Boost Your Bottom Line
Better People Management
company hires new employees, the goal is to grow, increase
productivity, and ultimately make more money. But what happens when
your new hire or even a long-time team member underperforms? You can
forget about increasing productivity, that’s for sure.
manager with at least a few years experience has dealt with an
under-performing employee. The problem persists in every department,
organization, and industry because every company relies on the output
of its workforce. While the intangible effects of underperformance,
such as low morale and reduced productivity, are real, until recently
the actual cost of poor performance was too ambiguous to calculate.
Foundation conducted research in seven countries including the United States
to understand the costs associated with poor people performance. Their
eye-opening research revealed that American managers spend thirteen
percent of their time managing poor performers and fourteen percent of
their time correcting the poor performers’ mistakes. This translates
into an average of thirty-four days per year dealing with
that with the fact that American employees admit that sixty-eight
percent of the mistakes they personally make never come to their
manager’s attention. Worse yet, problems increase with
organizational size. In larger organizations (those with over $8.5
million in turnover), managers spend approximately eight weeks per
year, or forty-one days, on managing poor performers.
what’s the root of these staggeringly high poor performance
statistics? Researchers at Sheffield’s Institute
of Work Psychology sampled manufacturing businesses and found that eighteen percent of
variations in productivity and nineteen percent in profitability were
attributed to people management practices. In addition, The Future
Foundation estimates the United States devotes $105 billion a year correcting problems associated with poor
people management and hiring practices. This translates into 1.05
percent of the total United States gross domestic product. Clearly, the current approaches to people
management waste corporate profits.
to Improve Poor Performance:
instant results or oversimplifying quick fixes is counter productive.
No one-size-fits-all people management template will work for every
organization. The strategy you use must fit within your company’s
business strategy and goals. And your management practices must fit
together and mutually reinforce each other. However, the following
three strategies can be applied to every organization in any industry.
contribution can and should be measured. The failure to set clear,
measurable performance standards expected of each employee often leads
to poor performance. The worker may believe he or she is meeting
expectations, while the supervisor has a completely different idea on
the desired outcome. In these cases, when specific measurable
objectives aren’t in place, success is open to interpretation.
general rule, when setting performance goals you need to be clear
about the following five items:
1) Clearly define desired results or outcomes.
2) Clarify approved policies or procedures. Be
careful you don’t dictate exactly how to reach the end result
unless specifically asked. Remember, the same goal can be achieved
in different ways.
3) Outline available resources. This may include a
budget, personnel, and equipment.
4) Set specific phases for accountability.
5) Help the employee see the big picture and how his
or her performance furthers the organization’s goals. Make sure
you reach a mutual understanding about each item before starting.
you’re clear on these five elements, you need to communicate them to
your employees. A proven method to increasing accountability is
increasing the frequency of performance reviews. For example, employee
performance reviews and goal-setting meetings are often given every
ninety days. With such a long length of time, employees tend to wait
until the last few weeks before the review to achieve the desired
outcome. When this happens, you lose several weeks of improved
break the goal into three monthly performance increases. Then the
employee is able to focus on a more realistic goal with a shorter
duration. This makes it easier for them to stay motivated, you get the
benefit of increased performance earlier, and any misunderstandings
can be resolved sooner. Plus, shorter timelines increase
accountability. Holding each employee accountable and demonstrating
how their contribution affects the company is essential for increased
Improve your Hiring Process:
to The Future Foundation study, an average of eight months training is
required to achieve expected performance levels. Currently, one out of
eight American employees leaves his or her job before obtaining
competency. Worse yet, co-workers are not immune to the mis-hire. The
same study found that nearly one quarter (twenty-three percent) of
American workers surveyed feel their colleagues are incompetent.
this problem, review your hiring process and determine your success.
Most companies have spent a great deal of time creating their
manufacturing and sales process, but have neglected the same procedure
to find, interview, and hire top talent.
three items you need to review:
1) Hold your hiring process accountable. One of the
leading causes to employee turnover is a poor job match. Calculate
what your success rate is by determining the average length your
employees stay before leaving. Calculate the cost of each mis-hire
and seek to decrease it on a regular basis.
2) Plan properly. The axiom, “Poor planning
produces poor performance and proper planning produces proper
performance,” is very true when it comes to hiring. Organize
your hiring process with the same levels of effort and thought you
use with your other critical processes.
3) Ask for feedback and conduct exit interviews.
After a new employee has acclimated for thirty days, ask for
confidential feedback on the hiring process while it is still
fresh in their minds. You may receive information that will
improve your process. Most companies perform exit interviews as
people leave. If you don’t, start now. You are missing out on
valuable information on how to improve matching the right person
with the right job.
hiring process the time and resources it deserves. The right people in
the right positions are your most important asset, so act like it.
Revamp Your Development Process: Today,
most senior executives agree on the importance of developing your
management team for superior business performance. The gap between
current productivity levels and expected performance is often
attributed to a lack of skills. Although executives feel they are
investing in their people, these programs are often under funded,
antiquated, and not in line with the organization’s goals.
your management’s development process, first stop funding reactive
investments dealing with employee performance levels. The capital
saved should be invested on proactive solutions to ensure the right
people are matched with the right positions within the organization.
This will go a long way to free up the manager’s time spent on under
review your development process to make sure it provides three
essential elements: skills training, hands-on practices of acquired
skills, and a network of advice from colleagues and mentors. Adults
learn best when applying new information in a non-threatening
environment to confirm understanding.
sure your development process is in line with the strategic goals of
the business. IBM now begins its development design process by
defining desired business results because their most popular training
courses were producing a negative return on investment. They had to
make changes in their system to attain their goals.
use this process to invest wisely, your development process will
increase your bottom line.
than ever, as the world continues to merge into a single global
economy, human capital is the key driver of profit and innovation.
Effective people management practices get superior results by
increasing accountability, retaining and recruiting better people, and
developing innovative ways to increase profit.
integrated and appropriately applied people management strategies and
practices are the most powerful driver of sustained success. Even
quite small improvements can be expected to deliver results. When you
use these people management strategies in your organization, you can
increase productivity, eliminate underperformance, and boost your
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