May 31, 2022
Amid the “Great Resignation,” many employers are working hard to retain the workers they currently have—even if some of these workers produce subpar results.
According to the Wall Street Journal, new claims for unemployment benefits are trending at their lowest levels since 1968—signaling just how few layoffs are occurring in the current tight labor market. In March, there were roughly 1.1 jobless claims per 1,000 people, compared with 2.3 jobless claims per 1,000 people in 1968.
“Right now, Americans are experiencing the highest level of job security on record by many measures,” said Aaron Sojourner, an economist at the University of Minnesota.
In addition, many companies are grappling with staff shortages after record numbers of employees quit their jobs as part of the “Great Resignation” over the past few months. Because of this, experts say employers may now be more circumspect about who they choose to lay off, if they do so at all.
Before the pandemic, “companies tended to have more caution on the side of hiring than on the side of layoffs,” said Erica Groshen, a former commissioner at the Bureau of Labor Statistics. “I think right now they have a more balanced caution. The balance has tilted a little bit to paying attention to the risks of laying people off.”
In the current labor market, many companies are choosing to hold on to their current workers, rather than trying to hire new ones—even if these workers are underperforming or not giving their full effort, the Journal reports.
“You’d have to be incredibly lousy” to get fired as a software engineer right now, said David Cancel, CEO of Drift, a marketing firm that uses artificial intelligence. “Most companies—and us, in some cases—are keeping people who wouldn’t be on the team in a looser market. The standards would be higher.”
In particular, Benjamin Friedrich, associate professor of strategy at Northwestern University, said employees in smaller roles in a company are likely keep their positions, regardless of performance. In comparison, executives are more likely to lose their jobs if they have disappointing results, since these failures cost the company more overall.
According to a survey of 2,000 managers from UKG, around two-thirds said they would be willing to rehire former employees who had middling performances, and 16% said they would take any of their former employees back, regardless of their skill.
“I call it bird-in-the-hand management,” said David Gilbertson, UKG’s VP who leads its workplace research. “The companies I talk to are all worried about recruiting.”
Instead of recruiting new employees, many companies are now training or retraining the employees they already have, according to Jim Link, chief human resources officer at the Society for Human Resource Management. This may mean teaching employees how to be better at their current jobs, or transferring them to different positions, to see if they will perform better with different duties.
Employers “are looking at how to uplift the skill and capability of the employees that are on their staff, and they’re making great efforts to do that,” Link said.
However, companies who put up with subpar employees may also see their high performers leave if they do not feel sufficiently rewarded for their work, the Journal writes. If employers do not distinguish between good work and bad work, morale on their teams may fall over time.
“You’re showing your top performers the bottom of what you’ll tolerate,” said Jessie Wisdom, co-founder of Humu, a company that aims to improve team motivation. “If I’m working really hard, but I see that management doesn’t treat me any differently than they treat someone who is doing the bare minimum, that is very demotivating. Why should I do my best anymore?” (Harrison, Wall Street Journal, 4/15; Borchers, Wall Street Journal, 5/19)
Every manager knows how much work it takes to find, hire, and train new team members, so it’s no surprise many leaders err on the side of retaining team members who are underperforming – particularly when the median hospital vacancy rate is already twice the rate seen in more typical times. But we often underestimate the costs of retaining team members who are underperforming and overestimate the benefits. Staff who aren’t meeting expectations impact:
Is it reasonable to have a higher bar for what constitutes underperformance warranting termination in the current environment? Yes—and not simply because of labor shortages. There are several reasons a team member may not be meeting expectations that can be resolved. Explore these potential root causes before beginning a formal termination process:
If you have a team member who isn’t meeting expectations, you don’t need to jump right to termination—but you do need to take action. The costs to your team are too high to avoid doing so.
Current ArticleIf you can't fire an underperformer… what's next?
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