What are Your Problem Staff Members Really Costing You?

By Megan V. Falcon, Falcon Law Ltd

The following scenario is a common one in business.

You have someone currently engaged in a managerial position.  They appear to have constant problems with other valuable employees.  You attempt to identify an underlying problem or cause, but nothing is revealed other than a seemingly competent, talented employee who is results oriented.  They may even be your top sales performer. 

Ask yourself, perhaps the highlighted issues are not a business problem at all, but possibly a character one.  Analyse the personhood of the employee, and you might find a trail of issues. 

For example, there may have been a personality conflict, whereby another staff member had to be exited from the business.  This has occurred together with comments from other employees suggesting they will leave due to the behaviour the experience from the person in question.

Once you have asked the question of what does the person accomplish and how do they deal with people, now estimate the true cost of having this person in your business. 

For example, summarise the actual expense to your business of having the person employed in it:

• First, take what the company pays as a salary to the problem person as remuneration
• Add what the company pays you, the leader, on the basis of an hourly rate, and figure out how many hours you have spent listening to other people in the business talk or complain about this problem person during the past year.  Multiply that figure by your hourly rate to determine expense of your time
• Add the number of hours according to the expense of the people who were spending their time talking to you about the problem person instead of doing their work
• Add the opportunity cost of what you and those other employees could have been achieving, in lieu of spending time speaking or complaining about the problem person
• Add cost of the entire distraction to morale, focus and general direction of the business as a whole, that is created by issues surrounding the problem person
• Add any cost of a monetary settlement you had to pay for another employee that exited as a result of the matters having arisen, due to relationship issues with this problem person
• Add the management effort and potential cost of losing any staff that remain, but are still complaining about this supposed problem person
• Add the cost of lawyers, consultants or HR people that you have had to engage to become involved in resolving the issues arising due to the problem person
• Add the cost of finding a replacement for any staff member who exits due to the issues they have had with the problem person
• Add the potential cost of a loss of whoever is in charge of managing this problem person, due to a loss of confidence in him/her by the board, owners or key leadership within the company, due to a failure to manage the problem person
• Add the cost of lost recruitment effort and training that had been invested in the lost employee/s
• Add the lost business, work and momentum during the time lapse, between staff leaving, and seeking and engaging new employees from scratch

Are you getting the picture? 

Staff problems are costly!  Now that you have determined the potential cost to your business of having this person in it, consider whether either performance management or prompt removal of the employee from their position is a necessary step, before you incur the existing or pending expense you will inevitably create by a failure to act.

Then, learn from the experience so that when recruiting another prospective employee, you make sure time is taken to speak with relevant prior references.  Miss this crucial step at your detriment! 

Ask about the prospective employee’s performance, from both a business and character perspective.  Did they achieve at a high level of competence, and were their relationships with others effective and low maintenance, or were there ongoing issues. 

But most importantly, ask the previous employer, “Would you have them in your business again..?  Was it an experience you would want to repeat..?”  The ability to achieve results is important, but only part of the necessary picture regarding an employee’s ability to succeed at work.

Falcon Law Ltd is a private employment law consultancy practice.  The principal, Megan V. Falcon is a specialist consultant who provides expert advice to employers, to effectively assist them by way of leadership consultancy, facilitation and dispute resolution.  Megan has been admitted as a Barrister and Solicitor to the High Court of New Zealand but trades as a specialised Employment Law Strategist. Please contact her directly by mobile 0275 FALCON / 0275 325266 or mvf@falconlaw.co.nz.