It may surprise you to know that there is a significant cost each time you have to manage a poor performer. It is not just the loss incurred when hiring that you need to include in your cost calculations but it is impact of poor performance on KPI’s and lack of meeting the Job Description objectives.
Let’s see how to figure out the cost of poor performance
- You can start with calculating average revenue per employee (total corporate or department revenue divided by the number of employees)
- Your next step will be determining the productivity of the poor performer. By doing so, you will understand the gap between required average revenue and actual revenue of the performer.
- Now, you can differentiate the output of the Best, Average and Poor performers. By ranking the best to worst on the same job (JD), you can differentiate the cost of time and money you are spending on a poor performer.
- Next pace is investigating what would be the reason for poor performance. In most cases it would be Absenteeism, Non-revenue jobs, Errors, Accidents, Miscommunications, Theft, Revealing trade secrets, Lack of supervising, Negative team impacts, personal issues etc. Figuring out the basic and actual reason is very important.
- Now you can check or plan, if there is any possibility to improve the poor performance. If no, then releasing them will be the best option. If yes, you can figure out the continuous performance evaluation program
All organizations should know the value of their Human Assets, whether they are well-performing or weak-performing.
It is surprising that only a few firms are taking the initiative to calculate the productivity and efficiency based on performance measurement criteria’s.
If you need assistance to carry out your organizations Performance Analysis and Action plan,
Feel free to contact Team Najma at firstname.lastname@example.org