Today’s episode is chock-full of tough love, as we address the unpopular topic of underperformers. This topic always evokes a long list of excuses and results in procrastination. In this episode you will learn the true impact of tolerating underperformers on your team, and you’ll learn the approach Netflix uses to continually weed out underperformers. So, get out of your head
Hey, it’s Julie and welcome to the Corporate Yogi podcast. Today’s episode is chock-full of tough love. We’re talking about underperformers. This is one of the least favourite conversations I have with clients. You see, whenever it comes up, they KNOW what they’re tolerating, but for whatever reason they are putting off doing something about it. They have that active head tilt thing going on side to side, and the resistance in their language that tells me they know they should do something about it, but they just don’t wanna. They often don’t fully understand the true ramifications of tolerating underperformers, so that is what I’m going to reveal to you today. This theme of underperformers came into my awareness more than 20 years ago, when I read the classic biz book Jim Collins’ Good to Great. He introduced this importance of having the right people on your team. He used the bus analogy. I still remember it today, and still hear people reference the bus. You need to get the right people on the bus, and the wrong people off the bus. The metaphor continues on to, making sure the right people are in the right seats on the bus, doing the right things. Clearly this metaphor was sticky enough to have an impact and be remembered all these years later. It’s an important message, if you want to do great things with your team you absolutely do have to have the right people on your team. The other half of the equation that often gets left out is, you have to also be a great leader who will nurture and inspire the team to consistently get the best of them, consistently. It’s not all just on the shoulders of team members. Another analogy I hear a lot is A players and B players. You want to have a team full of A players, and not harbour any B players, let alone C players. Personally, I don’t love this player analogy as much, it feels a little cliquey or judgy to me. But I have come across an approach from Netflix and what they do to ensure top performers, which I really quite like, and I’m going to share that with you today. And in this episode I’m going to ensure we look at this from both sides, so it doesn’t just apply to people managers, we’re going to also talk about what you can do if you suspect you’re being labelled as the underperformer.
So here’s a look at what you’re going to learn today:
1) First, I’m going to explain the impact of tolerating underperformers on your team
2) In the 2nd segment I’ll introduce you to the approach that Netflix uses with their underperformers
3) In the 3rd segment we’ll address this topic from the employee perspective, if you suspect you might bean underperformer
So get out of your head and into your heart and let’s dive right in shall we.
Now because this is a common conversation with clients I have heard every excuse in the book to tolerate an underperformer. Leaders always know full well these underperformers are there, they simply aren’t ready to deal with it yet. Here are some of the most common excuses I hear, 1: they’ve been here at the company forever, 2: they’re really close with others on the team and I don’t want to break up the band, 3: what if it impacts culture and people don’t feel safe anymore, and the most common resistance I hear – what will people think of me? And yes, this last one is the biggest resistance I see of all, what will people think of me if I let go of this employee? Our image consultant saboteur steps in and makes things complicated and distracts us from the facts. The Saboteur worries that people will think we’re a hardass, or too tough, a big meanie. But, I want you to remember one simple thing, it’s not your fault they’re underperformers. Again, it’s not your fault they’re underperformers. Unless of course it is your fault, which is a whole different podcast episode and an answer that only you, your boss and likely your coach knows. This episode assumes that you are a solid leader, and have done everything in your power to get the person to show up and contribute at 100%. So let’s start to have that tough love conversation about the IMPACT of an underperformer, we often think it is isolated to this one person on your team who is only giving say 50%, when the other 5 team members are giving 100%, so that one salary isn’t optimized, which sucks, but it’s not a big deal and you have to pick up the slack sometimes and you deal with it. But in reality, this scenario is not isolated to this one person and you as their manager, Oh no, everyone on your team is likely picking up their slack or impacted by them in some way. It’s more like a ripple effect through your team, department and sometimes to the whole company. The biggest danger, is that it jeopardizes your top talent most of all and you risk losing them! Yes, your underperformers can end up driving away your top talent! How is that for tough love. It’s true though. So instead of making a list of reasons why you can’t let them go, or focusing on how uncomfortable it will be, or listening to your Image Consultant Saboteur, here’s a list of reasons you must let them go:
1. Decreased performance. This will impact the whole team and possibly outside your team. If they’re operating at 50% without any consequences, that may rub off on others on your team
2. It lowers morale. People want to be inspired and motivated by others they work for, they want to know the bar is set high and that’s why they picked for this team. If they see their colleagues operating under the performance bar, they’ll start to question if they still really want to be part of the team.
3. You lose credibility as a manager. Do you really think people don’t notice your underperformer? People see, they know, you’re not hiding it from anyone. Do you want to be seen as soft? And in reality, this is fodder for gossip and side conversations, which are so damaging in a company, I wish we didn’t have to face them, but in reality gossip happens, and your underperformer is a prime topic for gossip
4. You decrease your impact as a manager. Let’s say you assign a new project to 2 different people on your team – one who always delivers and the other one is your underperformer. How many times throughout the week will you think or worry about your employee A, not likely much, why would you, they always deliver and get things done. What about your underperformer, how much will you worry, wonder, check in and maybe even make contingency plans if they don’t deliver. This is all time, energy and effort that takes your time and energy away from you being strategic and doing your job.
5. And lastly, but most importantly you risk losing the good talent on your team, because they will be frustrated by the underperformer and won’t want to stick around.
