3 reasons why employees underperform and how your startup can deal with it

9th Apr 2013
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In my last article, I wrote about the criticality of performance management for startups and shared 5 tips for performance management. Almost all startups have their star performers – the ones who combine their efficiency at work with dedication for the company and passion for the job. Most employees lie somewhere on the spectrum of medium to high performance and medium to high commitment. Then, however there are those who just don’t make the mark...


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Gwen Moran describes 5 types of problem employees – those whose performance at work creates issues. Reasons can range from cultural fit and capability mismatch to a lack of discipline and even illegal activities. Apart from the last category, which is definitely something you cannot tolerate, low performers can create quite a dilemma for you as startup founder.You know that your startup needs every employee working at a 100%, often more! You can’t afford to have an employee underperform. Underperformance not only impacts the employee’s immediate area of work, it could also impact the team. That said, firing employees is emotionally unsettling, not just for you but for the team who may have built some level of relationship with the employee. It also feels like a waste of the investment you and your team made in hiring, onboarding and training him/ her. The toughest are those who, as Howard A. Tullman describes in his article - 3 Employees You Need To Fire. Now – are “All effort, no results”

In dealing with low performers, it is absolutely critical to diagnose the real issues. Underperformance could stem from 3 broad issues - Capability mismatch, Lack of motivation and Misalignment:

Capability Mismatch

This is where the employee does not have the adequate skills or knowledge for the work assigned. Check if the employee has been given a role different to what he/ she was hired for or was doing earlier? If not, and it’s a new hire, you need to review if you are hiring properly. If yes, why was the role changed? A drop in performance of an old timer could often be a result of taking on something new.

Where there is capability mismatch, you need to consider two things. The first is can the employee be reassigned to another role? Even if such a role is available, can you get someone else who can do the role at a substantially lower cost or significantly more efficiently?

The second is what will it take to bridge the capability gap? This is a cost-benefit analysis that you need to run. Can you allow the employee to take more time to build the required capability? How much time will you personally need to invest in mentoring the employee? Are there any formal training programs that you can send the employee to? How much do they cost?

In making the above decisions, also consider the commitment levels of the employee. For a highly committed employee, the investment in upskilling or redeploying may well be worth it in the long term.

Lack of Motivation  

An employee could have the capability but may simply not be putting in the required effort. Indiscipline and lack of accountability may seem like behavioural traits that some people just have. However, more often than not, they are symptoms of disengagement and de-motivation. There are several cases of employees who have burnt the midnight oil in previous jobs but don’t seem to even want to turn up to work in the current one.

Motivation is a deeper issue and needs to be treated differently from other performance cases. I have written about employee engagement in an earlier article. Another good resource is from the global recruitment company – Michael Page – on seven reasons for employee de-motivation. Employees could also sometimes be dealing with personal issues. We are human and any general de-motivation will also reflect in our work. Such cases need to be treated sensitively and with patience. Here again however, look at how important the employee is to your scheme of things and how invested he/ she is in your company.

Lack of Alignment

You sometimes have employees who have the right skills and are putting in all the effort but are just not achieving the results. This could be a sign of misalignment – they either don’t completely understand what is expected from them or are not going about it the right way.

Find out if the employee has been properly guided. It is very common among startups to hire someone and expect them to start firing immediately. In our super-charged startup jobs where there is so much to do in so little time, we often forget that someone needs to guide the newcomer. Even the best batsmen take some time to understand the pitch; why not help them!

Even if you have inducted and onboarded employees properly, you need to maintain constant communication to track how they are doing. Set up periodic reviews with an aim to coach employees and ensure that their efforts are aligned with your startup’s needs. Watch out for signs of misalignment as it can sometimes get confused with capability mismatch.

How you deal with the underperformer needs to be driven by a deep understanding of the underlying issues. You need to consider several perspectives and make cost-benefit based decisions. At the end of the day, if you feel that you have genuinely explored all aspects and it does not make sense to retain the employee, do not be afraid to let go. It is hard but sometimes it has to be done.

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