Almost half admitted they lose sleep worrying about who will leave next.
“In small businesses, even one resignation can have a disproportionate impact on output, morale and momentum,” said HiBob chief executive and co-founder Ronni Zehavi.
“SMBs are powered by close relationships and a shared sense of purpose, which makes them incredibly resilient – but also more exposed when those dynamics shift. Retaining talent in this environment isn’t about quick fixes. It’s about consistency: recognising people, creating clear paths for growth, and investing in a culture that makes them want to stay.”
Retention strategies
Zehavi said the focus was moving away from just money. “Our data shows the employee focus is shifting away from pay alone – towards recognition, career development and creating a reason for employees to stay. SMBs who prioritise these will be one step ahead in avoiding the cost of resignation.”
Independent studies echo the findings. Oxford Economics, a forecasting firm, has estimated the average cost of replacing a UK employee at over £30,000 when training and lost productivity are included. Other surveys suggest culture, recognition and career progression are now stronger drivers of retention than pay, particularly in smaller businesses.
Experts say small firms, unable to compete on salary with larger organisations, can gain an advantage by offering progression opportunities, stronger culture and flexibility. Many employees also value predictable schedules and genuine recognition more than financial rewards.
With over half of SMB employees saying they are considering a move within 12 months, the need for action is urgent, observers say, and employers who address culture, communication and career development may reduce the risk of departures spreading through teams.
For smaller firms, where one resignation can quickly affect morale and performance across the business, retention efforts are likely to prove critical.