One quick caveat here, when I talk about underperformers, I’m talking about chronic underperformers, not just someone who is temporarily going through a rough patch that might be impacting their performance, like an illness, sick loved one or other personal situation that will impact them in the short term. That is different, and needs to be handled on a case by case basis.
So I recently finished reading the book, No Rules Rules – Netflix and the Culture of Reinvention, by Reed Hastings and Erin Meyer. It is a fantastic book, I highly recommend it. There are lots of gems in there and Reed shares very specific examples from the company, employees and managers, actual real world scenarios that help you understand how they put their leadership philosophy into practice, things that work and things they’ve had to humbly tweak over the years. I’d like to introduce you to one important concept that applies to our topic of underperformers today. It’s called the Keeper test, and it’s something they developed and actively use at Netflix. Here’s how it works, you ask yourself, “if someone on my team were to quit tmrw, would I fight to keep them, or would you accept their resignation perhaps with a little relief. If the latter, you should give them a severance package and look for a star, someone you would fight to keep.” That’s the keeper test. You put yourself in the scenario and imagine what it would be like if one of your team members were to leave. It sounds a little bit harsh, but the goal here is to remove any shame from anyone who is let go from Netflix. Here’s how Reed explains it. If you look at a high performance Olympic team, if a person is cut from the team, they’re still admired for having had the guts and skill for making the team in the first place. When you maintain a high standard of what it takes to get ON the team, then the focus and attention is put on that, and if you’re let go, there isn’t any shame or hard feelings involved. To implement the Keeper test, you have to be all in. You can’t just dip a toe and do it sometimes and not other times. It’s definitely something you have to commit to.
So I don’t want this episode to feel one-sided, so if you’re not a people manager and you consider yourself on the receiving end of the Keeper Test and are starting to feel feel powerless, fear not. Reed absolutely addresses this in the book too, he openly admits that some of his employees struggle with the fear of being fired, and worry about making mistakes. He shares a technique for you too. He calls it the Keeper Test Prompt Question. During your next 1:1 meeting you can ask your manager, “If I were thinking of leaving, how hard would you work to change my mind.” That will give you a very candid, very honest perspective of where you stand, and what your boss thinks of you. Now you have to ask yourself, do you work in an environment, where you feel comfortable having that conversation with your boss. And if you’re a manager, would you be comfortable answering this directly to your employee. Asking this type of direct question does require a lot of honesty, trust and psychological safety, and I know this doesn’t exist on all teams. I get it. This is why I strongly encourage you to start all your working relationships with a relationship design conversation at the start, to really set the tone to have these types of conversations at any point down the road. If you’re both conscious individuals, there’s no reason you can’t have open and honest conversations. It does however require there to be candor on both sides, you both have to be honest. And using this tool in a culture like Netflix is easier because the entire culture, top down is using the Keeper Test. If this isn’t part of the culture in your organization, fear not, it is definitely something you can have a conversation about and start to work towards. This episode is a great door opener and conversation starter, and also reading the Netflix book, No Rules, Rules can help to introduce it to the culture too. Just because your entire company isn’t using this approach to feedback, it doesn’t mean that you can’t create a micro-culture on your team of how you will handle these conversations. A micro-culture is a brilliant way to take the charge in doing things different. Think about it as a bubble that you have around your team or department of doing things a certain way, that may be different than the rest of the organization. I’ve used this approach and also seen it used with great success and what often ends up happening after a couple of months is you’ll get people inquiring, hey – what are you all doing differently over there, or what are you putting in the kool-aid over there to make people so happy and engaged all the time. And next thing you know, people will be coming to you and your team to learn from you and your techniques. This is a great leadership opportunity.
And one other note before I wrap this employee perspective….. don’t take things personally. If you don’t pass the keeper test, then obviously you want to do some digging around to find out why, and see if these are things you can and want to change about yourself. In many cases however, I do see the scenario where there just isn’t the right fit personality-wise, or employees are doing work where they’re not really fulfilled or engaged. So no wonder they’re not high performers. This isn’t personal, it just means it’s time to move on and find what really lights you up and gets you excited. And I want to share another part of the Netflix culture philosophy, they believe that “adequate performance gets a generous severance” again, adequate performance gets a generous severance” which translates to, don’t just kick someone to the curb if they don’t pass the keeper test, make sure you give them enough runway to take the time and find themselves the right job. Be generous with your severance. One other fascinating part of their culture I was particularly impressed by was their talent retention strategy. So Reed believes in striving to always maintain high-density talent, which means he wants to attract only the best of the best, and he would rather pay top dollar to hire someone who is going to be worth it, rather than hiring 4-5 inferior people who are going to require a lot of managing. To facilitate and maintain high-density talent, he always wants to pay top of market salary to all his employees, and encourages them to research the going market rate of their salary each year to ensure they are being paid at the top of their respective market. And if they’re not, it’s their responsibility to take that to their manager. It’s like distributed responsibility. Now THAT is a dedicated and “all in” retention strategy, isn’t it?
OK it’s time to wrap up this episode on tolerating underperformers – if it hit a nerve or rang true to you then I really encourage you to take the necessary action. Deep down inside you know exactly what you need to do, I’m just here to hold the mirror steady for you. Now it’s up to you to take action. While parting ways with an underperformer may initially seem like a cruel thing, it is truly the kindest thing that you can do for everyone involved, including the underperformer!
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And remember that any fear or resistance you hold inside is simply your greatness in disguise