Firing any employee comes with several costs, most of them hidden, as they don’t show on any profit-loss statements or budgets. But that doesn’t mean they aren’t there.
Costs of Firing Any Employee
Of course, there are the obvious ones such as any listings in newspapers or job websites, and there might be costs from using an employment agency as well. Those are the ones that show on the budget. What doesn’t show are other factors such as training the new person. Even if you hire within the company, there will be several months in most instances of bringing the new person up to speed. While that happens, those who stay in their jobs that are connected to the one who’s learning will probably end up taking on additional workload to cover the slack. That means there could be more mistakes, less time spent on employees’ usual assignments, and possibly resentment toward the new person, who will then take longer to assimilate easily into the group.
While still in the interview and hiring process, for high-level employees the cost of doing that generally costs about 40% of that position’s annual salary. That’s a fairly significant amount and does not include the cost of training or how long it takes for the new employee to get to where the person who was fired was at the time they left.
What About High-Profile Employees?
First and foremost, if the person is high-profile, then letting them go could easily be high-profile as well. The story can turn into a PR nightmare if not handled perfectly, and even then, sometimes you just won’t win. Consider when MWW PR Anthony Weiner (known for his sexting antics) go after just a few months. Retraining costs were not much of an issue, and they were already receiving a lot of flack for hiring him, but even still, it just prolonged the bad news in the press. It was probably necessary, but it cost them a lot in the process.
If it’s a CEO, even if they go graciously, expect to have company financial raked over by reporters and others. No matter what agreement was reached to protect the company and keep the fired boss happy enough not to turn it into a battle in social media or the court, somebody is going to think things were handled badly, and the journey to social media is not far away from becoming a PR crisis.
One final consideration would be if firing that person means you’ve just created a competitor. Even if you have a non-compete agreement, those usually come with a maximum time frame. If the ex-employee has skills and knowledge used in your industry, they could easily spend that time developing contacts, ideas, and, products and when the time has ended and could set up shop as a major competitor, one that’s driven to prove their value in the industry.
Before you issue that pink slip, consider all the costs.