I’ve been pondering this question lately. Bad employees are easy. If a person is losing you money or holding you back, it’s easy to rationalize firing them. Good employees are easy too. If a person is exceptional, you keep them engaged with monetary incentives (money!), increased responsibility, and increased freedom. But what about the average, mediocre masses? What do you do with them?
I think the best way to think about it is to look at employees as an investment. When you’re younger, you can afford to take more risks with your money. If you’ve invested in a stock that’s consistently returned negligible amounts, you should sell it and invest your money elsewhere. When you’re young, the risk is small — a few thousand dollars — and it’s easy enough to change course when an investment tanks.
If you’re older, sometimes mediocre isn’t so bad. I know there are a lot of geriatrics that would have LOVED to have 0% returns in 2008 instead of losing 20-40% of their net worth. They can’t and shouldn’t take the same risks.
How’s that apply to businesses? In many ways, new companies are like young people. The opportunity cost of the mediocre employee is so high that mediocre employees should not be retained. Older, established companies are like old people. The risk of an exceptionally bad employee are too high, so it makes sense to retain the mediocre to be safe.
How does this apply to you? If you want to work with smart, exceptional people, you’re more likely to find them at a small, young company.
What Do You Do With Mediocre Employees?
I’ve been pondering this question lately. Bad employees are easy. If a person is losing you money or holding you back, it’s easy to rationalize firing them. Good employees are easy too. If a person is exceptional, you keep them engaged with monetary incentives (money!), increased responsibility, and increased freedom. But what about the average, mediocre masses? What do you do with them?
I think the best way to think about it is to look at employees as an investment. When you’re younger, you can afford to take more risks with your money. If you’ve invested in a stock that’s consistently returned negligible amounts, you should sell it and invest your money elsewhere. When you’re young, the risk is small — a few thousand dollars — and it’s easy enough to change course when an investment tanks.
If you’re older, sometimes mediocre isn’t so bad. I know there are a lot of geriatrics that would have LOVED to have 0% returns in 2008 instead of losing 20-40% of their net worth. They can’t and shouldn’t take the same risks.
How’s that apply to businesses? In many ways, new companies are like young people. The opportunity cost of the mediocre employee is so high that mediocre employees should not be retained. Older, established companies are like old people. The risk of an exceptionally bad employee are too high, so it makes sense to retain the mediocre to be safe.
How does this apply to you? If you want to work with smart, exceptional people, you’re more likely to find them at a small, young company.