Take Action With Your Underperformers

Getting the right people in the key seats is your most important job as leader. It’s so important that you must summon the discipline to resist making quick hires in these roles, because mistakes at this level are costly. You need the right people, not just good people. If you’re not sure that a person is right, you need to pass.

It’s easy to see the sense in showing more discipline when you hire, but what about the people who already work for you? The truth is, most leaders resist doing an honest review of their teams. It’s a tough assignment because it’s very subjective and often involves factors unrelated to their actual work.

In Good to Great, the landmark study of companies that beat the general market (and their closest competitors) by a cumulative total stock return of at least three times for 15 consecutive years, Jim Collins found that every company that went from good performance to great performance took the same six steps on their path to greatness.

In every case, the first two steps on the journey were about getting a critical mass of right people in the company. That meant first, finding “level five” key leaders (those possessing a combination of humility and drive) and second, getting “the right people on the bus and the wrong people off the bus.”¹

It’s pretty obvious that it is really important to attract and retain stars, though it’s often forgotten that it’s just as important to identify underperformers and hold them accountable to getting the results they need to achieve—and to take action with them if they can’t or won’t do so. That said, actually holding people accountable is like drinking poison for many people leaders. Why is it so difficult, and what we can do about it?

Common Excuses for Giving Underperformers a Pass

In most companies, there’s an assumption that underperformers, particularly ones who have been with the company for a long time, are safe—even untouchable. There are also huge emotional barriers to acting on non-stars. Here are some of the most common rationales that I hear from clients:

• “She’s been here for 20 years, and while she underperforms, we’ve become friends and shared so much of our lives together, that I couldn’t possibly hold her accountable now.”

• “He’s a struggler and always will be, but at least he can be counted on to show up in the morning. He’s better than having no one at all.”

• “We could never afford the cost of litigation and severance if we let her go.”

• “We could never find the time to replace him when we’re this busy.”

• “She’s been here so long that, while she under-performs, she serves the valuable role of ‘historian’ and ‘keeper of the values.’”

• “Sure, he’s weak at his job, but our kids play soccer together and we’re neighbors.”

• “I’m sorry but I can’t have a tough talk with a single mom who has three kids to support.”

• “If I were to fire him, I think he might commit suicide because he could never find another job.”

• “Our culture is different than the ones in the books. Acting on underperformers would destroy the family feel of our company.”

These are all real reasons that I’ve heard from leaders about why they don’t take action. Though firing may not be the answer, something needs to be done to challenge, reposition, or replace non-stars. These situations are causing you and your teammates real problems and need to be dealt with so that everyone can move forward.

False Assumptions Prop Up Excuses

Let’s look at three common assumptions that underlie most of our reasons for inaction.

It Isn’t “Nice” to Confront People About Their Performance

Most people don’t take action on non-stars because they really believe that it isn’t a nice thing to do. But is it really nice to ignore poor performance?

First, consider the people who have to work with and for these people. They are the ones who have to put up with their difficult behavior, do extra work to cover for them, and live in a business that offers them less opportunity than it should. These are the people who choose to work elsewhere because they have to endure the non-star every day. Are you being nice to them by ignoring subpar performance from your non-stars? Sometimes, non-stars can make everyone else’s life harder because they don’t pull their weight and force others to do it for them. They can make the lives of those around them downright miserable, and when they’re finally dealt with, people all around them cheer.

Second, consider the company. Non-stars make poor mentors because they teach bad habits to their protégés. If they have influence over hiring decisions, they always choose to hire people who are weaker than they are; they find stars too eager by far. They attract lower-quality customers and turn off great ones. They make your company less competitive and therefore less safe for all those who depend on the business to feed their families. That’s not nice!

Ignoring a Performance Deficit Is Nicer Than the Alternative

Now let’s think about the underperformer. Is it nice to them to ignore their performance deficit? On the contrary—ignoring underperformance is one of the cruelest things you can do to a subordinate. The cruelty is unintentional, but I’ve seen the following scenario played out again and again.

Times are good, and while the underperformer doesn’t bring a lot of value to the company, she’s nice enough, and so you ignore her results and bury the issues. When things get tough, though, it’s a different story, and it may become financially impossible to continue to hang on to this person.

When you’re deciding who to lay off, it’s always going to be the underperformer first. When she hears the news, she feels angry, bitter, and betrayed, because her reviews were always satisfactory, and now she is being let go while others, maybe people junior to her, are being retained. Worst of all, this may happen when she is in her 40s or 50s, a difficult time for her to make a change. That’s not being nice.

