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Saturday, May 15, 2021

Executive Insider

Addressing Low Performance in Our Organizations

While no one likes to admit to bad hiring or promotion decisions, nonstarters and other low performers present serious challenges for their colleagues, departments, and organizations. At best, low performers get in the way. At worst, they create obstacles in the form of unnecessary costs, counterproductive decisions, work backlogs, and more. Collaborations between lower performers and higher performers also typically do not create the intended effect: Rather than uplifting the lower performer, often, the higher performer’s work and morale are degraded.

Causes of Low Performance

Low performance tends to happen for four main reasons:

Root Cause 1: Getting promoted beyond ability. Management authors Laurence J. Peter and Raymond Hull coined the term The Peter Principle in 1969 to describe the phenomenon in hierarchical organizations where people are progressively promoted until they reach their level of incompetence¹. For example, the technical savvy that helped a software developer excel and advance through progressive independent contributor and technical lead roles does little to help her effectively navigate the political waters of a director-level role. The result is an organizational plateau where “every post tends to be occupied by an employee who is incompetent to carry out its duties” (Peter’s Corollary).

Root Cause 2: Getting hired into the wrong job. Employees in the wrong job typically experience poor person-job (PJ) fit, a term for the degree to which employees’ needs or capabilities are compatible with their jobs and the tasks they perform at work. While some PJ fit researchers focus on employees’ needs (e.g., for autonomy, influence, or interpersonal interaction) and how well the job satisfies those needs (“Need-Supplies Fit”), other researchers investigate the demands of the job (e.g., for detail orientation or negotiation tactics) and how well the employee can meet those demands through their knowledge, skills, and abilities (“Demands-Abilities Fit”)². Notably, fit requires that the balance is just right—too much of a desired thing is as bad as too little of it, and a job that is too easy is just as bad as a job that is too demanding. Regardless of the particular slant on PJ fit you favor (i.e., need-supplies v. demands-abilities), poor fit means lower employee satisfaction, higher turnover, and—pertinent to this article—poorer performance.

Root Cause 3: Salary exceeds value produced. Although some interesting research has been produced in the realm of equity theory³ and cognitive dissonance that overpaid workers demonstrate increased productivity, there are some hard limits to the benefits of pay-performance dissonance. In short, when an employee’s pay exceeds the value they provide, the organization suffers. This can occur when, following an organizational restructure, the employee’s responsibilities and title are removed but compensation is kept the same. Or it may occur when other shifts result in an internal job change where the employee is not performing up to standards, but has retained their earlier salary. Regardless of the reason, such dissonances need to be identified and appropriate corrective action must follow.

Root Cause 4. Shifts in organizational vision, strategy, and performance standards.  Organizations are living systems, and the demands to stay nimble have only intensified as pressures for change have mounted thanks to accelerating technological advancement, shifting living and working arrangements, and evolving political and global landscapes. As organizations negotiate these changes, their vision and strategy may require revision, and positions and performance standards may follow suit. Accordingly, employees may find themselves lacking critical skillsets for the jobs they used to perform effortlessly. For example, the rapid move to conducting business remotely in Spring 2020 left meeting organizers and facilitators, educators, and professionals of every stripe scrambling to adapt their approaches to fit a new business environment that prohibited face-to-face contact. In such cases, performance gaps need to be identified so that remediation may occur.

These are but some of the reasons why low performers can proliferate in our organizations, blocking and beleaguering the work of good players. Our mandate as leaders is to get things done, help our people get things done, and collectively work for the success of the organization.

Resolving Low Performance

After identifying the low performers in your organization, consider the following four questions to help remedy the situation:

Question 1. Do they belong on the bus? It is tempting to think of our people as family rather than employees and want to keep everyone onboard. But, sometimes, the right solution is to help them transition out of the organization. When that is the case, it is important to frankly address the situation, initiate a transition plan, and support their exit practically and financially through outplacement, time off for interviewing, and severance (see Martin [2021] for a detailed discussion of counseling out employees with civility and respect).

Question 2. Are they in the right seat? In the case where low performance rests in a poor fit between the job and employees’ needs or abilities, it can be valuable to help them “switch seats” by finding a more compatible role in the organization. Although I caution leaders against spending excessive time and expense assessing and uncovering employees’ hidden passions, skills, and drives, it can be helpful to review their track record to identify when and where they performed extremely well. When this is identified (often with the help of their current and past direct supervisors) and an opening exists or could be created, it can make sense for the organization employee to move them to this better fitting position.

Question 3. Can they “hold” that seat? When an employee is considered to be in the “right” seat but performance still is lacking, it is helpful to identify any knowledge, skill, or ability gaps that exist. Once these are identified, it is critical to consider whether these gaps are reasonable for the individual’s compensation and tenure, whether the gaps are trainable, and whether the gaps can be closed given reasonable time and expense for the organization. For example, retooling a data entry operator to become proficient in the new software being used in their department may be expected and reasonable, while cultivating relationship building skills in a senior sales representative with 5 years of experience likely would not constitute a reasonable organizational investment. If the investment needed to get the employee up to speed is not feasible and no other position is appropriate, transitioning them off the bus would be needed.

Question 4. Are we paying the right amount for that seat? Pay-performance dissonance can stem from various events and sometimes can have beneficial results; however, it generally is not a sound management strategy. At the same time, sudden and dramatic pay cuts are not advised and rarely are helpful. Instead, utilize creative compensation strategies to remove the dissonance between pay and performance. This could take the form of freezing the employee’s annual pay increases until their salary is in concert with their role. In cases of larger dissonance (e.g., they are being paid $75,000 per year for a $60,000 job), small annual pay decreases (e.g., $3000-5000 per year) may be applied until the appropriate salary range is achieved.

Conclusion

A low performer can produce dissatisfaction and other issues within themselves, for their colleagues, and their organizations. As leaders and HR professionals, it is our job to identify the cause of low performance and take prompt, appropriate action to correct the issues.

References:

  1. Peter, L. J., & Hull, R. (1969). The Peter Principle. William Morrow and Company.
  2. Edwards, J. R. (1996). An examination of competing versions of the person-environment fit approach to stress. Academy of Management Journal, 39(2), 292-339.
  3. Adams, J. S., & Freedman, S. (1976). Equity theory revisited: Comments and annotated bibliography. In Advances in experimental social psychology (Vol. 9, pp. 43-90). Academic Press.
  4. Sloane, Peter & Williams, Hector. (2007). Are “Overpaid” Workers Really Unhappy? A Test of the Theory of Cognitive Dissonance. LABOUR. 10. 3 – 16. 10.1111/j.1467-9914.1996.tb00077.x
  5. Martin, J. (2021). It’s Time to Change How We Think About Our Employees. Strategic HR Review.

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James F. Martin
James F. Martin has over thirty years of Fortune 500 senior-level human resource experience specializing in organizational turnaround, HR transformation, talent upgrading, and performance improvement. Human resource leader with experience in building teams, change management, labor and employee relations, organization development/design, compensation and benefits, Built and led several field HR organizations. Substantial labor experience in contract negotiations, union avoidance and decertification elections. Problem solver and results orientated leader. Solves problems while cutting through the bureaucracy prevalent in many HR organizations. James F. Martin is an opinion columnist for the CEOWORLD magazine. You can follow him on LinkedIn.