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"Are underperforming employees tanking your profits?" with Rosa Ponce de Leon, Leadership Strategist

Are underperforming employees tanking your profits?

Let’s face it, to succeed in business you have to know your numbers. One of the numbers that many CEOs overlook is the impact underperforming employees have on their bottom line.

We’re all in business to make money and small businesses rely on the strength of their team to perform at a certain level to meet revenue goals.

So, what if you have an under performer on your team?  Is it really a big deal?

Yes, it has the potential to reduce profit and lower morale.

Use these 6 steps to calculate how much your under performers are costing you:

  1. Determine what your employee is worth – Let’s say, for the sake of discussion that your employee is worth $100k a year. And, let’s use the example that he is under performing by 25%. That is a cost of $25k annually.

  2. Determine the differential between an average employee and your under performer – Now, let’s use the example that he is under performing by 25%. That is a cost of $25k annually.

  3. Quantify the value of the weak performer’s differential – So, to keep that employee without seeing improvements in his performance would be a negative $25k.

  4. Consider other costs of retaining a weak performer:
    1. Absenteeism – poor performers tend to call in sick more often
    2. Generate less revenue – weak performers generate significantly less revenue (reduces their value)
    3. Customer service – can damage customer loyalty and retention
    4. Errors – under performers make more serious errors often requiring to pay someone else to fix the mistake
    5. Accidents – weak performers can cause accidents which would potentially raise insurance costs
    6. Reveal Trade Secrets – bad employees may accidentally or purposefully divulge valuable intellectual property
    7. Morale – weak team members can negatively impact team performance, cause good employees to leave, and stifle innovations
    8. Waste time – poor performance can eat up to 17% of their manager’s time

  5. Determine if the weak performer can make improvements – take an honest assessment to see if additional training, coaching or performance management will make a long term difference in performance.

 

Employees are our most valuable assets so it’s crucial to wrap our heads around their contributions. So, it’s equally important to know the value of our high-achievers and our under-achievers and assess the cost of retention.

Over time, it could cost hundreds of thousands of dollars. That’s why it’s vital for companies to be able to implement our VOICE framework. Our tactical method produces superior results and helps businesses protect their bottom line.

I can’t wait to share key takeaways that will change the way you do business forever!

Schedule a free strategy call.

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