Before the Ax Falls: 3 Steps to Head off Employee Termination

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It's expensive to lose an employee. We’re not talking about employee retirement or someone going off into the sunset for a better job. We’re talking about the dreaded ax – employee termination – the “You’re fired,” that none of us really want to deal with.

It may be necessary; the employee could be a bad cultural match or not have the right skills. But before you give them the ax understand it’s going to hurt you as much as it does them.

The High Cost of Employee Termination

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A Center for American Progress (CAP) report studied the costs associated with employee termination:

  • The average cost to terminate a $10/hour employee is $3,328.
  • For salaries ranging from $30,000 to $50,000, it will cost 20% of their annual paycheck. That’s about $8,000 to replace a $40,000 manager position.
  • For highly skilled executive roles, the cost rises to 213% of their salary. For an employee making $100,000, you’ll spend an average of $213,000 to replace them.

The costs calculated in the CAP study include the job hunt itself: Advertising, networking, interviewing, and hiring. It includes onboarding tasks like training and orientation. There is also lost productivity, especially in jobs such as sales, while the new employee gets up to speed in the role. It includes training and a trial and error process natural to any job.

High turnover also hurts employee morale. It makes people feel less secure and potentially less engaged. There is a cultural impact every time you lose an employee; whether they are fired or not.

Three Steps To Avoid Employee Termination

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Before you commit to firing an employee, we recommend three key steps. Consider it your “cooling off” period.

  1. Communicate with the troublesome employee. Explain the situation and discuss ways they might improve. Take time to listen to their side of the story and carefully gauge their attitude. There’s a big difference between wanting to succeed and failing and just having a bad attitude. Ask yourself this crucial question: Is this an employee that could improve with additional training?
  2. If the answer is, “Yes,” then create a Performance Improvement Plan. Set up regular coaching sessions that monitor their progress.
  3. If this doesn’t work, it’s time to take corrective action. Make certain you conduct an Assessment of what went wrong after the termination. Was there something you should have done differently in the hiring process?

Because of the cultural and monetary costs associated with employee termination, you should always consider it a last resort.

Try it Before You Buy It?

Consider talking with an Artisan Talent Account Manager to see if there might be temporary to full-time hiring options for the next round of creative staffers you bring on board.

Or, ask our team to take over the recruitment, and screening process, to help ensure a better long-term match. Contact us to find out your options.

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