Nothing speaks louder than money. And when you’re struggling with an employee who is costing you dollars in productivity before you start the separation process, you may want to take into consideration the cost of severing them. Simply put, employee retention saves money unless the employee is draining dollars.
According to the Center for American Progress, “For all jobs earning less than $50,000 per year, or more than 40 percent of U.S. jobs, the average cost of replacing an employee amounts to fully 20 percent of the person’s annual salary.” While this is a dent for any organization, it might be a bigger loss to retain the employee. It’s a catch 22.
The true question: “Is your employee worth retaining?” This worth includes factors that, while economic, are still hard to quantify. Aside from the additional training, additional management hours and loss productivity that stem from a less than desirable performance, you need to take into account how others, including you as the manager, will be directly affected. When you spend all your time catering to and enabling a lost sheep the others may go astray. Not to mention the headache and stress (perhaps medical expenses) that occur during the rehabilitation process.
Please understand that a lot of my work is spent on coaching and developing talent to increase retention. But when an employee and organization are best served by severing ties, it’s time to cut your losses and consider outplacement strategies. Remember, as your career consultant, I’m here to help.