This is the first installment in a 3-part series, where Robin Adwar shares the effects of obtaining, maintaining, and retaining under-performing employees as compared to top-performers. Studies have shown that the “output” (ROI) of top-performing employees is more than 3 times than that of under-performing employees. In many cases, the difference in compensation between an organization’s top performers and their under-performers is minimal if anything. Poor HR work is seldom more visible than when we fail to fire an under-performing/poor employee. It loses the trust we have built up and the damaging image often spreads beyond employee relations to the rest of the organization.
Part One: Perception of Your Organization
The message of retaining an under-performer rings loud to other employees as well as to competitors: “These people don’t know how to hire or manage properly! They can’t be doing well if they still got him on board.”
In this first blog I’m exploring how an under-performing employee adversely affects perception mainly among the members of the organization.
- Top performers challenge and motivate each other to be better; under-performers have the opposite effect on their co-workers creating an inferior company instead of one that excels.
- Employees who under-perform reflect their work ethic to their peers; managers who under-perform reflect to their peers and subordinates and ultimately create a less productive organization.
- In a team comprised of mainly top-performers, an under-performer does not fit in and throws off the team’s dynamic, the team’s morale, and the team’s cohesiveness.
- Top-performers will come to resent the organization for not keeping pace with them through hiring under-performers who cannot progress the business the same way.
- Under-performance is easily detectable by customers who will keep that experience with them the next time they’re in the market for your product or service.
- Under-performers set internal expectations low or create an environment of double standards. This is further enhanced as future recruits join the company and follow the path of least resistance.
Part Two: Internal, Indirect Costs
Many business owners and CEOs think that firing a non-performing employee will cost them money. In reality, it saves them money.
Below I have compiled the main internal, indirect costs an organization can expect because of keeping an under-performing employee on staff.
- A position taken by an under-performer is obviously not being adequately completed and therefore a strain on the other members of the organization.
- Under-performers require additional oversight and management, draining time that could be of better use elsewhere.
- Under-performers generally are not creative or inventive, contributing little to that side of the business.
- Under-performers often undergo training to make up for their shortcomings – which is a great solution if the employee is open to and capable of learning to change.
- …And during this additional training, other resources will have to be pulled in to fill in on the workload.
- Hiring and retaining under-performing managers can adversely affect the salability and/or the willingness of others to partner or invest in the organization.
- Under-performing managers will not hire or promote top-performing employees out of fear the top-performer will replace them.
Part Three: Better Employees
Every organization has some under-performers. World Class organizations have far fewer under-performers than average or poor performing organizations. The bottom line is negatively impacted by poor employees and positively impacted by great ones!
The first two parts of this blog series have been about under-performers and how they adversely affect an organization. In this final one I delve into the importance and value of hiring top-performers.
- …have competencies that we need now and anticipate we will need in the future.
- …are agile, can multi-task, and can shift rapidly to new problems and jobs.
- …self-develop, believe in life-long learning, and are motivated to do this because of their own goals and passions.
- …require no or minimal “maintenance” from managers. They have a lower error rate, number of disciplinary incidents, and absenteeism rates then other employees.
- …have higher customer satisfaction, higher performance appraisal scores, higher bonus rates, higher forced ranking scores, and higher promotion rates.
- …inspire and train others to be more productive.
- …stay longer at good organizations.
- …produce a larger return for every dollar of salary paid them.
Robin Adwar is a coach and leadership consultant at SoundBoard Consulting. She specializes in organizational behavior and HR studies and regularly blogs on inter- and intra-organizational solutions. She has developed a series of SoundBoard “Selection and Assessment Tools” and “HR Coaching” programs to assist in the hiring process.