The Underperformer Has Limited Alternatives

We sometimes assume that a non-star won’t have any other option if we let him go. But this might short-change your underperformer. Have you considered the possibility that your non-star might be a star somewhere else and that a push to make a change is exactly what he needs? Here’s a list of some now-famous people who were fired at least once in their careers, and the reasons they were let go:

Some of these seem crazy (Walt Disney not creative enough—seriously?), but most were crucial moments of redirection for young people who needed to rethink their areas of strength and weakness, and ask themselves if they were in the right job; in short, these hard times were blessings in disguise.

Imagine if Madonna had gone on to be regional manager at Dunkin’ Donuts? Where would she be today? What if Standard Oil had put up with Robert Redford’s sloppy work as a manual laborer? Where would he be today? Or if J.K. Rowling’s poor performance as a secretary had been tolerated by her superiors? Harry Potter might be just another failed magician.

You may be thinking, “Believe me, my non-star isn’t going to win an Academy Award anytime soon!” That may be so, but it’s quite possible—even likely—that she will go on to find a place that fits her values or ignites her passions in a way that you and your company don’t. Who knows? Maybe you’ll work for her one day in a company she’ll go on to found.

Facing Up to Non-Stars: A True Case Study

Early in my coaching career, I met a young man named Dan. He was working in sales in a family business founded and operated by his father, and he was being groomed for leadership. He hoped to one day run the business. Dan was (and is) focused, determined, and a ton of fun.

When he finally took the business over and sat in the “big chair,” his dad gave him (and me) some advice. It sounded something like this: “Dan, I’ve had 35 years to build my team, and now it’s your turn. Your biggest job will be building a team of your own that can take the business to the new levels that you want to reach. You have my support in doing whatever you feel you need to do.”

So, we began what proved to be a long journey by looking at each person in every key role and asking the first essential question detailed in Chapter 2: If we could do it all over again, would we hire this person? As we went through the list, it got depressing, because again and again the answer was no.

These mental exercises are fine in theory, or in a classroom, but you can’t just re-adjust, repurpose, and, as a last resort, swap out each key seat until you have a star in every role, can you? It’s just not done. You can’t rock the boat like that. Or can you?

After much deliberation, that’s exactly what Dan decided to do. He sat with every key person and respectfully outlined his expectations. He held accountability meetings, making everyone’s responsibilities clear to the entire group and assuming they would be completed. If leaders showed a pattern of not getting core tasks done, it became obvious to the rest of the team, and Dan quietly, firmly, and kindly held each one to account.

Some employees hated this new level of expectation and transparency, and found other jobs. Others (his best people) loved it because it meant that things were getting done and the company was moving ahead to a bright new future.

It was a long road, but Dan’s determination paid off. Today, he oversees a culture that is unprecedented in its openness and productivity. He has many new star players. He’s also retained some long-termers who wanted to perform at a high level. Some of them adjusted or changed roles, and some stepped up their game to a new level.

When I look at the top 20 or so key seats in that business now, all of them are filled with star players. Once Dan completed those staff changes, the business started to grow—fast.

Today Dan’s company is about five times the size it was when he took over. However, the business began to dramatically change with the addition of only three key team members. These stars brought with them new attitudes and ideas, and set a new bar for performance in every respect.

How about your business? Are you treading water, content with the unhappy status quo? Are your key leaders setting the pace? If you could hire each one all over again, would you? The most important key to human motivation is pretty simple: People follow the example of their leaders.

People Action Steps

• Rate your current team from best to worst, as if you were the coach of a hockey team.

• Be clear on who your lowest and highest performers are.

• If you think it’s not nice to avoid underperformance, change your thinking on this matter.

In Summary

The first steps in your transition from a good company to a great one are getting the right people and putting them in the right roles. Although we understand that we need to be careful when making hires, dealing with our current team is another matter. Most leaders resist rating their team honestly and acting on underperformers. The reason leaders resist is mostly because they want to be nice. Allowing underperformance, though, isn’t being nice to anybody, including:

• Those who have to work with the underper-former. Someone has to pull the extra weight, and it’s not fun for colleagues who have to do the extra work. In addition, underperformers make poor mentors, and turn off your best customers and staff.

• The company. Underperformers make the company less competitive, less profitable, and therefore less secure (because it is forced to offer less opportunity to all of the great people).

• The underperformer himself. He may be an underperformer at your company, but release may provide an opportunity where he does fit and can fully engage. Often underperformers are retained until circumstances force a change when they’re least equipped to go through it—in their 40s and 50s.