How to Overcome the #1 Challenge to Profitability
The following is adapted from Building an Elite Organization.
I know you’re busy, so I’m not going to beat around the bush: disengagement at work is the number one challenge to a company’s profitability. Why is that?
Because disengagement fuels unproductive behaviors.
Instead of giving their all to projects and priorities, disengaged team members do whatever they can to skate through their days. They spend their time text messaging, checking Facebook, surfing the internet, and doing just enough to keep their job.
Disengagement is an epidemic in the American workforce. I recently read a Gallup study that found that 72 percent of US employees are not engaged at work. That means nearly three out of four people are not engaged—and that’s why it feels like you have a small group of superheroes who drive most of the results, while almost everyone else seems happy to sit back.
The good news is you can overcome this challenge at your organization. At its heart, it requires you to take two very different but equally critical actions. You must identify what I think of as C players and either help them develop or let them go. At the same time, you must identify, develop, and nurture your A players. I know this may seem daunting, so let me share how I handle this at my organization.
What a C Player Looks Like
C players are the downfall of many organizations. C players generally fall into two categories:
- People whose behaviors do not match your core values
- People who do not execute and achieve the desired results of the role
Not every underperforming team member is doomed to remain a C player. Sometimes team members become disengaged because they are not being challenged, there is a lack of leadership, or they aren’t being held accountable. These people could become highly productive and engaged if provided with better structure, training, and accountability.
Other times, you may have someone who is not a great fit for the organization’s culture—people might even love them—but they are not driving results yet. That could all change if you moved them into the right role with the right responsibilities and expectations.
More often than not, however, your C players are not going to change. The simple truth is that you cannot run a business loaded with C players if you want to be able to weather whatever storms come your way. You cannot grow profitability over the long term with average or lower-than-average team members.
The Risks of C Players
We sometimes keep C players on because either they do the job really well but are not a cultural fit, or they are a great cultural fit but cannot do the job. Either situation exposes your organization to significant risk.
The people who are not cultural fits can create significant risks for many reasons. For one, these types of people often put themselves first and are egocentric. They focus first on what is best for them, not what is best for the organization, and may even make choices that are good for them but bad for the business or your clients. These toxic people can also make your A players less productive, or make them leave your organization altogether.
As your company grows, you are exposed to more and more risk of theft, fraud, and other material financial risk. Although not every C or D player is going to be a thief, another big risk these toxic people present is the reputational risk that comes with how they treat your clients, partners, and vendors. This is especially a problem if you have these types of people in leadership seats.
What to Do With C Players
As I mentioned before, some C players have the capacity to develop into A players. Those people are worth spending some time on. Move them to an area better suited to their skills and personality. Challenge them to become A players. Hold them accountable. If they rise to the occasion, keep them in your organization. If they don’t, then you need to exit them.
Do not put up with the wrong people in your organization even if they are extremely talented and individually productive. The cost ends up being too high. If you are debating keeping someone in your organization, ask yourself if you would want to grab a beer with them after work. If you wouldn’t, then that person is very likely not the type of individual you should have working for you.
Similarly, if you have a person who is unable to consistently generate results, you need to exit them from your organization. When you have people in your company who have consistently proven that they cannot be counted on to produce results, you are in turn exposing yourself to tremendous risk.
Team members who fail to generate results drag down revenue, profits, and growth, and they put significantly more pressure on you and your best people. This additional pressure on your A players will frustrate them and, in turn, can result in you losing your very best people.
If you find yourself hesitating to exit C players who have proven unable or unwilling to change, consider this. Every C player who occupies a seat in your organization represents a lost opportunity to fill that seat with an A player who will drive your organization forward as they generate profits, bring in big relationships, and attract more A players.
Identify A Players
Once you’ve done everything you can to get rid of any C players in your organization—either by turning them into A players or exiting them from the company—you need to fill your organization with A players. That is the only way to make your organization one that is consistently profitable and scalable.
In fact, your primary focus must be on building a disciplined culture filled with A players, one that has an extreme bias toward action and execution with an emphasis on the development of leaders. You can do this by identifying people who consistently get results and fit into your organization’s culture, then supporting them and giving them opportunities to grow and develop further.
You should also constantly seek A players to bring into your organization. Once you have them, make sure you spend time nurturing and supporting them. You want them to stay A players, and that means making sure they feel valued and supported.
Develop and Support Your A Players
One of the best ways to nurture your A players and keep them operating at a high level is to give them a clear development path. Great employees don’t want to be stagnant; they want to develop personally and professionally. It’s up to you as the company’s leader to make sure that your organization provides opportunities for each individual to grow. That is key to their ongoing engagement, longevity, and ability to continue to remain A players and drive tremendous results in helping your company grow.
In order to develop your people, you must really care about each of them as a person. You must care about their success. I know that sounds simple and maybe cliché, but it is critical that you truly care and, as importantly, that you show them you are willing to invest in them. This means you need to show an interest in more than your team members’ job performance.
In addition, it is important to support people in achieving their career goals. If a particular team member wants to evolve from their role as a frontline producer into an executive leader, for example, you need to provide them with a clear path to get there, complete with how they will be held accountable for their own upwardly mobile journey.
You Need Great People to be Profitable
While there’s no doubt that disengagement is the biggest challenge to a company’s profitability, it’s well within your power to overcome that challenge at your own company. It may take some time, but it’s time well spent.
By getting rid of your C players and filling your organization with A players, you will be in a position to grow and prosper in good times. Not only that, but you will also be in a great position to capitalize on volatility, uncertainty, and market corrections.
For more advice on building a great team to support your organization’s profitability and growth, you can find Building an Elite Organization on Amazon.
Don Wenner is the Founder and CEO of DLP Real Estate Capital, a leader in real estate investing, private direct lending, construction, management, and sales. DLP has been ranked as an Inc. 5,000 Fastest-Growing US company for eight consecutive years, with an average three-year-growth rate exceeding 400 percent and more than $1 billion in assets. Named one of the top fifteen real estate professionals by REAL Trends and The Wall Street Journal for seven years straight, Don has closed more than $4 billion in real estate transactions. He resides in St. Augustine, Florida, with his wife and two sons.