Invisible high cost of non-performance in your businesses

Let’s do the maths by creating a hypothetical situation: Jackie manages a team of 10 employees. Their individual salary is Sh150,000 per month on average, which is a total of Sh1.5 million per month.

Now let’s say, overall, as a team, they were only performing at 60 per cent of their real potential for various reasons. Jackie is actually losing out on Sh600,000 each month.

If you crunch the numbers for 12 months, Jackie’s firm has had a Sh7.2 million loss in productivity. That is just for one team. Imagine if this was the case across more than one department.

If you are in manufacturing and you have a broken machine, what would you do? You would — almost with your eyes closed — identify what the problem is, invest in fixing it, if it is fixable, or replace the machine.

However, time and time again leaders recognise there is a problem with their team members. They ignore it and hope it goes away, or bash it a few times hoping it will fix itself.

We often treat our machines with more importance than our people — which is sad. You can have the best machine in the world, but if the person operating it is broken, undervalued and demotivated, there’s little value in having a great machine.

This draws us back to the question: how are you addressing non-performance in your business? Many leaders don’t pay enough attention to the business cost of allowing poor performance.

Studies show that the cost of one bad apple in a high-performing team can bring productivity down by 30 to 40 per cent. Leaders tend to put up with poor performance because they don’t want to have the tough conversation.

Well-articulated goals

It is also difficult to determine whether performance is good or bad unless there are clear performance measures.

If Jackie gave her team well-articulated goals that can be measured over time, she would be able to help her team to work harder.

Setting clear goals increases motivation and achievement — as highlighted by numerous studies and illustrated by various firms globally.

The team at Adobe Systems revamped its performance management process, and has statistics to prove that regular feedback and check-ins drove up motivation and results.

They cut voluntary employee turnover by around 30 per cent. Interestingly ‘involuntary departures’ rose by 50 per cent because executives and managers were having those tough conversations with employees struggling with performance issues. The solution is relatively simple: be clear about what needs to be achieved, have regular reviews and honest conversations.

Fear of confrontation is a problem many leaders suffer from. However, it is a fear worth overcoming, especially as your business performance depends on it. Like Jackie had to eventually do, go ahead and swig that espresso, square out your shoulders, and have that chat.

Kent is the founder and owner of Redstone Consulting, a performance consulting firm that focuses on leadership development, change and performance management, team development and executive coaching. Email: [email protected]