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Managing to the 40 Percenters

Having managed teams for over a decade, I’ve seen that there are two common pitfalls that managers encounter when leading a team: they either focus too much of their time and energy managing the high performers, or spin their wheels managing the low performers. The truth is, neither is effective. If leaders instead spent their time managing the “40 percenters” team performance would improve dramatically.

The most appealing way to manage a team, and the default for most leaders, is to spend most of their time and energy coaching the high performers. It typically takes the least amount of effort and it is the most enjoyable. These high performing employees likely have a good understanding of the business and are strategic thinkers with a consistently high level of execution. Why wouldn’t a leader want to spend most of their time managing this group? Not only does it feel good to manage people who are successful, it is often the easiest way to achieve accolades yourself.

The first challenge with this approach is that spending a disproportionate amount of time and effort managing your high performers doesn't scale. By definition, your high performers are a small, select group and not where the lion-share of your people resource lies. On top of that, most high performers thrive in a working environment with more autonomy and ownership, which lends itself nicely to less hands-on management, not more. Especially at Dialpad, where managers can use our products to review activity, sentiment, and follow up items, there is no need to micromanage your high performers. So unless a meaningful percentage of your high performer’s time is spent coaching the rest of your team (which is a great idea in theory but one that is rarely implemented) the manager is diverting attention away from those that need it most to the group that likely needs it the least.

But don’t be fooled: managing to your lowest performing employees can be just as detrimental, if not more, to a leader’s effectiveness. The amount of time and energy it would take a manager to meaningfully improve a lower performer’s abilities enough so that they make a substantive impact on the business rarely has a positive ROI. And often, part of the reason why your low performers are your low performers isn’t just skillset. Low performing employees are typically ineffective, at least in part, because they are unengaged or uninterested in the job. This means that their likelihood of making significant strides is low, but the time suck for management is unreasonably high.

Instead, the best use for the majority of a leader’s time is spent managing to the 40th percentile of employees. These “40 percenters”, or the lower band of your average performing employees, is the group that, broadly speaking, should receive most of the manager’s time and resources. These employees have the opportunity, with pointed guidance and clear direction, to raise the standard of performance broadly across the team. The 40 percenters are already ramped, have some understanding of the business, and know the players on the field for your business and your customers. The 40 percenters are often on the cusp of being high performers, and therefore see achievement as attainable. Because of that, they take feedback seriously. And often, the 40 percenter’s pain points reverberate across the team. By improving the 40 percenter’s performance, you’ll help more of your team than you think.

Last point: it might not be immediately apparent, but your average performers are often your most visible employees. Not necessarily to the organization broadly (those are often your high performers) but to your team, the average employees are by definition the standard and pervasive. So if your high performers incrementally improve based on your management, it does little for motivation or morale among the masses. And if your low performers improve, after much painstaking effort, it likely still won’t make enough impact to matter. But raising the standard bar of performance for your 40 percenters will inspire, motivate, and produce a consistently better work product for the majority. This scale is what matters: not just for your team, but raising the bar for your entire organization.