Tolerating Mediocrity – What is the Cost?

June R. Jewell CPA, President, AEC Business Solutions
Posted on: 09/12/18
Written by: June R. Jewell CPA, President, AEC Business Solutions

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When we close our eyes and dream of the ideal business and team of employees, we imagine a world where there are no conflicts, everyone is a top performer, and we never have to give negative feedback.


But the reality is that not all employees are created equal. We all start out hiring people because we believe they are a good fit, have the right skill sets and experience, and we like them. I am assuming this since most of us don’t hire people we don’t like. After we hire them, we start to give them assignments, and within a few months, realize they are everything we hoped they would be, or not.

This is the critical point in an employee’s tenure with us that often determines how the rest of their employment will go. If we accept a lower level of quality, attitude, or competence than we need or expect, we set ourselves up for mediocrity with the employee. The worst part is – the primary problem is what we are not doing rather than what we are doing. Providing regular, constructive feedback is essential to employee success, but many employees in the A/E industry only get that feedback during their annual review, and it is often vague and not tied to specific activities or projects.

So we are accepting mediocrity. Or even worse, poor performance. Our dream of the superstar employee then turns into a ritual of praying they don’t screw up.

This lack of addressing important performance issues is a cultural problem. Many firms do not have a performance management process that helps an employee set measurable goals, has frequent discussions around performance, and gives timely feedback during a project. Many managers and supervisors are not trained on the soft skills needed to have difficult conversations, and exhibit passive-aggressive behavior – complaining about employees but not doing anything about it. Additionally, many firms do not have rewards, incentives and consequences tied to performance, and everyone in the firm is treated the same for pay increases and bonuses.

There is a high price to pay for this lack of structure. Besides the frustration of dealing with project issues, your top performers may resent the underperforming employees, and management, for allowing them to continue to work there. Ultimately, this could affect retention of your best staff.

As my mission is to “Find Lost Dollars” due to business management and operational practices, I have worked on trying to calculate the true cost of misaligned or missing performance management processes. After surveying many A/E firms of all sizes, my research has shown that at least an hour a week is wasted due to mediocre or poor performance. The cost of this is astounding and obviously proportional to the number of employees you have. For every 50 employees in your firm, I calculate the cost as follows:

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Not every employee is under-performing, yet some may be wasting more than one hour a week so it probably averages out. This is a huge amount of money – so where is it going and how can you get it back?

The first thing we need to do is figure out how the mediocre performance is affecting our work, projects, client and employee retention, etc. The following areas are the first places to investigate to understand where lost revenues may be impacted due to failure to hold employees accountable or deal with under-performing employees:

  • Hiring the wrong people due to poor hiring practices or poorly defined job descriptions

  • Keeping poor performers too long

  • Poor productivity (utilization, etc.)

  • Project Budget Overruns

  • Rework and quality control

  • Unhappy clients

  • Dis-incentivizing (or losing) top performing employees

  • Not following company processes or using company systems

  • Wasted time due to overall inefficiency

I have clearly demonstrated that there are real costs to accepting mediocre behavior and performance. There are many ways that implementing employee accountability standards and having clearly laid out performance management processes can help you find your lost dollars.

By teaching your employees the importance of business management best practices, establishing clear expectations and goals, providing regular feedback and implementing rewards and consequences based on performance, you can start to change the culture of mediocrity to a culture of profitability.

About the Author: June Jewell is a CPA and author of the best-selling book Find the Lost Dollars: 
6 Steps to Increase Profits in Architecture, Engineering and Environmental Firms. She is the President of AEC Business Solutions, focused on helping A&E firms grow profitably and measurably increase profits by impacting how employees perform.  Learn more about how to improve your employee and firm financial performance at www.AECBusiness.com.

Want to change your culture to one where employees are focused on helping your company succeed and be accountable for financial results? Join our web training  Getting Employees to Think and Act LikeOwners on September 18th at 2:00 ET.  

REGISTER HERE!

 

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