The True Cost to Replace an Employee

Cost to replace an employee

As a leader, you face business expenses that can blindside you. The cost of replacing an employee is higher than you think! Assume you hired a poor choice ninety days ago (hey, it can happen!) Now you need to terminate her. You’re obviously out the wages that you paid her, but that’s not all. What is your true cost to replace an employee?

The cost of being a revolving door employer to poorly suited employees is enormous. And you’re not the only one facing this problem.

Ninety days ago, that one employee looked good on paper and sounded good in the interview. So you gave her the job. That was a mistake and now you regret it. (In an upcoming article, I’ll give you some tips on avoiding that predicament in the first place.)

Consider the other costs for that one employment mistake. Before you decide to let her go, you faced distractions while you decided how to deal with her. There is stress on the rest of your staff because they had to work with or cover for her. You may have customer or business losses because of her. Worst case, there could be legal expenses if she was really bad. Tally up those costs and it’s scary.

But those are only part of the true cost to replace an employee. To find her (hopefully) permanent replacement you’ll also have expenses for:

  • Recruitment and screening
  • Interviewing time
  • Job offer and negotiation
  • Orientation and training
  • Setting up employment file and office supplies
  • Extra initial supervision/feedback meetings
  • Distraction/time away from other important responsibilities

Put some dollar numbers by these list items. You can’t solve a problem until you understand it. The true cost to replace an employee is high and the mental toll is even higher. But we’ll get you through it and launch you to new heights. You haven’t peaked yet!