Is it cheaper to retain? Or fire? Part I


Q&A with Dave Nichols - Is it cheaper to retain an employee? Or fire them?

Being a manager, supervisor, or owner - hiring and firing is part of the job description. But when faced with an underperforming or problem employee, you may find yourself at a crossroads of cost.

Performance or behavior
In order to assess if it's more cost effective to retain or fire an employee, first start with this question: Is it a performance or behavioral issue?

A performance issue, for example, could range from poor numbers such as low closing rates to bad customer reviews, whereas behavioral issues could be described as professionalism and punctuality. Some behavior like theft and dishonesty are grounds for immediate termination in my book, but performance and other behavioral issues such as arriving late and unfriendliness can be helped with a little bit of training.

Find the cause
Oftentimes performance issues are related to the individual but can also be caused by a bad or lacking on-boarding process, poor to no training in the new role or external influences on the performance. So when considering retaining or termination, do some investigating into the root cause of the performance issue to see if the behavior could potentially be repeated with future employees in that role.

Also in working through performance issues, if you feel the employee is good for the role but needs some work, show them how they can become a leader in their role to not only save the team member but to reap greater benefits than you may have originally envisioned, so that the cost of coaching (training, reviewing processes and procedures, considering external influences on performance) or replacing can be easily outpaced.

In part two of this two-part series, I'll walk you through a formula for calculating termination versus retention cost, including a hidden value you might not have considered.

Dave Nichols is a Regional Training Manager with HVAC Learning Solutions.

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