Leadership

4 Reasons NOT to Fire a Longtime Employee

firing a longtime employee

It’s the advice column that has people in a frenzy.

An employer wrote into Fortune’s weekly advice column asking if it would be wrong to lay off a warehouse employee of 20 years because it would be easier and cheaper to hire someone younger and faster.

The writer was quick to empathize with the employer’s conundrum, diving into the heavy costs of retaining a longtime employee. From cost-of-living salary increases to healthcare contributions to his growing vacation allocations, the writer noted that an employee’s 20 years with the company can get pricey. What’s more, the author pointed out, an older employee poses a greater risk of injury on the job and perhaps will need financial aid as he nears retirement and finds he hasn’t saved enough. Although he goes on to suggest possible solutions such as transitioning this employee into another role, he remains firm that the choice is up to the boss who must make decisions in the interest of the company and not any, one employee.

But with the headline reading “Why You’re Not a Jerk for Firing a Longtime Employee,” it’s easy to see how the author reads this thorny issue.

Leaving aside the issue of age discrimination–which Fortune later addressed with an addendum to the article–the piece is missing a much bigger point. All of those costly benefits that a longtime employee accrues are there for a reason: loyal employees are tremendously valuable to a company.

Also read: Defeat Ageism at Work

Here are just 4 of many reasons you should think twice before firing a longtime employee:

  1. Yes, There are Turnover Costs

Replacing employees costs money, plain and simple. According to the Society for Human Resource Management, replacing an employee can cost a company up to 60-percent of his salary. To break even, the company would have to find a much cheaper worker to replace the longtime employee.

But turnover costs are only the beginning of the issue.

  1. Throwing Away Experience

The expertise and institutional knowledge gained over years and even decades on the job have their own value—no matter how intangible they may be. Say for example, a new manager comes in looking to shake things up. This new person may be full of excellent ideas and proposes a key initiative that he believes will make the company money. Everyone is on board except for one, longtime employee who remembers that the company has tried a similar initiative before and failed miserably. Using this knowledge that would otherwise be lost, this longtime employee can help the company avoid repeating history. The costs saved by this longtime employee in this instance would easily pay for his well-earned vacation days and salary increases over the years.

But of course, such moments of vindication are rare. The real contributions of longtime employees may unfortunately be easier for an employer to overlook—especially if all he wants to see is the bottom line.

  1. The Message You Send About Loyalty

However, one’s tenure with a company should never cloud an employer’s judgment on that worker’s value. Just because someone has been with the company for 20 years does not mean that he is a perfect employee and must remain. But firing even an imperfect, longtime employee may have detrimental effects on the company that are not immediately apparent. For example, seeing a longtime employee lose his job could communicate to the workforce that the company does not value loyalty. As a result, some younger workers who would have otherwise planned a long and fruitful career with the company will now not think so harshly of keeping their options open on the job market. Perhaps more concerning, seeing a long time employee go could erode workplace morale, confidence and engagement.

Also read: 3 Ways to Maximize Employee Engagement

  1. Destroying Diversity

Finally, there is the issue of workplace diversity: engaging a wide variety of perspectives can be extremely beneficial to a company. But without cultivating generational diversity, a company is failing to see the full picture. There are some challenges that only years of expertise can resolve. Retaining a workforce where both fresh perspectives and time-honed wisdom can coexist will be beneficial in the long term to all involved.

So – are you a jerk for firing a longtime employee? Maybe “jerk” is not the right word. Shortsighted, perhaps, would be a more accurate way of characterizing an employer’s decision to let an employee go just because he could hire someone newer and cheaper.

About the Author

R. Kress is an Emmy Award winning journalist whose reporting and writing has appeared in national media from NBC News to the International Herald Tribune. She has covered news from cities around the world including Jerusalem, Krakow, Amman and Mumbai.