No matter how many times you've done it, no leader likes to fire employees.

J.T. O'Donnell, who describes her previous role of "restructuring" divisions of companies as the role George Clooney played in "Up in the Air," says letting people go never gets any easier. 

Even when you know an employee is not a good fit for your company, you come up with excuses to avoid the inevitable. You may worry about how that decision will impact the rest of your team’s workload or that you won’t have the budget to replace the employee. HR makes firing people difficult, and even you have to admit the employee does some good work.

However, there’s a high price to pay for hesitation. One person can destroy the company culture you’ve worked so hard to build, and this can directly affect your bottom line.

The devastating cost of bad employees

Here are just a few ways a bad employee can ruin your organization from the inside out:

  • He or she can threaten the morale of your other employees.
  • Bad employees do second-rate work and bring others down with them, reducing overall productivity.
  • People who aren’t engaged don’t provide the best service, and your customers will take notice.
  • If you aren’t willing to make the tough decisions, your good employees will lose trust and respect for you.

Firing bad employees isn’t just about the “soft” issue of maintaining a feel-good culture, where every employee is a perfect team player. Disengaged workers cost the American economy $350 billion per year in lost productivity. Plus, if you keep bad people, good people will leave, and replacing them can cost up to 200 percent of their salary.

We once hired a call center director to oversee 200 people. She had a great résumé and killer ideas, but she came in like a bull in a china shop and made drastic changes without including her team.

It took us a year to appreciate the impact she was having on our culture. On the day we let her go, another employee came up to me with tears in her eyes and said I had just “lifted a cloud from the organization.”

Did I feel good about that? No, I felt terrible. It had taken us time to recognize that this employee was hurting the organization, but the people she worked with directly were acutely aware of the problem.

How to identify problem employees early

To keep bad employees from infecting your organization, better employee screening during the hiring process and early detection are key.

Start by reexamining your hiring process. How do you filter for problematic employees and assess attitude and motivation? Asking candidates how they would solve problems will alert you to their approach in handling people.

Once hired, make sure you have conversations with employees throughout the year -; not just during a formal review once a year. It’s much easier to address little problems than it is to manage a messy accumulation of them.

When someone isn’t a culture fit, have an open conversation and make a plan to improve. Document these conversations for HR purposes so there’s no confusion later on.

When your gut tells you a person is not meant to be part of the company, act immediately. While he may not be a good fit for your company, he may thrive in a different environment.

Most importantly, don’t ignore complaints from good employees. These people are your early warning system.

You can’t “save” everyone, but you must do your part as a leader to make sure you’re communicating appropriately and often. People who aren’t a good fit will generally reveal themselves, but it’s up to you to trust your intuition and do your part to protect your company’s culture and profitability.