Indispensable Employees and The Lottery Principle

Employers generally make one of two mistakes when firing someone - they either do it too quickly or too slowly. Too quickly happens when they terminate an employee who might have been salvageable with a little time and good management practices. Instead of spending a little money to rehabilitate, they often decide to spend a lot of money to simply start over.

On the flip side, too slowly sometimes happens when an owner or manager has the illusion that a problem employee is indispensable. This may be rooted in one of three issues:

1. The owner/manager knows that he/she will be inconvenienced by addressing the problem and is willing to tolerate a lot more than they should in order to avoid any conflict.
2. The owner/manager is worried about the problem employee's relationship with a key client. 
3. The owner/manager overvalues the problem employee's individual production, but undervalues how the trouble-maker limits the productivity of the rest of the team.  

I worked with a CEO who needed to make a personnel change in a critical, non-executive role. He requested that I run blind ads, network confidentially, or anything else I could think of to find a replacement before taking action against the poor performing employee. Since I'm not a fan of blind ads in any circumstance, I reminded him of The Lottery Principle. 

The Powerball prize reached an unusually high number one week, which generated some buzz around the office. I asked one of our top sales people if he would be coming into work tomorrow if his numbers were picked. He said, "Yes, but I'll be wearing flip flops!" 

The Lottery Principle teaches us that if an employee wins the lottery tonight and flies to Key West tomorrow, the organization will find a way to work through the unplanned loss, no matter what role the employee filled. If that's true then why do so many organizations feel powerless to act on poor performance, even when they know they need to? 

I found myself in similar situation to that CEO a few years back. I had a poor performer who happened to be loved by my largest client. The frustrating part was that he didn't even do a very good job for the client, but was revered by the client nonetheless. In both my case and in the case of the CEO, above, the problem employee eventually did something that forced our hands. And in both cases we realized that the sky didn't fall and we wish we had acted sooner. In fact, that's the comment you'll most frequently hear from other employees in those cases, "What took you so long?"

So, how do you know when it's time? It's time when you can clearly define what the performance deficiencies are, you have communicated your expectations to the employee such that they know what success looks like, and you've determined that the employee is either unable or unwilling to meet those expectations. At that point it is time severe the relationship and deal with the ramifications, just as you would if the employee won the lottery and disappeared to a Caribbean island.