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The Business Forum
Cost of the Status Quo
Thomas R. Northup
To improve organizational
achievement, we must continuously improve its key component: employee
performance. Without ongoing improvement, employee effort becomes
routine and the organization develops a status quo culture. Maintaining
this type of culture has a cost.
Employee achievement is a function
of many organizational skills. Recruiting and selection, training and
development, and management and leadership all affect the quality of the
people in a company and therefore affect organizational achievement.
Employees in an organization fall
into one of four quadrants. Employees in each quadrant impact
NOT YET 1
his first day, a new hire is motivated but not yet competent. He does
not know the company policies and procedures necessary to be successful
in his job.
Through orientation, on the job
training, and mentoring, this employee moves from quadrant 1 to quadrant
2. He can now perform his job in a satisfactory manner and is a
motivated, functioning member of the organization.
Unfortunately, over time many
employees move from quadrant 2 to quadrant 3. They are competent but
have lost motivation. They go through the motions but make no effort to
improve and excel.
extent of this problem is well documented. “A mere 14 percent of
employees around the world are highly engaged in their work. In other
words, roughly 85 percent of people at work are giving significantly
less of themselves than they could.” From the Towers Perrin Survey of
86,000 employees around the world.
Employees move from quadrant 2 to 3
for numerous reasons, including no personal connection to the mission of
the organization, weak supervision, confusing direction, lack of clear
goals, and siloed operations where departments work at cross
Who interfaces the most with
employees, managers or peers? Dissatisfied employees don't like to be
alone. They recruit other employees to join them in their
dissatisfaction. This can cause particular damage to new employees.
When a company allows these
conditions to persist, the culture of the organization is affected and
some employees move to quadrant 4. They are demotivated, they lose
interest over time, and they become incompetent.
This takes a person far beyond the
lack of motivation we saw in employees in quadrant 3. People in quadrant
4 complain in the parking lot with the fatal disease called …………. Ain't
It Awful Here! They have negative attitudes. They poison the
organization’s culture and the work of others.
The lower productivity in quadrants
3 and 4 has an enormous cost. If 30% of employees in a 100-person
organization with a $4 million payroll are in quadrant 3 and are only
60% productive the cost is $480,000. If we assume a product / service
gross margin of 30% the organization must sell $1.6 million to recover
the $480,000 wasted payroll investment. For a 200 person organization
the sales required to cover the wasted payroll investment is $3.2
In addition to productivity costs,
employee failure costs include time wasted by direct managers, the cost
of repairing fractured team morale, and replacement hiring costs.
Lack of commitment to employee
execution has an enormous cost. If you could move people from quadrant 3
to quadrant 2, imagine what that would mean to your company.
Management and leadership are key
to employee and organizational achievement. The two critical components
are a clear organizational vision and an effective leadership
When employees personally relate to
a clear vision, they focus on how to best deliver results to clients.
Effective leadership builds a
results based culture based on enthusiastic, motivated, confident teams
of employees committed to achieving the vision of the organization. In
this development culture, employees desire to improve personally and to
meet challenging goals. They feel valued and rewarded.
Ongoing employee development has
the following advantages.
Accelerates the move from quadrant 1 to quadrant 2
Keeps more employees in quadrant 2 and helps recover employees from
Minimizes the influence of employees in quadrant 3
Minimizes the number of employees in quadrant 4
The results of employee development
are dramatic. A large scale research project by Harvard Business School
professors Leonard Schlisinger and Jim Keskett found that companies that
have distinguished themselves in the way they hire, train and treat
their employees have experienced:
Growth rates 60 – 300% greater than competitors
Return on sales 200 – 300% greater than competitors
Return on assets 150 – 300% greater than competitors
Effective leaders understand a
basic truth: no company with unhappy unmotivated employees ever had
satisfied customers. Ongoing development of employee performance brings
competitive advantage in your marketplace.
Thanks to Mike Weaver,
Achievement Associates, for the thought behind this article.
Thomas R. Northup is a Fellow of The Business
Forum Institute and is a nationally recognized management expert,
consultant, speaker and coach. He is the author of the book, The Five
Hidden Mistakes CEOs Make. How to Unlock the Secrets and Drive Growth
and Profitability. Marshall Goldsmith, author of the New York
Times best-seller, What Got You Here Won’t Get You There, said about Five Mistakes “Gleaned from years of success as a CEO in his
own right, Tom Northup masterfully provides practical wisdom and tools
to move senior leaders beyond the status quo to help them see what
they need to see, not just what they want to see.” Tom is the
former CEO and principal of three successful businesses, and he
understands the business complexities faced by today’s busy executives.
He is experienced in high growth situations, new product start-ups,
strategic planning, market analysis, team operations, and
turn-around/reorganization. Today, through coaching, consulting,
mentoring, and training, Tom provides practical experience and
thoughtful leadership. Tom works side-by-side with clients to develop
plans and implement strategies to …. build capabilities that increase
revenue and profitability year after year, make companies more proactive
in the marketplace, build effective management teams, foster greater
corporate wide accountability and generate sustained results. He is a
goal-oriented executive experienced in developing strong management
teams all with a focus on driving continuous results and success.
Tom graduated with a BS in Mathematics from Bucknell University and has
an MBA from Syracuse University. He is an active with the Forum for
Corporate Directors, the Institute of Management Consultants and runs a
CEO roundtable at the Irvine Chamber of Commerce. In addition to his
book he has written many articles on management that have been published throughout the
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