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Could You Spend
$115,000 Without
Knowing It?
Maybe You Already Have....
 Ed
has been employed
with the same
company for 6 years
but recently is
struggling to work
under a newly hired
manager. Once an exemplary
employee, Ed has
become disruptive.
He complains openly
to co-workers about
his distaste for
management and he
has ignored the
company hierarchy by
bringing issues
directly to senior
staff. His number of
“sick” days has
increased
dramatically and he
has fallen behind on
several projects.
The company, fears
a wrongful
termination lawsuit and
is reluctant to
terminate Ed. They are aware Ed is unhappy, and are waiting for him to quit…which
he does. Problem
solved, right? That
depends on whether or not you planned to spend
$115,000 on "resolving" the situation.
Ed was earning an
annual salary of
$75,000. The
situation described
occurred fairly
quickly…over the
course of five
months. During that
time Ed missed 14
days of work. His
productivity dropped
to about 2/3 of what
it had been.
Further, his
co-workers were
impacted by Ed’s
negativity, his absences
and other changes
that occurred. They
had to work harder
and still fell
behind. A resentment
toward management
emerged, especially
among those who were
friendly with
Ed – why wasn’t
something being
done?
Once Ed was
gone, management and
senior staff began
the heavy task of
recruitment,
interviewing, hiring
and training a new
employee to replace
Ed.
So how does it all
add up? Given Ed’s
income of
$75,000/year we know
the following:
|
Fourteen days “sick”
= |
$ 4,200 |
|
Five months
working at 2/3
capacity = |
$ 10,416 |
|
Departments
productivity loss
after Ed quits = |
$ 19,000 |
|
Time spent dealing
with issue and/or
listening to Ed
vent = |
$ 8,900 |
|
Cost of
Replacement* =
(recruitment
through training) |
$72,563 |
TOTAL of
Calculable
COSTS: |
$115,079 |
*This is a modest estimate for replacement costs.
The Department of
Labor and other
employment
organizations report
the cost of
replacing an
employee to be at
least 30% of that
employees annual
income + benefits;
Most analysts
suggest the actual
cost will range from
75 - 150% of the
replaced workers
annual salary +
benefits. Costs grow
exponentially higher
in direct relation
to the level of
expertise and
responsibility
(title) of the
person being
replaced.
Other "hidden" costs:
-
Time spent by HR and Management to handle issues related to Ed's departure, recruitment of his replacement, and staff issues regarding the change.
- Damage to
morale for those
remaining at the
company
-
Lost
opportunities for
growth and success
of the company
-
Additional
expenses, including
company benefits
for Ed and all
other affected
staff
-
New hire issues –
uncertainty of the fit this
person will be. How long before they have fully replaced
Ed.
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