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Finding the Value of Your Best and Worst Performers

Tuesday, January 14, 2014 6:00 am - by Everest
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They say that you shouldn’t fix what ain’t broke, but whoever said that probably ain’t never heard of a double negative. Even if you don’t think that there’s anything to be done about the way that your business runs or the way your people work, it doesn’t mean that you can’t improve the state of things. While you might just accept that certain people are just better workers than others, it’s always valuable to know what’s going on with your various employees on a dollar for dollar level. As in: what they’re getting from you and what they give back in return. While we’re all beautiful, unique snow flakes and all of that good stuff: when you get down to it, employees are investments and you don’t want to be stuck with the ones that promise little to no ROI. You want to hire the people that make an large impact at your company, both for the team that they work with and for your bottom line. 

So how much does a bad hiring decision cost your company? Well, it’s pretty dependent on the position that the underperformer occupies, but here’s an Infographic to give you a general idea of the impact of a bad hire. We’ll be getting to how to measure the dollar impact of your top and bottom performers in just a moment, but first, let’s talk about the soft costs associated with underperformers.

“So, what would you say is your MO, Mr. Underperformanson?”

“Well, you may not know this about me, but I really couldn’t be bothered to do much above the bare minimum. I’m really trying to make it as a stand up comic right now and this sales gig is just my ‘day job.’ Ya dig?”

“Sure I dig. But did you know that I just got a call from that new client that Ms Topperformer brought in last week and they are deciding not to sign with us after all.”

“Bummer.”

“Indeed. The reason that they gave was a certain ‘air of unprofessionalism’ from our staff, specifically a particularly off color joke that you told in the elevator.”

“Oops, it must have been the one about the alligator, the nun and Mike Tyson. That one’s a doosy. Speaking of using the elevator, I’ve got to get out of here. There’s an open Mic in half an hour with my name on it.”

While your underperformers might not literally chase your customers out of the building, they are definitely doing more harm than good. Besides soaking up paycheck after paycheck, underperformers are a burden to their team, costing your other employees their time and hurting morale over all. Though it’s costly to replace these employees, the overall effect of getting someone that’s competent and motivated in their place is massive.

So you want to tell who’s having the most impact at your company. For a simple and effective method of measuring your top and bottom performers, here’s a pair of articles from DR. John Sullivan, Silicon Valley HR guru for measuring the dollar value of top performers and underperforming employees. I won’t give you the full version, but I’ll give you the basics just in case you don’t have time to read from the good doctor.

The first thing that you need to do is approach your company’s CFO office and tell them that you want to measure the dollar value of your employees. They’ll be able to help you with the metrics, the math and the clout to get this little survey done right. The next step is to establish the basis for comparison by finding the revenue generated by your average employee. You can do this by dividing the total company revenue by the number of employees that you have. For calculating the value of your top performers, look at what specific projects or products they were instrumental in completing and estimate the revenue that this work brought to the company. Then, you divide this number by the average. Hopefully, you get a multiplier, as in: your top performers are bringing in 10x more revenue than the average  employee.

Measuring your weakest performers can be done by first determining their percentage below the average revenue generator. If your weak sales person is bringing in 40% less sales than the average, just multiply the average by the percentage and you’ll have the money that they’re failing to bring to the table each year. Once you’ve measured who’s pulling their weight an who’s just along for the ride, it might crystallize any tough hiring or firing decisions that you’ve been putting off.