Author: Dr. Brad Lebo

Problem employees may be disruptive, unproductive, destructive, unhelpful, frequently absent, or just disconnected. It’s not uncommon for problem employees to emerge after the “honeymoon” period of just being hired or to even surprise everyone with bad behavior after a long track record of success. What’s important is to take a hard and objective look at problem employees and understand the reasons they become problems (or start as one).

Employees are liabilities instead of assets for one or more of the following four reasons:

1. Lack of intellectual horsepower. Intellectual horsepower is a competency that is hard to change (per my experience and the experience of the folks behind Topgrading). Not having intellectual horsepower severely cripples effectiveness, especially as tasks become more complex and dynamic. It is not unusual for people’s roles and responsibilities to outgrow their intellectual horsepower. When someone applies him/herself to a job and no longer succeeds at it (because the job has changed), take an objective look at their intellectual horsepower. Also, don’t be surprised if the increased demands of a position leave the person feeling overwhelmed and fleeing, freezing, or fighting (the three reactions to being overwhelmed).
2. Compromised character. The compromise usually starts to reveal itself in poor interpersonal interaction and lack of integrity. Lack of integrity has obvious pitfalls for any organization that extends trust to its employees, including everything from rule breaking to theft. Poor interpersonal interaction can have much more subtle effects on an organization and can include problems such as angry outbursts, being “two-faced”, being narcissistic, failing to develop subordinates, failing at being a team-player, etc. Basically, this heading includes all problems between people that remain unresolved and, therefore, left to fester.  You can tell if you have poor interpersonal interaction on your hands when teams stop working well, when people avoid particular individuals, and when getting people pulling in the same direction in your organization becomes a real challenge. Please note: Poor interpersonal action in someone who was functioning well can be a symptom of stress due to new responsibilities, personality conflicts with subordinates, or issues outside the workplace (problems at home, for example).
3. Compromised mental or physical health. Mental and physical health problems cost employers billions of dollars each year and this accounting generally does not include the organizational disruption caused by these problems. On an individual level, chronic diseases are the most likely to compromise an employee and move them from being an asset to a liability. This includes conditions such as mood disorders, substance abuse, and chronic physical disorders such as diabetes and chronic pain. On occasion, an employee may become a problem when a loved one develops a chronic disease. They may be healthy but distracted by their caregiving responsibilities.
4. Poor employee management. In these cases the problem is not the employee, the problem is his or her manager. In general, the problem employee is not given sufficient direction, is held accountable to unclear expectations, or is given weak feedback on performance. If this is the case, the manager can elevate the employee’s performance by setting clear goals, priorities, expectations, and providing meaningful feedback. A special case of poorly managed employees is when an employee is promoted to his or her level of incompetence: The so called “Peter Principle” in action. In general, this happens when the employee fails at a new position and becomes a problem for reason one or two above. Another special case of a poorly managed employees is when employee morale is low due to the dysfunction of the organization. When poor performance is the rule, rather than the exception, inevitably there is serious organizational dysfunction at work. A poor manager:

• Promotes without merit
• Avoids responsibility for problems
• Does little work him or herself
• Takes credit when it’s not due
• Plays favorites

Understanding the reason an employee is a problem starts the process of solving the problem. Solutions include development, re-assignment, and treatment of mental health and medical problems. Which reason or reasons best describes your problem employee?

High performance hiring has the goal of having top performers at every level of your organization. It is based on the work of Brad Smart and his book: Topgrading: How Leading Companies Win by Hiring, Coaching, and Keeping the Best People.

High performance hiring assumes that everyone has unique talents and interests but that these talents and interests differ substantially from person to person.

High performance hiring further assumes that for every position in the organization there are individuals who are ideally suited to excel in the position, just as there are many individuals who are ill-suited for the position.

Leaders in any organization are in a pivotal position to work toward hiring top performers. It is arguable that no other process improvement or technological improvement comes close to returning as much on investment, than the time spent investing in the strategies of high performance hiring.

