HR Strategy

What Employee Separation Really Costs You

By

Lauren Rogers

| Aug 13, 2019

Often, it can be sad to see a beloved employee leave for a new opportunity, but at other times, it’s a relief to part ways with a team member who simply isn’t working out.

No matter the reason for an employee’s separation, it can be draining for managers, HR and the departing individual’s team – with emotionally charged conversations, questions or frustrations from the team. Additionally, lapsed productivity and the logistical challenges of finding a replacement add hours of workload and stress across the company.

But if managed solely through manual processes, employee separation can also drain another organizational resource: cold, hard cash.

stack of papers

Separation by the numbers

Research from Ernst & Young’s study on the financial cost of 41 common HR tasks indicates each time an employee is terminated, an organization incurs costs for these specific functions:

  • processing COBRA, retirement and other benefits, $11.36
  • documenting reason for separation, $12.10
  • preparing and completing employee exit interview or survey, $16.86
  • documenting exit interview, $15.20
  • calculating employee’s final payout, $13.19

This means that for each employee who leaves your company, manually completing separation-related tasks sets you back $68.71. If 300 employees move on to something else in a year, that’s $20,613 out of your budget to simply process the separations!

Much ado about something

Manual processes contribute to miscommunication and organizational bottlenecks. They make documenting important conversations and maintaining compliance more challenging than they need to be. And employee separation isn’t the only HR function manual processing unnecessarily complicates.

Expense management, time and attendance, benefits administration, training and other tasks become more burdensome than necessary. A very real financial burden exists, as well.

Discover how much manual process could cost your company across the board in our calculator, based on Ernst and Young’s data. Or check out our recent white paper, Minimize Avoidable Labor Costs While Increasing Efficiency Companywide, to get a deeper dive into the data and demonstrate how manual processes are costing your organization big dollars.

About the Author

Lauren Rogers

As a writer at Paycom, Lauren Rogers keeps employees abreast of company news and events, and provides insight to industry leaders regarding issues affecting human capital management. With experience in marketing and communications, Lauren has written blogs and other materials for a variety of businesses and nonprofits. Outside the office, she enjoys gardening, testing new recipes and sipping something caffeinated with her nose in a book.

See more posts by Lauren Rogers