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Could you spend
$45,000 without
knowing it?
 Gary
has been employed
with the same
company for 6 years
but recently is
struggling to work
under a newly hired
manager. Once a good
employee, Gary 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, fearing
a wrongful
termination lawsuit,
is reluctant to
terminate Gary and
so is waiting for
Gary to quit…which
he does. Problem
solved, right? That
depends on how you
wish to spend
$45,000.
Gary was earning an
annual salary of
$50,000. The
situation described
occurred fairly
quickly…over the
course of three
months. During that
time Gary missed 11
days of work. His
productivity dropped
to about 2/3 of what
it had been.
Further, his
co-workers were
impacted by Gary’s
negativity, absences
and other changes
that occurred. They
had to work harder
and still fell
behind. A resentment
toward management
emerged, especially
among those who had
been friendly with
Gary – why wasn’t
something being
done? Once Gary was
gone, management and
senior staff began
the task of
recruitment,
interviewing, hiring
and training a new
employee to replace
Gary.
So how does it all
add up? Given Gary’s
income of
$50,000/year we know
the following:
|
Eleven days “sick”
= |
$ 2,200 |
|
Three months
working at 2/3
capacity = |
$ 4,166 |
|
Departments
productivity loss
after Gary quits = |
$ 8,000 |
|
Time spent dealing
with issue and/or
listening to Gary
vent = |
$ 5,400 |
|
Cost of
recruitment
through training*
(replacing Gary) =
|
$25,000 |
TOTAL of
Calculable
COSTS: |
$44,766 |
Other costs:
-
Damage to
morale for those
remaining at the
company
-
Lost
opportunity for
growth and success
of the company had
the department
stayed strong and
cohesive
-
Additional
expenses, including
company benefits
for Gary and all
other affected
staff
-
New hire –
uncertainty of how
strong a fit this
person will be, and
how long it may
take before they
have fully replaced
Gary.
*This is a
modest estimate.
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.
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