When it comes to pop culture, watching a room full of people cheer or cringe as an executive screams, “You’re fired” may make for some riveting reality television. In real-life, however, there’s nothing entertaining about the termination process.
The effects of a termination may be felt by a variety of those involved with a business or corporation. Obviously, the employee who has been fired will be affected, as will the person’s family. Co-workers will be impacted, perhaps leading to a decrease in morale, productivity, and even safety. Termination is one of the most, if not the most, unpleasant duties a manager, supervisor, or human resources professional must face, and may result in resentment and anger on both sides of the table.
The Cost of Termination
There’s no doubt that termination affects people, but it also impacts the bottom line. Termination is expensive. When an employee is dismissed, it typically costs between 50% and 60% of that person’s annual salary to refill the position. In the best case scenario, the company is faced with the costs of advertising, training, and hiring a new employee to fill the position. Until someone new is hired, the rest of the team may have to work overtime, resulting in additional salary expenses. The terminated employee may also file for unemployment. In the worst case scenario, an employee who feels the termination was wrongful may decide to sue, resulting in legal fees. In any case, termination reduces profit every single time.
The Decision to Terminate
In order to reduce the negative effects of termination on personnel and profits, managers and supervisors should consider termination the last resort rather than the go-to solution. If an employee’s performance points toward the need for termination, a manager or supervisor should answer the following questions:
- Have your company’s policies been applied fairly?
- Are you firing for performance or for personality?
- Have you tried coaching, additional training, progressive discipline, a performance improvement plan (PIP), and/or reassignment?
- Do you have all the facts and have these facts been documented (for example, with signed performance appraisals and warnings)?
If the answer to these questions is yes and termination appears to be the only choice, the manager or supervisor should work in conjunction with Human Resources to ensure the termination is handled in an appropriate and legal manner. The termination should happen as early in the week and as early in the day as possible. Be prepared to receive company property and give the employee a final paycheck. Be courteous and direct. Once the termination is complete, do not discuss the circumstances with other employees.
There is no doubt that a termination will impact your business team and affect your corporate bank account. However, if the termination is necessary, as long as it is handled with dignity and according to federal and state laws, your business and the remaining team members will be stronger in the long run.