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Getting More from Your Employees:  The 20-60-20% Rule

By Ray Silverstein

for Entrepreuer.com

 

“Average” isn’t good enough any more. Not in this competitive environment. Not in this lagging economy. If you accept average performance from your employees, you’re doing your company a huge disservice. 

 

So why is it then that so many of us mutely accept mediocre performance? Perhaps because raising the bar isn’t easy. Taking corrective action can be unpleasant. And if you haven’t done any of this before, it may not be clear how or where to begin.    

 

One place to begin is with the 20-60-20% rule. It goes like this: rate the performance of nearly any employee group, and you’ll find the population divides itself into three categories:

  • 20% are strong performers

  • 60% are average performers

  • 20% are weak performers

 

Now, you have three possible places to begin, but which one’s most critical? Here’s a clue: your strong performers are already doing fine under your current management, so don’t waste time fixing what isn’t broken. We’ll come back to them later.

 

That leaves your average performers—your majority—and your weak performers, a smaller but more dangerous group. Who to start with, and what do you do?

 

The good news is, you can, as they say, kill two birds with one stone. According to research, when you start vigorously managing your weakest employees, it makes the biggest impact on your next group up—namely, your average workers.

 

If you aren’t taking action against underperforming employees—employees who aren’t productive, who come in late and waste time or perhaps don’t come in at all—what message does that send to the average worker?

 

It tells them that there are no consequences for performance. Remember, your employees are well aware of one another’s behavior, even if management pretends not to notice. This fosters a culture of apathy and negatively that drags everyone down.    

 

On the other hand, if you start holding underperformers accountable, many of your average employees may just step it up a notch, all by themselves.

 

How To Handle Underperformers

There are a number of ways to manage poorly performing employees. Start by creating job descriptions and performance standards for everyone—a step many small employers wrongly overlook.

 

Job descriptions are incredibly useful tools. They tell employees what’s expected of them. They give you a standard for measuring performance, a must when it’s raise and bonus time. And they protect employers against wrongful termination suits, because now you have a specific tool for documenting problems. 

 

If someone isn’t performing well in their job, figure out why. Is it a training issue? If so, make training available and you may solve the problem. Is this person a good worker, but poorly suited to his job? Then see if there’s a more appropriate role for him elsewhere in the company. Or does she simply have very poor work habits? If no matter what you try, you can’t motivate her to improve her performance, you need to do the toughest thing of all: terminate her.

 

Are you familiar with “Neutron Jack” Welch, the former CEO of General Electric, who is famous for his extreme managerial practices? Back in the 1980s, Welch insisted that  each year, every department manager rank his or her personnel and eliminate the bottom 10% of workers. His theory was that it raises performance expectations and keeps everyone—even stellar employees—on their toes. Fear of losing one’s job is powerful motivation.

 

While Welch’s practice was radical, it’s also radical—dangerously so—to keep non-performers on board. Plain and simple, they are hurting your business! Cut them loose, and you’ll send ripples throughout your organization, shaking up other non-performers and prodding average employees to aim higher. As a bonus, you’ll boost morale among your top performers, because it shows that you’re paying attention and that you value good work.

 

According to an old Icelandic proverb, “Mediocrity is climbing molehills without sweating.” If you want climb mountains, not molehills, develop a zero tolerance for mediocrity. Use the 20%-60%-20% rule to keep your employees moving upward.

 

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