It may seem counterintuitive, but at a time when qualified job applicants are hard to find, it’s more important for your bottom line to fire employees who hold your company back.
A regional warehouse owner recently brought this home to me. When I asked how business was, he replied, “A lot better since I finally started firing people and replacing them with others who can actually do the job of running a warehouse.”
A Harvard Business School study comes to the inclusion that ridding yourself of a toxic employee can secure a more positive impact on your organization than you can achieve by replacing an average worker with a “superstar.”
A toxic worker is one who is harmful to an organization’s performance. This could be someone who is simply a bad fit, or whose behavior adversely affects fellow workers or other company assets—including unsafe behavior and violence in the workplace.
A superstar is defined as someone in the top 1% of productivity who adds so much value that without that person a firm would have to hire additional workers (or pay for additional hours from existing workers) to achieve the same output.
The disparity between the two categories of employees is so great that ridding your organization of a toxic worker can result in cost returns of nearly two-to-one compared to those generated by a superstar, the Harvard researchers conclude. The study found the average cost of a toxic employee was $12,489 in 2015, while the average benefits generated by a superstar totaled $5,303.
The cost of a toxic employee includes the expense of replacing additional workers who quit their employment because of that person, but doesn’t include additional costs stemming from litigation, regulatory penalties and reduced employee morale—so it is likely an underestimate, the researchers say.
What You Can Do
Not surprisingly, there are right ways and wrong ways to fire someone, especially in this era of proliferating lawsuits citing disability, age, religious, racial or ethnic discrimination, alleging retaliation for filing a sexual harassment complaint, and those charging violation of family leave and other labor laws.
Employment litigation is one of the fastest growing sectors of litigation, note attorneys at the law firm of Husch Blackwell. Approximately one out of five of all the lawsuits nationwide are filed by current or former employees.
To avoid legal problems, the lawyers recommend that before you fire an employee:
• Have proper and specific (not generalized) documentation of performance problems.
• If the employee has lodged a complaint, ensure you’ve conducted and documented a full and complete investigation.
• During an investigation, speak with and obtain signed statements from co-employees—don’t make legal conclusions based on assumptions or speculation.
• Be thorough and consistent.
• Have and articulate a valid legal basis for the discharge.
• Afterwards, do not alter or destroy any records in the employee’s file.
Unsatisfactory work performance justifying termination includes: unwillingness to work toward assigned goals, inability to complete work assignments or correct errors in reasonable time, inability or unwillingness to learn new tasks or skills or to work collaboratively, and failure to exercise good judgment.
Attorneys regularly report how shocked they are when they learn many managers continue to regularly say obviously dumb things that draw lawsuits, especially when it comes to racial, sexist and other obviously discriminatory remarks, like those demeaning women’s and older workers’ capabilities. Keep in mind that any mention of age or retirement in connection with a termination, even when offering an enhanced severance package, can result in losing an age discrimination lawsuit.
In fact, in today’s legal environment perhaps the best advice is for you to get expert advice from an experienced legal advisor to help shape and implement a termination process. Oh, and in the process, also try to avoid saying anything stupid.