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3 Ways to Get Rid of an Overpaid, Underperforming Employee

Mar 15

One of the biggest issues we face as HR Pros is trying to get rid of our overpriced employees.  Let’s be real, we made our own bed with this issue!  We were the ones going to our ‘comp’ guy, going “No, we have to go over the range, this talent is worth it!”  Now you’re living with an employee making $20K more than the rest of team and all hell is breaking loose!

To be fair, we aren’t the only ones who do this.  Pro sports are classic for overpaying talent.  You sign a player to what looks like a great deal, but by year 4 or 5 all of sudden you wonder how do we get rid of this stiff!

This happened recently with the NFL’s Houston Texan’s in the signing of Brock Osweiler. Osweiler played great for a few games with the Denver Bronco’s behind an injured Peyton Manning, and when Osweiler became a free agent the Texan’s offered him a four-year, $72 million dollar contract.

He then fell to earth and showed his short success in Denver wasn’t a trend as he performed way below average and the Texan’s were forced to trade him to Cleveland in hopes of salvaging anything from this bad signing.

Let’s assume your overpaid employee isn’t horrible but has become just average.  Sound familiar?

How do you get rid of an overpaid, high priced, average employee?  I’ve got a few ideas:

1. Buy Out/Severance/Job Elimination – These aren’t all the same but these can be used to help you with this issue. For those HR Pros who have never used these options, you’re missing out.  Let’s be clear, it costs money but it also gives you legal protection and gets rid of a problem very quickly. Don’t blow this option off, you would be shocked at what amounts of money an employee would accept to go away.  Start low in your negotiations! Make sure you work with legal to get the right paperwork drawn up to protect yourself against future litigation!

(I’ve been able to get middle management levels folks to go away for $25K!  A huge positive impact with the team, productivity, engagement, etc.  Best $25K I’ve ever spent)

2. Put them in a box – Most of our leadership teams suck at accountability. To get rid of an overpaid person you need to turn up the accountability to an uncomfortable level. This usually pushes them out the door. You can’t let off the gas with this tactic. You really have to follow up on the accountability until the person bails.  This can be painful and loud, and usually isn’t the cleanest way to get rid of person. If they’re smart, they’ll know exactly what you’re doing and could cause further problems then your overpay issue! Ironically, most HR Pros use this technique, over all else.

3. The Breakup Conversation – I’ve also had some good success having the breakup conversation.  Face-to-face, nothing in writing, close the door and just get ‘real’.  “Tim, we need to talk. You’re making $20K more than the next highest person on the team, and you’re not delivering that level of compensation.  We’ve got to do something. That could be you leaving in some form, or what do you think?”

I’ve been amazed what my overpaid workers have come up with in terms of possible solutions.  I’ve had people retire after these conversations. They’ve put themselves into a tighter box than I ever would have created. They even offered up taking a pay cut because they love the company and the job and realize ‘we’ made an error and it’s become a problem.  I’ll be honest, in my career pay cuts rarely work out so be cautious using them, but breakup conversations can lead you to a solution!

1 Comment to “3 Ways to Get Rid of an Overpaid, Underperforming Employee”

  1. Great article. It is right on point with what we know happens in every company. I agree that having frank conversations can lead to some of the best outcomes when the employee is giving you the solution. I also agree that separation is the best in this scenario.

    Steven McCorry
    Mar 15, 2017

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