Managing Employee Performance: What Level Do Your Employees Fall Into?

Managing Employee Performance: What Level Do Your Employees Fall Into?

How do you turn average workers into the best they can be? How do you salvage underperformers, or identify when they need to be let go? In our five-part 'Managing Employee Performance' series, we will discuss powerful management strategies that can be applied to each performance group: top, average and underperformers. In the first of the series, this week's blog post discusses the different methods to help identify which performance level your employees fall into.


Not all employees are alike. Some excel in their roles, while underperforming workers can drag down the bottom-line. Most fall somewhere in the middle. 


Of course, every company wants nothing but top performers, whose output is typically measurably superior to others: researchers studied the workforces at multiple firms, and per results published in Personnel Psychology, top performers blow others out of the water. The top 5% of workers produce, on average, 26% of the firms’ total output.


Wow! But let’s not forget the 74% of output produced by the rest of the workforce, and here’s a key question: how do you manage each segment for maximum productivity and to improve output moving forward? 


Each of the different performance levels have different management needs, and different tactics and best practices will apply.


  • Top performers need to be retained and engaged.
  • Average performers need to be primed for improved success.
  • Underperformers need to be improved, or let go. 

But all of that is easier said than done, and there’s a foundational question that comes first: how do you even figure which worker is which? It’s not always obvious. Here are four different (but overlapping) methods.


1: The numbers method.


Think performance reviews where managers rank employees according to a scale of 1 to 5. With this approach, top performers may be more common than you think: an Oxford Economics and SAP study of 2,872 employees recounting their most recent performance appraisal rating found that 40% were high performers, 40% were average, and 20% were below average. 


However, this kind of scoring can be either highly subjective and biased (if a manager or supervisor is filling out the appraisal without tying it to specific achievements) or rigorously objective if based on specific performance metrics (which can miss other strengths an employee brings to the workplace).


2: The bell curve (AKA normal distribution) method.


This method places workers along a spectrum relative to each other. Top performers are those who occupy the top 15% or so; underperformers are those who occupy the bottom 15% or so, and average workers are the people in between.


However, bell curve grading is more common in classrooms than in offices. For performance evaluations, it can be a very rigid approach that strips awards or recognition away from people who, by their absolute performance, should be considered top performers. That can affect morale.


3: The power law distribution.


Related to the “normal” distribution of a bell curve is a heavily skewed version called the power law distribution.  Google, under Laszlo Bock as SVP of People Relations, follows this model. The power law distribution has been found to better predict organizational performance than a standard bell curve. Bock notes about top performers, “The top 1% of workers generated 10 times the average output, and the top 5% more than four times the average."


To understand where your employees fall along this spectrum, you have to clearly measure their output, productivity, or performance. This model predicts a large number of people at relatively low levels of performance, a fair number of average performers, and only a tiny number of high-productivity people.


What do you do with this information?


Here we return to our original question: how do you manage each group to maximize their performance? We’ll be following this article with further discussion of specific, on-the-ground management strategies that can be applied to each performance group: top, average, and underperformers. 


Stay tuned for some powerful management strategies!


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