Managing Employee Performance: How Do You Manage Top Performers?

Managing Employee Performance: How Do You Manage Top Performers?

Not all employees are alike. Some excel in their roles, while under-performing workers can drag down the bottom-line. Most fall somewhere in the middle. In Part 1 of this series, we introduced several ways to figure out which employee is which. In Part 2, we discussed management strategies specific to those workers in the middle of the range. Today we’ll focus on how to help top performers thrive.

Pay based on performance.

As we mentioned in Part 1, Laszlo Bock, SVP of People Relations at Google has a personal policy to compensate in line with performance. His rule of thumb: if you’d trade more than five people for your very best performer (i.e., if the very best performer’s output matches or exceeds five average workers), you’re probably underpaying him or her. This approach is all about retaining that crucial 5-8% of the workforce that generates 26% or more of the output, according to Bock. He isn’t alone: according to research from Mercer, the highest rated performers (typically 8% of the workforce) are often paid much more (average pay increase of 4.8%), while middle rated employees (57% of the workforce) see only about half as much an increase on average (2.6%). To some extent, you have to pay top performers more if you want to stay competitive. 

Promote…or don’t.

Top performers should not languish in positions where their true potential is not being tapped. If the role isn’t challenging enough, they’ll disengage and leave. And people who perform well should be recognized through promotion once they’ve demonstrated that they can handle it. Promotion can give them opportunities to develop new skills and grow in their career. But be aware there’s a risk too: the Peter Principle, or the phenomenon of promoting people into positions of incompetence. Consider Sales: Beth might know exactly how to bring in the big clients, but does she know how to lead a team of others to do the same? Many companies simply assume that if she can do the former, she can do the latter. That’s not always true. But if you don’t promote, you must provide alternative challenges and opportunities for career and personal growth.

Don’t punish top performers because of under-performers elsewhere.

It can be tempting to expect top performers to fill in the gaps left by other people’s sub-optimal work, because they can do it better and faster. When faced with an average or under-performer, you might be tempted to move some of their responsibilities onto someone you know can handle it better. But in that scenario, you’re punishing your superstar with more work while possibly, inadvertently, rewarding the poor performance of others.

Provide detailed, granular feedback.

Top performers need coaching more than they need feedback. Think of it this way: improving the performance of a low performer might be moving up a rank or two on a 5-point scale. A rough, all-inclusive 5-point scale is fine for that. But improving the performance of a top-performer is like moving from a 95 to a 98. Making that fine-tuned an improvement, at that high level, can have measurable benefits for your organization, but it requires an equally fine-tuned approach to feedback and employee development.

Need more information about performance management or employee engagement? CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR best practices, compliance, payroll and benefits. To learn more about our integrated HR outsourcing solution, contact us today.