The Staggering Cost of Poor Performance

In nearly every workshop I ask the question: How many of you would agree that most organizations tend to keep poor performers too long? Every time, hordes of hands shoot up. While it’s difficult to precisely quantify the cost of just a single poor performer—some researchers have attempted to—I feel safe in asserting that if managers considered the following costs they’d be inclined to more quickly prioritize either getting the person better, or getting a better person:

1. Lost production: This factor may be the easiest to quantify by comparing the production difference between a top and bottom performer. The fact that this cost is incurred month-in and month-out causes the penalty for delayed action in turning around or removing poor performers to escalate in a hurry.
2. Broken or lost momentum: How can one possibly quantify the cost of broken or lost momentum caused by someone who needs continual reprimands, creates mess after mess, or whose behavior brings about emergencies-of-the-moment others must stop to solve or repair.

To exacerbate this factor, consider that it always hurts more to lose momentum when things are rolling along; which is, ironically, the time a manager is least likely to confront or remove a poor performer. After all, when business is good and all the seas appear calm, complacency entices managers to stay the course and maintain rather than make the tough decisions they’re being paid to execute concerning poor performance.

1. Lower morale: Most would agree that a poor performer diminishes the collective self-esteem of an entire group. Most everyone, especially top producers, feel at least slightly cheapened and depleted working with those who don’t contribute towards the organization’s goals, and make the workplace feel less special.
2. Your credibility: This one really stings, because credibility takes enormous time and effort to build, and is even more difficult to regain once you’ve lost it. It’s sad to hear managers boast about how they’re “number one,” and have built a “special place to work,” and how “not everyone can be one of us,” and then see disillusioned teammates peruse the dealership with an inner dialogue that sounds something like this:

“Number one? Special place to work? Not everyone can be one of us? Really? And Fred is still here? And Suzy? And Carl? Hmmm, the boss is talking right and walking left again. Does he really think we haven’t noticed what’s really going on here?” 

To compound the credibility dilemma consider this:  you will lose the respect of the best when you fail to deal effectively with the worst. Guaranteed.

I’ve not the space in this piece to delve into additional costs poor performers inflict on your brand, culture, customer experience, wasted training dollars and manpower hours invested in an a low return, or no-return project. It would be easier if the cost just a single poor performer caused you was a one time, lump-sum payment, but it’s not. Rather, they create an ongoing misery on the installment plan that persists in picking your pocket daily.

The purpose of this message has been to create a clearer perspective of the staggering costs of poor performance so you begin dealing with it faster. My past article, “How to Find the Great People You’re Looking For!” outlines steps to create the conditions for each team member’s success and potentially turn around poor performers, so I won’t cover that ground again here. Instead, I’ll close with final thoughts I hope will add more insight to this topic.

1. A key cause of poor performance is hiring the wrong person to begin with. The fastest way to prevent future poor performers is to dramatically improve your recruiting, interviewing and assessment strategies.
2. Keeping a poor performer simply because you’re shorthanded poses the question: what are your plans to create a recruiting process to build a pipeline of talented people so you’re not held hostage by people who shouldn’t even be on your team in the first place?
3. Your solid performers would rather be strategically short-staffed than foolishly filled up because you keep unfit people on your payroll. They’d much rather carry a bigger load personally, than their load and someone’s who shouldn’t be on the team in the first place.
4. A poor performer isn’t always a low producer; he or she could be a top producer with serious character flaws who mocks your values and undermines the performance of the team overall.
5. The costs you pay in unemployment or other benefits that result from terminations pale when compared to the penalties you incur by keeping someone who continues to affect production, momentum, morale, your credibility, the brand, culture, customer experience and more.
6. A poor performing manager should be given less rope, and less time to get it together than a poor performing subordinate. The stakes are considerably higher when the leaders are poor performers, because of the many others they negatively impact and hold back every day.
7. If you have a manager who must continually fire poor performers, he or she is the problem. They’re either hiring recklessly, haven’t created a high performing culture where great people are attracted to and can prosper, have failed to set clear expectations, train and/or hold accountable the people who are failing.
8. The role of H.R. is to facilitate the removal of poor performers, not to block it.
9. Mediocrity is dangerously seductive. When what used to cause your organization pain, starts to feel normal, something must change; in most cases that something will involve the leaders getting better at doing their job.