One of the biggest challenges any business owner or manager faces on a regular basis is working with employees who are not high performers. These low performers may be friendly and well-liked, but they aren’t carrying their weight, and not keeping their performance up can have disastrous consequences to your bottom line as well as the morale of the rest of your team. Here are some tips on how to deal with low performers in your workplace so you can make sure everyone is getting their job done, even when it isn’t top-notch work while keeping everyone happy and productive.
Why Do Some Employees Underperform?
There are a few factors that can lead to low performance. Some common issues include interpersonal conflict, poor communication, or unclear expectations, but there’s often more to it than that. It’s worth asking yourself some hard questions when you notice one of your employees is lagging behind: Do they lack experience? Are they struggling with new technology? Is there a personality clash? Did I hire them for a job they didn’t really want in the first place? Have they been promoted into a position they don’t want (or aren’t ready for)? All these things can affect performance, but if you haven’t worked through them yet and adjusted how you work together as a team, you might be setting yourself up for future problems.
What Is the Cost To You?
There are a lot of costs involved in having low performers on your bottom line. From decreased productivity to increased turnover, there’s no shortage of reasons why you need to deal with a low performer at work and hold them accountable for their behaviors. But have you ever thought about how much each individual low performer is costing your business? Some people are expensive habits because they’re just not very good at what they do, while others can be toxic personalities that negatively impact team culture. No matter which camp they fall into, these people can be expensive—to say nothing would be harmful—and it’s important to measure those real costs so you can make better decisions going forward. How much would it cost if all your employees were high performers?
Costs of High Turnover
Turnover is expensive. Finding, hiring, and training new employees costs time and money. In fact, turnover can cost up to three times an employee’s annual salary. One study found that it costs $15,000 to replace an entry-level employee and $120,000 for a high-level executive. Add those costs to annual salary costs, opportunity cost (what that person could have produced in their position had they stayed), training expenses, and cost of a project or product being completed by a less-qualified team member—it’s easy to see how rapidly turnover adds up. So clearly, keeping your best employees around makes sense from both a practical and financial standpoint.
The Cost of Training New Employees
The cost to bring in a new employee can range from $4,000 to $24,000, depending on where you live and your company’s size. If a company hires outside labor, that bill could easily be an extra $5,000 per person when you consider things like relocation fees and administrative costs associated with hiring someone new. In addition to those expenses, there are other costs associated with replacing employees. It could take months for a business owner to find a replacement and regain productivity—not to mention all of the time spent by managers and others doing interviews instead of working with existing employees. The bottom line is that low performers cost companies real money—but most businesses don’t know it because they don’t measure performance metrics throughout their organization.
Losing Client Relationships
Client turnover is very expensive for businesses. Not only are you losing your client’s monthly revenue and future business, but you also lose their brand recognition and recommendations to new customers. If a client leaves, it may take months—or even years—to replace them in terms of sales. According to recent research, a 5% loss in clients can reduce profit by up to 50%. To prevent low performers from impacting your bottom line, maintain strong relationships with clients through effective communication channels like Slack or HipChat.
What Actions Should You Take?
The first step in dealing with low performers is to conduct a thorough analysis. Identify problem areas, and look at your business as a whole. The next step is to address whatever issues you find. You might need to make changes internally or bring in outside assistance, such as a consulting firm if you can’t handle it all yourself. But remember that sometimes employees just aren’t a good fit for your company; no matter how much you try to help them improve their performance, they simply won’t be able to change their ways—and in these cases, it’s better to part ways before things get even worse.
Define Performance Expectations
This should be a fairly easy task. If you don’t already have performance expectations documented, it’s a good idea to do so before firing any employees. As an employer, it is your responsibility to maintain documentation detailing why certain disciplinary actions were taken, and that documentation must always include specific reasons supporting any termination or dismissal. Failure to maintain records will not only limit your ability to terminate an employee but also may make you personally liable for wrongful termination in some situations. Documentation is key! Write down what you expect from your employees; it may help keep everyone focused and happier with their jobs.
Implement Systems to Manage Performance.
As companies grow and evolve, so too must your approach to talent management. If you’re still using a system that emphasizes annual reviews, progress metrics, and subjective grading scales—you’re setting yourself up for failure. Instead, it’s time to think about more objective ways to assess employee performance. One way is through leaderboards—displaying business and individual performance metrics in an easy-to-read format that shows how your employees stack up against one another and how they are performing against their goals. This can help ensure low performers are brought to light quickly so they can receive coaching, mentorship, or other resources necessary for continuous development.
Work with Potential Underperforming Employees.
When an employee isn’t performing well, it can be incredibly tempting to dismiss them—and replace them with someone who seems like they’ll be a better fit. But removing a problem employee is actually a pretty costly move. After all, while high performers may cost more upfront, they will ultimately improve your bottom line. If you realize that you have an underperforming employee who just can’t be helped, don’t panic; instead, consider helping them find another position within your company or another job in another organization where their talents might better suit their abilities. If they really aren’t fitting in with your company culture and vision but have value to offer somewhere else, do everyone a favor and let them go there instead.
Conduct One-On-One Meetings with Underperforming Employees.
Make no mistake. Low performers are difficult and expensive to deal with. They hold other employees back, disrupt flow and efficiency, and can (ultimately) drive customers away. Rather than wait for performance reviews at set points throughout each year, it’s good to schedule regular one-on-one meetings with your employees (at least once a month). Whether or not you decide to fire an employee based on these meetings is up to you; but regardless, they can significantly impact how well your team performs over time.