Use the 20-60-20 Rule to Manage Your Staff for Profitable Results

Whether you’re operating in a good economy or a tough economy, evaluating your staff keeps the company moving forward.  Adjusting human capital to meet the changing needs of your business is critical to your success. The “20-60-20 rule" is a simple, practical system of categorizing your staff to assess your company’s human resource requirements and help with delegation and strategic succession planning.

The 20-60-20 rule divides employees into three categories based on performance:

•  Top 20 percent: strong performers

•  Middle 60 percent: average performers

•  Bottom 20 percent: weak performers

The top 20 percent is the “best in class” in any area within a company.  Workers in this group understand job goals, work independently with little direction, and have the skills to deliver results. To best interact with these top performers, acknowledge their efforts, challenge them, promote them, but mainly, allow them do their jobs without obstacles. Keep these employees motivated to drive company growth.

The bottom 20 percent represents your company’s weakest links. These employees are often unproductive, negative, and can be the most dangerous employees in that they can affect company productivity as a whole. Gallup’s research on employee engagement has shown that the bottom 20 percent is not involved with the company or its goals. Deal with employees in this group quickly with training or opportunities to improve, or make the tough decision to let these employees go. Once identified, it is best to eliminate the bottom 20 percent before they affect others.

The middle 60 percent is where your company should focus most of its efforts, since they comprise the largest segment. These are employees who are basically good at their jobs. Many have promising talent to be developed. These employees need nurturing from managers to rise to the top 20 percent. This large segment also contains employees who need monitoring because they can veer toward the bottom 20 percent. The greatest thing about the middle 60 percent is that, over time, the cream will indeed rise to the top.

In today’s challenging economy, average does not cut it anymore. Your company must continuously evaluate employees. To be successful and grow, retain the top performers, develop those that are promising, and eliminate lowest rated staff. The 20-60-20 rule can always be used to assess human capital requirements and adjust with changing times.