The 10% Club

I was designing a leadership development course for one of our clients earlier this week, and had to smile.  I remembered a theory that a colleague of mine, Judith Weber-Lucas, had on employee engagement and motivation.  Now it wouldn’t count as “true theory” as there haven’t been any scientific studies to support it, but when sharing this ‘theory’ with students in prior leadership development courses, the room always gave a collective head nod that they could relate to it.  She called her theory “the 10% club.”  The theory is that “within every organization, we can roughly assume that 10% are unmotivated, disengaged, under performers.  These are the people who hate to be there, look at their work as just a job, don’t contribute, and are always looking for a reason to bring everyone down.”  She would then ask her participants, “What is the cost of that 10% to the organization?”

Here’s her simple formula:

• Determine how many people would equal 10%
• Multiply that number by an average salary amount

Here’s an example:

• An organization has 5,000 employees on the payroll—10% of 5,000 is 500
• 500 employees x $37,000 = $18,500,000

The monetary amount you get is a rough estimate of what an organization pays to have unmotivated and disengaged performers on their payroll.  This amount doesn’t factor in the other indirect costs such as benefits, time the leader has spent working with the employee, cost of morale and performance on the team members working with this person, and the list continues.

As leaders in our organizations, we are ultimately responsible for that money walking out the door each year.  This means it is up to us to make sure that our employees are motivated, satisfied, and having an effective impact on performance.  Do you know how to do that?  Do you have an effective performance management plan in place to turn the 10% around?  How about to re-engage those that are doing well and to keep them motivated?

In my experience, organizations have been quick to “solve” that problem by purchasing a software tool.  It is a well-intended purchase—“let’s buy something that will help our people track performance and make it easier on them.”  However, the actual “human interaction” piece is not in place, and it’s often an afterthought.  Most organizations provide training, but the training is more about the software tool, how to use it, and when you should use it throughout the year.  Rarely do organizations ask the question, “Do my leaders really know how to have a performance conversation with their employees?”  Unfortunately the software can’t have that conversation for you.

Categorised in: Amy Murphy