Over the years, I have talked with many CEOs and executives about their business and financial forecasts and how well their teams have accomplished their goals. When the discussion comes around to the organizational chart and employee performance, it is not unusual to hear comments like: “Fred does OK, but we just don’t have the budget to upgrade his position to an A player.” Recently, I helped out a local small business that was facing this very challenge.
Here’s a pretty common scenario: Let’s assume that Fred makes $50,000 per year. Fred’s performance is OK, but it probably rates a B or B minus. Let’s also assume that it would cost $65,000 – $70,000 per year to put a solid A player in the position. You might say “that’s $15,000 to $20,000 more – we just can’t justify that right now.” [Meanwhile, this much or more is leaking out of the building each year in casually-monitored office supplies, dues and subscriptions, trade shows, etc. – but that’s probably a topic for another day…]
Sure, funds might be tight, but are you really saving money? Or, is sub-par performance already costing you more than what you might pay an A player? Worse yet, are you losing something that might be even more valuable than money: time? When evaluating your current staff and the cost of recruiting A players into your organization, you might want to pause and ask yourself the following questions:
- What is the real “cost” of a B (or worse yet, C) player? How many errors are being made, how many times to you have to follow up on progress, how much do you have to micromanage? (We all love herding cats, right?)
- In a startup or rapidly growing small business, what is the cost of the lost time that will never be recovered? If you are in the early stages of establishing your brand and competitive advantage, this lost time could make the difference between survival and failure.
- What impact does the B player have on your other employees who are bringing A level performance?
A singular focus on the “cost” of your key people is like focusing on the price of other goods and services that you buy – low price rarely gives you the best long term value.
Question: How often have you fallen into this trap, and what were the consequences to your organization?