As the economy starts to slow down, so managers begin to look at their employee costs. Del Hunter argues that many managers are under the mistaken impression that all workers should be treated equally. This doesn't mean that every employee is different. Really great managers have figured out that if you want to give your company a competitive edge – to increase employee productivity, for example – then security management teams should dedicate their energies to the top 20% of employees in both creative and (dare we say it) more imaginative ways.
In a recent article written by John Sullivan looking at how companies might attract and retain the very best performers, he argued: "If you wish to increase company revenue by millions of dollars then you can do so by retaining the Top 20% of your employees, releasing the bottom 10% and replacing them with average performing employees." Sullivan speaks as head of the human resources programme at San Francisco State University, and a former recruiter for Agilent Technologies.

Neither John Sullivan nor I are exponents of treating employees badly. Moreover, as a director of an Investors in People-based organisation I find myself in a constant quandary when dealing with underachieving members of staff. "Just how much management time should be devoted to such people?" states John Sullivan. Quite. In the absence of simple formulae, I now favour the replacement option.

In some industries, it's not unusual to find that the performance differential between average and top employees is consistently 25%. In real terms, that can mean 25% less sickness absence, or 25% more solutions delivered to clients and a 25% proportional decrease in losses. This makes the net gain to the business too attractive to ignore.

The worth of top performers
Demonstrating the true value of top performers in comparison to average workers isn't easy, in particular when you're talking about service-based skills such as communication or opportunity issues like the prevention of theft. However, every job has measurable outcomes (ie the outputs against which employee performance may be benchmarked).

Many employers use revenue – or earnings – per employee as a Board-level management tool (it's often used by potential buyers of a company as a gauge for assessing senior management ability). Calculate the average revenue for an employee for these jobs (the total divisional revenue for a year divided by the number of departmental employees... if that's not available, take the total turnover of the company for one year and divide this by the number of employees).

Take the average revenue per employee and multiply it by the top performer increase factor. The resulting number is the revenue generated by the top performer.

Armed with these figures, subtract the average revenue per employee from the revenue of a top performer. The difference is the value added each year by hiring or retaining a top performer versus an average performer. Naturally, this calculation can be used to compare average performers.

Other simple calculations involve contrasting the difference between the average output per employee and the output of the very top performers (expressed as a ratio). John Sullivan argues that you should then "divide the top performer output per employee for a specific position by the number you identified as the average performer output... the resulting number is the top performer increase factor for that role".

In some industries, it’s not unusual to find that the performance differential between average and top employees is consistently 25%. In real terms, that can mean 25% less sickness absence, or 25% more solutions delivered to clients and a 25% proportional

The ratio varies from employer to employer, the reason behind the difference often only being identified when companies benchmark themselves or undertake continuous improvement regimes such as Six Sigma. Either way, your aim is to find an appropriate and simple measure. No single measure should be accepted, and a matrix of data should always be examined. Other factors to be measured may be external (such as customer survey results), internal (like timekeeping records, for example) or a mixture of both.

Examples of other direct measures include the percentage of objectives or targets met, accuracy of forecasts, impact of key decisions, percentage of repeat customers and error percentage rate.

Using indirect measurements
To many organisations, indirect measurements are a by-product of the role or function. As such, they provide additional measurable data. Typically, these may include speed of promotion, performance measured in 360 degree appraisals, performance of direct reports (ie employees within the department), forced ranking by peers (as enjoyed by followers of Channel 4's celebrated series 'Big Brother') or external consultants (often used in wage re-structuring).

Some negative traits might also be considered. However, great care should be taken with these because they are particularly prone to the impact of factors beyond the manager's control (such as poor selection processes, client management issues and location). This in turn makes contrasting somewhat unreliable.

That said, typical negative traits include the number of disciplinary actions taken against employees, staff attrition and the number of employees who cite the manager as their reason for leaving.

In today's well-connected economy, most organisations boast effective management information tools. However, there remains a tendency to keep such data secret. Our preference is the shared use of data to identify the top performers, avoiding those who just shout the loudest.

Source

SMT

Postscript

Del Hunter is a director at SSR Personnel Services, the specialist recruitment consultancy for the security sector (www.ssr-personnel.com)