How much does a Terminated Employee Cost?
How Much Does A Terminated Employee Cost – The estimated cost of firing an employee depends on several variables, such as:
- The value of the lost productivity for the employee.
- Severance pay.
- There is a loss of sales due to fired employee’s existing customers.
- There maybe relocation costs, executive search firm fees, etc. for the replacement.
- The employee’s manager and HR manager’s time used with the firing and the new hire.
How Much Does A Terminated Employee Cost? Administrative time used for functions such as:
o Terminated employee,
- Ending the employee’s benefits,
- An exit interview,
- Changing locks or system passwords,
- Notifying customers, vendors, etc.,
- The security over the employee’s email accounts,
- The collection of the company’s materials,
o New hire employee,
- Developing and placing ads for the staff replacement,
- Updating the job description and salary requirements for the position,
- Reviewing resumes,
- Interviewing candidates,
- The hiring process (reference checks, background checks, new hire paperwork, etc.)
- The “onboarding” process,
- Technical training time,
- Set up of computer, phone, etc. (technology setup),
- Reduced productivity due to the “ramp-up period” for the new employee.
Also, related to the termination and hiring a new employee, there are several hidden costs as listed above. Therefore, each can reduce the productivity of the business.
How Much Does A Terminated Employee Cost?
Per industry experts, you are going to be surprised by the employee turnover costs. For staff or a middle manager, the additional expense is between 50% and 200% of the employee’s annual salary. Therefore, the turnover cost of highly productive salespeople or top executives is between 150% and 350% of the employee’s salary.
How Much Does A Terminated Employee Cost? The cost of making a “bad hire” is expensive. Take your time and go through the proper hiring process when searching for a new employee. Quickly finding someone is not the answer. The risk of shortcutting the hiring process is much higher than the reward. Yes, hiring another weak employee is never a reward.
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My name is Robert Curry, and I am an Author, CEO Coach, Keynote Speaker, and Turnaround Specialist. Over the past 20 years, I turned around more than 70 companies taking their businesses from Loses to Profits.
Recently, I published two books about turnarounds: “From Red to Black – A Business Turnaround” and “The Turnaround.” Both books are true stories about turnarounds of real companies that I have turned around during my career. In both books, I shared all my Profit Improvement Recommendations (“PIR’s”). PIR’s help to grow sales, reduce expenses, improve cash flow, and most noteworthy, strengthen the management teams.
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