Employee Termination and Turnover Costs

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.