Companies tend to have three levels of employees:
1. Superstars - those that consistently exceed expectations,
2. Average - those that consistently do what is expected,
3. Tolerable - those that are not bad enough to be fired.
I call them A's, B's and C's. A's are usually 5%, B's are usually 90% and C's are usually around 5%. Something should be done with the C's, but what? Lay them off? Fire them? Do nothing and hope that they improve?
Doing nothing is the course of least resistance, but the problem is that your A and B employees all know who they are, and eventually resent their lack of performance. It is bad for overall company morale to have the C's around.
When I was running a business I found that I rarely had to fire any of the C employees that worked for me. I simply sat them down and told them what was expected of them to become at least a B. It then became their decision to either change or quit, not mine. They knew that there was an "or else" attached to our conversation without me ever saying it.
My observations are that C employees are usually tolerated, sometimes for years. They may be long-term employees who you feel loyal to, or they may have some personal issues that would make losing their job especially painful. Or they have certain relationships that make it very difficult to do what should be done.
Good employees are hard to find, but your goal should be to have all A's working for you. Let the C's self-select themselves out. Work with the B's to become A's. They probably have the ability and intelligence, but just need a little prodding and encouragement.
A employees attract other A employees. They want to work in an environment where exceptional performance is both expected and rewarded. Make sure that your interview and testing process does everything possible to ensure that you are getting people that have the potential and desire to get ahead. Be willing to pay for these types of people. It will be certainly worth it in the long run. If you make a mistake, take prompt action to fix it.
Let your C employees know what they need to do keep their job. You'll be happy you did, and your A employees will be also.
Now you know your ABC's, Next time won't you sing with me?