Poor Employee Performance – How Much Does It Cost Your Business?

by Leon on February 24, 2013

how employee performance affects your businessIn today’s recession economy it is important to stretch every dollar your business spends to its absolute limit. It’s fairly easy to do this when it comes to product manufacturing, shipping costs and utility bills, but what about when it comes to the cost of your employees? You can determine how much profit an employee brings into the company through the work they do, or how much they cost you to maintain with their benefits package and your tax burden. But how can you determine if a subpar employee is costing your business money? People will make mistakes, but what if they continue to occur? Or what if there are other, more subtle ways that employee is impacting your business. If you have more than ten people in your business, chances are at least one of them is a poor employee. So how much is poor employee performance costing your business?

There is one easy way to quantify this, by looking at the added time these employees require. And it’s not just the extra time they have to put in, but it’s the extra time your managers put in handling these hard cases. If you’re the direct manager, you know what this takes. You’d much rather be raising up your quality employees, helping them along their successful trajectory. Instead you’re stuck in the doldrums with the weak link. According to some recent surveys, there is a very real cost to this strategy. Managers are spending more than 15% of their time pushing and prodding poor employees. That’s almost one full day out of the week wasted on a poor performer. What could you be generating with that time?

That poor employee could also be costing his co-workers time, energy and enthusiasm. A negative influence inside the office can spread to other people. One person mailing it in who remains on staff can leave the others disillusioned, frustrated or downright angry. A negative attitude spreads, and poor performance habits can easily be picked up by others. Suddenly this one bad apple is ruining the lot. And there’s no way to quantify the cost of that.

The poor employee can also cost the overall potential of your company. You know that your time is wasted, as is the time of your other employees. But how does this affect your customers? If the poor employee interacts with the public he could be hurting your brand in subtle ways that you aren’t even aware of. Perhaps there are clients out there that have a mediocre experience of your company. If they were interacting with a high performance employee, maybe they would have become outspoken brand ambassadors. Maybe they would have brought other customers to you, customers you didn’t have to advertise to attract. That’s money that isn’t in your pocket.

Last but not least, that poor employee is costing you by taking up a spot that could be filled by your next top earner or project manager. Keeping a full-time employee is expensive. You can’t always just add on extra people because you want or need them. He is taking up a place in your company that could go to someone else. So not only is he creating a negative result, he’s also actually blocking a potential positive result. Perhaps that superstar employee is out there, checking out your company’s image on reputation.com and passing you over because of some damage this bad seed has caused. You’re losing out twice, making this the worst cost of them all.

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