The Strategies:

1. Always be on the lookout for top performers. Attributes such as intelligence, creativity, passion, integrity, and tenacity are difficult to develop. Attributes such as experience, presenting well, and level of education are comparatively easy to develop.
2. Understand the competencies required to perform well in particular positions.
3. Understand the economic value to the organization of each particular position and how to measure the contribution a given individual makes (the economic value contributed and what he/she is accountable for).
4. Use screening interviews and assessment tools to reduce your candidate pool down to a manageable number of candidates to interview.
5. Use interviews with candidates to focus on competencies, the candidate’s experience in areas he/she will be accountable for, performance patterns, and recent performance.
6. Use interviews with current/former bosses and peers to assess performance as well as attributes such as how coachable the person is, how they contribute to team efforts, and how they get along with others.
7. Prioritize the ongoing process of developing and retaining your top performers.
8. Prioritize the ongoing process of realigning, redeploying, or releasing less than top performers.

The High Performance Hiring Steps:

1. Analyze behavioral competencies of the position and define the tasks and results the position is accountable for.
2. Develop a scorecard for the position that is a summary of the accountabilities and competencies required for the position.
3. Develop a screening interview to filter out candidates based on the scorecard.
4. Develop a screening assessment battery (on-line tests that include, for example, assessments of personality, motivation, and critical thinking ability and examine key competencies) to further narrow the candidate pool.
5. Develop an in-depth interview process for candidates who have passed the screening steps. Probe for experience delivering on expected accountabilities and evidence of competencies. Use “hands-on” skill assessments if possible.
6. Develop an in-depth interview process of past bosses and peers for candidates who have made it past step 5. Validate experience delivering on expected accountabilities and competencies.
7. Use the results of the screening assessment battery, the interview, and reference checks to decide on which individual to select.

Additional High Performance Steps:

1. Apply behavioral competencies and accountabilities analysis to all positions.
2. Use the results of this position analysis to inform performance reviews.
3. Develop, realign, redeploy, or release individuals based on performance reviews.
4. Develop (coach) individuals, particularly high performing individuals in areas where development is indicated.

In a previous post, I relayed that the cost of a mis-hire has been estimated to range between 6 and 27 times base salary, depending on assumptions. None of these assumptions considers the emotional disruption that a mis-hire creates if he or she has a difficult personality. In other words, no value is assigned to the emotional disruption created by a interpersonally difficult mis-hire. Omitting this cost of a mis-hire was my oversight.

A recent conversation with a CEO brought the oversight to my attention. In the case we spoke about, the mis-hire created bad feelings with both customers and employees as well as other members of senior management. Some of these bad feelings were just that–bad feelings. It is difficult to calculate the cost of someone being put off or upset. Other bad feelings have a cost that is relatively easy to calculate. For example, in the case the CEO mentioned, orders increased when the individual left the company because distributors had not wanted to deal with the mis-hire.

Other costs associated with emotional disruption can include the cost of replacing subordinates who leave because of the culture created by an emotionally abusive mis-hire or the loss of productivity associated with employees avoiding an abusive mis-hire.

Granted, not all mis-hires cause emotional disruption. Certainly there are individuals who are mis-hires and beloved despite their poor performance. But, more often, the obvious financial costs of a mis-hire tell only part of the story. Please comment or send questions using the contact page.

According to Dr. Brad Smart of Topgrading fame, “the average cost of a mis-hire can be six times base salary for a sales rep, 15 times base salary for a manager, and as much as 27 times base salary for an executive” (Paper 360°, January 2008). Dr. Smart’s calculations depend on certain assumptions for setting the price of missed opportunities and organizational disruption. The price one has to pay for missed opportunities and disruption increases the higher up one goes in an organization, of course. He notes that the mis-hire of a CEO in a large organization can cost much more than 27 times base salary.

Are these numbers believable and applicable to your business? To answer this question, it’s necessary to think about what any given employee contributes to your organization’s top line: the employee’s economic contribution to your organization. For example, if you have a salesperson, what sales are attributable to the activity of that person? If that person is an average performer, what is the difference between their sales figures and the sales figures for an outstanding performer? You can start to appreciate that the cost of a mis-hire can be significant and this is before adding in the cost of managing an average performer and trying to improve their performance OR the accumulated cost of missed opportunities (sales that beget future sales).

If this does not start you thinking that the cost of a mis-hire can be significant, think about the times a below-average employee makes a mistake or doesn’t do his/her job as expected. What are the costs associated with mistakes and managing below-average performance? What are the costs of having to redeploy or let go of under-performers? What are the costs of a sub-par manager poorly managing all the people who report to him/her?

The point is the cost of mis-hires can be significant. The solution is to have a strategy to hire only the top-performers for any given position. More to follow on the strategy but in the mean time, please think about the difference between running an organization with all top-performers and one with only a few: the difference in the economic performance of your organization is the true cost of mis-hires.