Better than nothing?: How to handle your marginal employees

The unemployment rate fell to 3.7 percent in September, the lowest in almost 50 years, and remains low, at 4 percent in January.

That means many consumers who have jobs can buy our goods and services. However, finding and keeping good employees is more difficult than ever.

Because of this, I hear one question more than any other in my consulting practice and in my role as a Vistage chair: “John, what should I do about (insert name)? His performance is extremely marginal and it’s not getting any better.”

My first response is always, “Is he better than nothing?” That question sounds so cold – curiously, it usually gets a laugh (sometimes an uncomfortable laugh). But I am dead serious.

When I owned my company, we had what we called “The Allied Minimum Standard of Employment.” Manager A would complain to me about one of her direct reports. I would ask if that person was better than nothing. That means, if we terminated him and didn’t replace him, would the company be better off?

If the answer was “yes,” we took it a step farther and had a firm rule that if the offending employee was worse than nothing, he had to leave immediately. Typically, we reserved that standard for toxic employees, liars, thieves or anyone who operated outside our core values.

Those terminations were fairly easy decisions. The tough calls were when someone was better than nothing, but not by much.

So, in a tight labor market, with compensation rising and recruiting difficult, here are a few ideas on what to do with the marginal or below-standard employee.

1. Adhere to a standard. I recommend using a simple tool such as this:
   Let’s say someone is an “A3,” outstanding in job performance, but below standard in core values. We may not ever get that person to an “A1,” but we may be satisfied if he becomes “A2,” average or above in core values, and job performance continues to be outstanding. 
   The question is, then, how much time do you devote to coaching that person to help him align more closely with core values? Depending on the employee’s tenure and financial value to the organization, I’d recommend 180 days maximum.
2. Can we place someone elsewhere in the organization? The more difficult situation is when you have somebody who is a “C1.” She is super high on core values but performing poorly. We need everyone performing, but we love the fact the person is “all-in” with the team. 
   If there’s another role that’s a better fit for her, go for it! I worked with a client company that had a brilliant engineer who couldn’t relate to people. He was in a client-facing support role. While he was technically correct almost 100 percent of the time, the clients didn’t like him. Fortunately, we found a technical product development role which was a much better fit. He went on to create one of the more profitable product lines.
3. Move on. Please! But if coaching just doesn’t work within a reasonable period of time or if you aren’t so lucky as to have a role that’s a better fit for a C1 or A3 employee, be honest and help that person find the right fit outside the company in this great job market. Do it now!
4. Why are we keeping the “C3” employees? I’m amazed at how often I see companies hanging on to people who are worse than nothing. I always hear a ton of excuses. “He’s been here such a long time.”  “My father hired her.” “HR won’t let me terminate him.” 
   If you have somebody who has been with you a long time and is worse than nothing, it will never get better. It might even get worse than worse. These people drag down the entire organization. They drive out your “A1” players and suck the life out of managers and supervisors. They’re demoralizing.  My goal is to ensure everyone is “better than nothing.”

Do it for your company, yourself and your employees.