How much does a Terminated Employee Cost?


terminated employee cost
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,
  • Recruiting,
  • 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” andThe 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.

If the information in this article How much does a Terminated Employee Cost? helps you, your family or a business associate, please email me at and share with me the story.

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From Red to Black & The Turnaround
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To our clients, past, present, and future:

I am Bob Curry, an author, and owner of CEO Results Coaching. It is incredible how often we hear a similar message and experience the same issues from new clients. Owners/CEOs feel like they are on an island with no one to turn to for advice. Unfocused employees are draining the company of its energy and funds, and sales teams have forgotten how to close deals. These clients say, in a desperate tone, “Bob, this just isn’t what I envisioned.” Our role is to refocus their efforts, so they can resurrect the original passion and vision that motivated them to start their company. The results, sales, and profits increase sales and profits, plus the ability to manage growth successfully.