Why Firing Your Bottom 10% of Underperforming Staff Makes Good Business Sense
by Colm Allen
I firmly believe, that in this economy, with full employment in our construction industry, staff retention is absolutely imperative for firms to thrive and prosper. But not all staff – only the committed, good ones. You don’t always need a vacancy to make a hire. You should hire or at least consider hiring, every top performer you meet, and do what’s necessary to make room for them on your team. That usually means shedding the lower 10% of nonperformers. Look around your business. Which employees would you be devastated to lose and which ones would you gladly “refer” over to a competitor? Then ask yourself: “Why are we keeping underperforming employees?”
Before you go scorching the earth, consider these questions:
- Who is underperforming in their job?
- How long has this poor performance been going on?
- Why is this the case? Did anything in their immediate team change recently to cause this effect?
- Do you have clear, written expectations for the desired performance activity for that position?
- Did your employee receive appropriate training to meet the expectations for their role?
- Can they be mentored to improve their performance?
- What impact is this having on the rest of your team?
- What is this performance saying to your customer?
Whether the stakeholders in your company are private investors, family, shareholder, or employees, the market is too tight to be carrying the baggage of less than fully committed, performing employees. Jack Welch, formerly of GE, says, “A company should rid itself of the bottom 10% of poor performers,” and this “selection” process should be an ongoing activity. It’s interesting to note that the company value of GE rose 4,000% while Welch was CEO, so it seems he knows a little something about building high-performing teams!
Proactive firms need to be dropping dead wood and acquiring new blood. In this day and age, you should be paying for employee performance, not attendance. Having someone sitting at their desk but not contributing to the bottom line is a poor investment.
Think of a competitor you admire, fear, or respect. Do you have any of their previous employees on your team? If no, why not? If you fire your underperforming staff, you have now found room in your talent acquisition budget to bring on new talent without having to identify a new source of funds. You might even get a two-for-one deal where the new hire, being more responsible and productive, can take on the jobs or a few departed slackers.
You’ve heard of signing bonuses, but what if we had “firing bonuses”? What if an employer sent a memo offering to pay a modest lump sum (say $5,000) to anyone who wanted to leave. Those who expressed interest would have “self-selected” themselves as not committed and ready for departure. Ultimately, the cost of an underperforming employee sends the wrong message to everyone. It says that, as a leader, you endorse poor performance and set a tone of low expectations for future recruits, and that’s not good for anyone.
If, on the other hand, you can honestly say your team is so good, you would not want to get rid of anybody, you are to be congratulated, as you are one of the few who can then concentrate on their core business — not construction, but customer service. The better the team, the better service.
As always, let me know if we can be of any help. colm@construction-recruiters.com
Do good work.
Colm Allen
Colm Allen is President at Construction Recruiters, Inc. in Milton, Mass.
