Most Of Your Team Members Are Underperforming

Here’s how to create and hire high achievers using the 80/20 rule

It’s no surprise that some employees are better performers than others. But in most cases, about 20% of your team is responsible for 80% of your company’s productivity. The good news? That means 20 percent of your employees are so-called “floor leaders” who drive achievement and value. They’re a combination of hyper-high performers, near-hyper-high performers, and potential hyper-high performers.
 
Let’s take an even more positive spin. While 80 percent of your workforce is made up of low performers, those employees may still show a wide range of actual performance and promising potential. In reality, there’s only a small fraction of people who are truly poor performers, with little to no potential. 

Perhaps only a small fraction of low performers are causing the majority of the out-and-out problems in your workforce. For these individuals, if their performance cannot improve, it’s time to show them the door.

Identifying Your Top Performers

Once the bottom performers are eliminated, you can segment your team by initially identifying the top of the top: the 20 percent that are hyper, near-hyper, and potentially hyper-high performers. Sometimes these people are obvious by mere observation, but employees who are directly linked to P&Ls, sales, or other positions in which performance output can be readily quantified and thus ranked in formal terms of the 80/20 principle are the most reliable candidates. 

In addition to whatever performance metrics are available, listen to feedback from colleagues. Get internal referrals. Focus on developing, rewarding, incentivizing, and training people in the top-performing segment for promotion. Position your hyper-high performers and near-hyper-high performers for promotion-from-within. 

Employees who are aware that promotion is a possibility are naturally less likely to look outside the company for opportunities.

Embracing OJT

Promotion from within is not a perk you offer employees but a business strategy that must serve the overall strategy as embodied in the company’s action plan and business plan. Focus on critical positions with high turnover or high vacancy rates. Give these critical needs a high priority and invest in education and training, especially on-the-job-training (OJT), to develop internal candidates for your critical roles.
 
After the high-performing 20 percent have been addressed, develop the skills of the remaining 80 percent. Your impulse may be to begin with the lowest performers. Resist that impulse. Identify instead those with real potential for improvement. Support them, encourage them, coach, train, and even mentor the most promising of them.
 
Good managers always possess the ability to delegate productively. They understand employee strengths and weaknesses and make assignments accordingly. If you want to elevate performance and move employees from lower levels to higher levels, start by identifying which of their skills are most developed and play to those strengths.  

Making Your Grass Green

It’s important to note that OJT is the most valuable and value-rich tool you have for job and career development. Accelerate OJT by investing in coaching, which is invariably more effective than classroom education. Make certain that employees are aware of available coaching programs and publicize your company’s strong promote-from-within orientation. Practice internal marketing of all the available paths to promotion. Encourage your top employees to move up. Consider offering workshops on how to advance or get promoted.
 
Remember, what is true of customers—your best customer is the customer you already have—is true of your hyper-high-performing and near-hyper-high-performing employees. The grass may be greener on the other side of the fence or may just seem to be. Counter both the reality and the appearance of a rival firm’s greener pastures by ensuring that you make yours super green with opportunities that are real, available, and worth working toward.

The 80/20 Recruiter

The grass isn’t always greener somewhere other than where you happen to be. In fact, filling open positions from your current talent pool offers an inherent advantage. Leaders in your company already know who the high performers are. This makes them very reliable sources of referral, and, provided that the referrals are enthusiastic, it offers a high probability that moving this person up internally will produce high-performing results.

Focus On the Right Talent

Nevertheless, positions open up that you cannot staff from internal sources. If you have no one in-house with the appropriate experience, you need to look beyond your four walls. When you set out to recruit new blood, you want to closely observe the 80/20 rule. It is simple: Marshal 80 percent of your hiring and recruiting efforts to focus on the best and most important 20 percent of the talent market. This is the strategic approach.
 
As Lou Adler, author of Hire with Your Head, points out, research consistently shows that the best candidates come from referrals. Typically, it takes interviewing ten referred candidates to find one with the potential of becoming a hyper-performer. A distant second are candidates who are sourced directly. Expect to see twenty before you find the one you want and need. If you devote time to writing a compelling job posting, you may have to interview 150 candidates before you are satisfied. That’s not a productive use of time and effort, but even worse is publishing a crappy or half-hearted posting. In such a scenario, the odds of finding the best person after a single interview are 1 in 200.

Stop Posting Individual Jobs

Adler notes that at a conference of some 800 recruiters, a speaker asked how many in the audience got their current job via referral. Two-thirds raised their hands. He cited a research project with 20,000 respondents, of whom fewer than 20 percent reported that they would ever even think of applying for employment via a job posting. For positions in high demand, the number dropped to just 5 percent. Yet companies routinely spend 80 percent of their precious time and resources in futile attempts to improve their job-posting process. It is a fool’s errand.
 
Your first step is obvious: stop being foolish by using methods proven to be futile. Instead, invest your precious time and effort in identifying great sources of referrals and start with these. Do not waste resources posting individual jobs. Minimize your use of postings by bundling related jobs in a master posting for the company. Never invite candidates to apply directly for a specific position but require instead that they submit sample work, or a description of major accomplishments related to your company’s needs. Reach out only to those applicants who truly excite you. This approach will garner far fewer applications because candidates will self-select before they apply. Adler believes that the modest talent pool resulting from such an appeal will have filtered out 80 to 90 percent of unqualified applicants.

“High Potential” Talent

The talent market consists of two major groups: those people actively seeking jobs versus those already reasonably well employed who are passively open to new challenges and even new careers. It is in this latter group that the outstanding candidates are most likely to be found. Recruiters and hiring managers will need to engage with these candidates to find the ideal balance of what your company’s available job requires versus the career ambitions and aspirations of candidates who do not need a job but want greater challenge and satisfaction. A career seeker offers greater likelihood of high potential than somebody who needs a job, any job, before the rent is due.
 
Taking a more strategic approach to fostering talent means focusing 90 percent of your human resources on self-coached and mentor-coached OJT. This is exponentially more effective than relying on formal instruction that’s isolated from the work at hand. Leaders must design every workday and workflow to foster a level of OJT that creates a hyper-high-performing workforce.

Adapted with permission from the publisher, Wiley, from From Panic to Profit by Bill Canady. Copyright © 2025 by Bill Canady.  

Bill Canady is the Chairman of OTC Industrial Technologies, CEO of Arrowhead Engineered Products, and author of From Panic to Profit: Uncover Value, Boost Revenue, and Grow Your Business with the 80/20 Principle [Wiley; April 29, 2025].