One of the largest expenses of any business is payroll and any money you spend on employees that are not performing to expectations is a waste of money. That’s not to say your people are not doing their job, but you have to ask if they are helping you succeed or are they only there for the paycheck.
If you only have one or two employees, it’s easy to see who is not performing up to your expectations. However, businesses with a dozen or more workers often let some of the underachievers slip through, costing them money without a significant return on their investment. And yes, employee costs are an investment and you can not afford to pay people that are not helping your business grow.
Business owners must remember that profit is not a dirty word. That’s why you are in business…to make money and anything that is standing in your way needs to be removed. Sometimes it can be a difficult decision to let someone go, but if you continue to let them be a drain on your profit and loss statement, their continued employment will become a drain on your personal economy.
A standard rule of thumb is to analyze the performance levels of your workers and find the top performers by issuing an annual performance evaluation. If you can not rate a worker as being an excellent worker, you have to ask yourself why you keep them on board. That is not to say that under-performers need to be eliminated, but it is an opportunity to determine what it will take to make them a top line employee.
How you determine the level of performance by each employee is not an easy function. It can also be time consuming if done correctly but one issue that many employers have difficulty with is not comparing employees with others. A worker should not be judged based on how they perform comparing their performance with another employee. Rather, their performance should be compared to the expectations of their individual job.
You can place most of your people in one of three levels. Below expectations, meets expectations and exceeds expectations. With those who fail to meet expectations, before cutting them loose, you need to understand why they are not performing. Look at their strengths and how they are helping the company meet its goals as well as their weaknesses, to determine if they can be made into a quality worker.
Those that are not meeting their expectations need to be addressed. Do they have the desire and capacity to perform up to expectations or do they have the ability to perform another function within your organization? If the answer is no, they are probably in the lower five percent of your company’s work force and likely need to be replaced.
Those who are meeting expectations are doing their job and earning their pay. Those that are exceeding your expectations by helping others or in some way helping your business grow should be rewarded at a higher level than those who are simply doing their job.
By completely and objectively looking at the contribution made by each of your employees you can determine which ones are helping your organization and which ones are holding you back.
