Employee Termination and Turnover Costs

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Questions and Answers

What is one of the less obvious costs associated with employee turnover?

  • Higher training costs for existing employees
  • Increased employee salaries
  • Immediate improvement in team morale
  • Loss of productivity while the position is vacant (correct)

For experienced roles, what is the potential percentage of salary cost associated with employee turnover?

  • Approximately 50%
  • Around 25%
  • Can climb to over 200% (correct)
  • Typically less than 10%

Which type of termination is characterized by the employer deciding to end the employment relationship?

  • Temporary Termination
  • Involuntary Termination (correct)
  • Mutual Termination
  • Expiration of Contract

What is a potential benefit of mutual termination of employment?

<p>Facilitates smooth transitions between parties (B)</p> Signup and view all the answers

Which factor is most likely to contribute to an employee's voluntary termination due to dissatisfaction?

<p>Lack of Career Development (B)</p> Signup and view all the answers

What is a potential impact on employers when experiencing high turnover due to dissatisfaction?

<p>Loss of Institutional Knowledge (A)</p> Signup and view all the answers

What is the purpose of outplacement programs for employees?

<p>To help employees transition into new roles (B)</p> Signup and view all the answers

Why is it important to communicate with the remaining team members after a termination?

<p>To maintain morale and prevent unnecessary concern (A)</p> Signup and view all the answers

Which of the following is NOT a component of outplacement services?

<p>Immediate rehiring within the same company (D)</p> Signup and view all the answers

What is the main goal of redeployment and internal transfers within a company?

<p>To retain valuable talent and fill vacancies internally (B)</p> Signup and view all the answers

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Study Notes

Employee Termination

  • Voluntary Termination:
    • Employee initiates the termination.
    • Reasons include retirement, new job, relocation, career change, and educational opportunities.
    • Can also be due to workplace dissatisfaction like bullying, harassment, poor relationships, lack of career development, or unpleasant job changes.
  • Involuntary Termination:
    • Employer initiates the termination.
    • Includes layoffs due to budget cuts or restructuring, at-will termination, and dismissal due to underperformance, misconduct, or policy violations.
  • Mutual Termination:
    • Both employee and employer agree to end the relationship.
    • Often due to a mismatch in expectations, contract buyouts, or other mutually beneficial agreements.

Cost of Employee Turnover

  • Can range from 16% of annual salary for entry-level positions to over 200% for more experienced roles.
  • Includes costs associated with recruitment, training, lost productivity, and disruption to team dynamics.

Employer Considerations for Termination

  • Ensure all actions are legally justified and well-documented.
  • Provide support to employees during the process to minimize negative impact.
  • Conduct exit interviews to identify and address underlying issues.
  • Secure company property and revoke system access before the employee leaves.
  • Communicate the situation to the remaining team clearly and concisely.

Outplacement Services

  • Provide structured support to laid-off employees to transition into new roles.
  • Help reduce the emotional and financial impact of job loss.
  • Includes:
    • Personalized career coaching: 85% find new jobs within 6 months.
    • Resume and interview help: Increase job search effectiveness.
    • Emotional support: Counseling to cope with stress.

Redeployment and Internal Transfers

  • Redeploy skilled employees into new roles within the company, instead of letting them go.
  • Benefits:
    • Retain valuable talent.
    • Fill internal vacancies with people who understand the company.
    • Show employees that their contributions are valued.
    • Increase morale and satisfaction.

Training and Upskilling

  • Companies offer training to help employees transition into new roles that require different skills.
  • Benefits:
    • Ensure a smooth transition.
    • Invest in employee development.

Severance in Austria

  • System differs from other countries.
  • Employers contribute 1.53% of employee's monthly salary to an Occupational Pension Fund.
  • Employee receives severance from the fund, not directly from the employer.
  • Employees can choose to receive immediate payout or let the funds grow for a larger, one-time payment later.

Key Takeaways

  • Broad Impact: Termination impacts team morale, productivity, and overall company culture.
  • Reputation & Loyalty: Approaching termination with empathy and transparency maintains reputation and employee loyalty.
  • Transition Support: Outplacement services ease transitions for laid-off employees, improving job search success.
  • Talent Retention: Redeployment and internal transfers retain valuable talent during restructuring.
  • Legal Protection: A documented termination process protects the company legally and ensures fairness.
  • Relevance Communication: Effective communication prevents misunderstandings and maintains trust.
  • Growth & Commitment: Training for redeployed employees demonstrates commitment to their long-term development and boosts morale.
  • Downsizing vs. Rightsizing: The distinction has implications for internal and external perceptions of decisions.
  • Severance Flexibility: Austria's system allows employees to customize their severance payment options.

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