The cost of tolerating underperformance — and overlooking your high performers

Let’s talk high performance culture.

While the concept isn’t anything new, it’s become increasingly top of mind in the wake of the current economic recession.

Why?

Because all companies share this one truth: Employees are our biggest expense.?

I bet you thought I was going to say employees are our biggest asset. Well… that’s true, too. But not the focus of today’s newsletter.?

Today, I want to talk about just how incredibly expensive employees are — and how much more expensive that cost gets when you:

1. Tolerate underperformance
2. Overlook high performers

But first, let’s talk about what high performance actually means.?

Depending on their specific culture and needs, most companies will have their own variation on how they define high performance, but most will agree that high performing employees look something like this:

• Autonomous
• Quick learner
• Embrace giving and receiving feedback
• Self-aware and self-correct
• Team player
• Action- and solution-oriented

In essence, they’re highly reliable people who play well with others and get the job done.

Which makes sense. You want people who are going to add value to the company, not drain resources.

But here’s the thing about high performance cultures: Most employers don’t actually hold up their end of the bargain on committing to these standards.

Yup. I said it.?

If you’re reading this with a guilty look on your face — or perhaps even a relieved sense of acknowledgement — I see you. It’s tough holding an entire workforce accountable to high performance standards. Especially if you’re sitting on the People team, where your job is often to advise, not enforce.

And that challenge only gets harder when you have:

• Managers who are too scared or ill-equipped to navigate performance issues
• Leadership teams that don’t believe in the correlation between management training and business goals
• A culture that’s so fast-paced, it’s unwilling — or unable — to slow down and make the necessary changes to improve its performance culture

Which is a bit ironic, when you really think about it.?

Employers understand — in theory — the value of high performance. They insist to all their employees and prospective candidates that they are in fact committed to upholding a high performance culture. And yet, when it comes time to actually do the necessary work, everything just sort of… fizzles out.?

My not-so-hot take on the matter? Most employers don’t actually get it.?

Let’s compare this to something a little easier to conceptualize: Personal savings.?

In theory, most people understand that if they replaced eating out with a home cooked meal, they’d end up saving extra cash they could put towards something more meaningful. Easy to grasp, but not particularly impactful.?

But what if someone were to actually do the math? What if someone calculated that at (on average) $40 per meal, 3 times per week, they spent over $6,000 a year on eating out. That’s a pretty jarring number. That kind of money could cover the cost of a much-needed vacation getaway, replacing that faulty washer, maybe even paying off a loan.?

The same is true when it comes to business.

Money lost to tolerating underperformance and overlooking high performers is significant, and — importantly — it’s money that could have been better spent on marketing campaigns, exploring new business opportunities, and more.

So why exactly are underperformers so darn expensive?

The hard truth is that underperformers are an incredible drain on company resources.?

And that can be tough to acknowledge given that — at the end of the day — we’re talking about people. Identifying them as an underperformer can feel overly personal and harsh.?

But here’s the thing: Not acknowledging this truth isn’t going to make the problem go away. It’s just going to make things worse.

Because the financial cost of an underperformer isn’t just the cost of their salary. It’s also the cost of:

• Lost business deals
• Lost business opportunities
• The time and energy their manager has to spend managing them and fixing their mistakes
• The time, energy, and morale of others on the team — particularly high performers — who have to pick up their slack and work around them
• The high performers who eventually leave due to burnout, disillusionment, and flat out frustration

The list goes on.?

But the money hemorrhaging doesn’t stop there.

Companies lose an incredible amount of money by overlooking their high performers.

What do I mean?

The fact of the matter is: High performers tend to get the least amount of support across most companies.

Which might not feel like a particularly alarming observation at a glance.?

After all, high performers are, well… high performing. They volunteer for projects. They go the extra mile. They get things done, and they get them done well.?

What support do they really need when they’re already doing such a great job?

The truth, of course, is more complex.?

High performers have some of the highest rates of burnout across employees.?

Because the more work high performers take on, the more we praise them. The more they shield us from any challenges they’re facing, the more we perceive them as being self-sufficient. The more projects they execute with minimal issues, the less attention we pay to opportunities for improvement.

And eventually, they start to get the wrong message.

Eventually, high performers start to define high performance as:

• Always saying ‘yes’ to every project, no matter what
• Never acknowledging any challenges you’re experiencing
• Figuring everything out for yourself so that you never have to use up anyone else’s time

Then one day we look up and wonder to ourselves in complete shock why our highest performing employees are all burnt out, disengaged, and leaving in droves.

And — just as with tolerating underperformance — this comes with a hefty cost:

• The cost to replace them
• The cost of reassigning other high performers to fill the gaps left while you backfill
• The cost of lost business opportunities, lost deals, and mistakes in their absence
• The cost of lowering morale across the company as employees look around and see the highest performing people all quitting?

So what’s my point?

I don’t have a secret ‘gotcha’ moment waiting for you at the closing credits.?

My point is exactly what I said at the start: Employees are our biggest expense. And when you tolerate underperformance and overlook high performers, that expense only gets higher.?

As People professionals, it’s our job to help our leadership teams connect the dots. That means not just reminding them about the company’s commitment to high performance, but explaining to them — every time — the cost of ignoring a performance issue or failing to support a high performer.?

How much money has it cost you this past quarter alone? How much did it cost you last year? What other projects could that manager be taking on if their direct report was performing at the level and quality of work you ‘say’ you require according to your performance standards??

From there, take steps to address the issue.

If you’ve got an underperformer, have the tough discussion. Help the manager create a timeline and roadmap for improvement. If it comes to it, make the tough decision. For a more detailed walkthrough on tips and tricks for managing underperformance, check out my latest webinar here.?

For your high performers, make sure your managers are asking the right questions, and checking in appropriately. Not sure what questions to ask? Check out my recommended list here.