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.

Not all employees are created equal

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.

It’s a cultural problem that can be fixed

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 which is much more effective.

Many managers and supervisors are not trained on the soft skills needed, 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.

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 A&E firms of all sizes, our research shows that an hour or more per 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 a 50-man firm, I calculate the cost as follows:

 

1 hour week x 48 weeks / year x $110 average bill rate = $5,280

lost revenue per employee

$5,280 x 50 employees = $264,000!

 

How much is mediocrity costing your firm?

Not every employee is underperforming, yet some may be wasting more than one hour a week so I believe it balances out. This is a huge amount of money – so where is it going and how can we get it back?

The first thing we need to do is figure out how the mediocre performance is affecting our work, projects, client retention, 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
  • Keeping poor performers too long
  • Poor productivity (utilization, etc.)
  • Project budget overruns
  • Rework and quality control
  • Unhappy clients
  • Disincentivizing great performers
  • Not following company processes and inefficiency

You can change the culture of mediocrity to a culture of profitability

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 establishing clear goals, providing regular feedback, and implementing consequences for inadequate performance, you can start to change the culture of mediocrity to a culture of profitability.

 

Cash is King Webinar

Managing Cash Flow in a Down Economy

Date: Wednesday, August 19th, 12:00pm ET

The average days to collect cash in the AEC industry is between 60 to 120 days. In this web training we will examine the complete project lifecycle to understand how cash flow can be increased when the economy is uncertain. Participants will gain valuable tips to improve cash flow by improving timesheet practices, reducing the billing cycle, and improving client relationships and collection practices.

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