The Low-Performance Culture and Why Companies Foster It - Without Being Aware
AGILEBUSINESS AGILITYORGANISATIONAL CULTURE
Imagine two companies operating in the same industry with similar resources. At HighFly Inc., the atmosphere is vibrant. Leaders make quick, informed decisions, employees are recognized and rewarded for their achievements with meaningful opportunities, and underperformance is swiftly addressed with supportive coaching or clear expectations for improvement. The result? A high-energy, innovative environment where employees are motivated to go the extra mile.
Now, consider MediocreCo., where things couldn’t be more different. Meetings drag on without clear direction because leadership struggles with decision-making, often ping-ponging decisions back and forth with no one willing to take ownership. When decisions are finally made, they are usually based on gut feelings or outdated information, as there is a lack of reliable data to support the decision-making process. Employees are either micromanaged to the point of frustration or left without any guidance at all. This creates an environment where employees feel treated like children, and some begin to act like spoiled children, resisting accountability and expecting rewards without effort. The lack of teamwork and collaboration further exacerbates the issue, leading to silos and a culture where each person looks out only for themselves.
The CEO of MediocreCo. is baffled — why does the company seem stuck in a rut while its competitor thrives? The answer lies in an invisible but pervasive problem: MediocreCo. fosters a low-performance culture without realizing it.
The Invisible Trap: Defining Low-Performance Culture
A typical day at MediocreCo. is filled with endless meetings, redundant processes, and a general sense of employee apathy. There’s no spark, no drive. The energy in the room is like a wet blanket over a campfire—dampening any enthusiasm before it can ignite.
But what exactly is a low-performance culture? It’s not just about lazy employees or poor management—it's a systemic issue. It manifests in various forms, like a lack of clear goals, micromanagement, excessive focus on short-term metrics, or a rigid hierarchical structure. These symptoms create an environment where employees are disempowered, disengaged, and disinclined to go the extra mile.
I dare say it’s rarely just one or two factors causing or reinforcing this low-performance culture. Much like an aviation accident, where experts[1] say at least ten different factors must align for a crash to occur, low-performance cultures often result from a combination of many intertwined issues.
How It Happens: The Unintentional Reinforcements
Several behaviors contribute to a low-performance culture:
Lack of Decision-Making by Leadership: Leadership often avoids making tough decisions, resulting in "decision ping-pong." Important choices bounce back and forth between managers, leading to delays and a lack of clarity. This indecisiveness creates an environment of uncertainty, where employees hesitate to take action without explicit instructions.[2]
Reward Excellent Work with Even More Work: At MediocreCo., high performers often find themselves burdened with more tasks as a "reward" for their productivity. This practice leads to burnout and demotivates employees who feel their efforts are being exploited rather than appreciated.
Leadership Allowing Low-Performers to Be the Bottleneck: By not addressing underperformance, MediocreCo. inadvertently allows low-performers to set the pace for the entire team. High performers often wait for the bottlenecks to clear, leading to frustration and significantly reducing overall team productivity.
Reward Low-Performance with Even Less Work: In a misguided attempt to manage workloads, managers might reduce tasks for underperformers, inadvertently rewarding them for poor performance. This creates a vicious cycle where low performers are not held accountable while high performers are overburdened.
Neglect of Talent Development: Ignoring employees' development needs leads to "People Debt"[3] —the accumulation of risks and costs associated with underdeveloping human capital. When there’s no focus on growth, employees stagnate, innovation dwindles, and the culture turns stale.
Overemphasis on Cost Efficiency: Prioritizing cost-cutting over creativity stifles innovation. Employees focus on "playing it safe" rather than experimenting with bold ideas, leading to a culture where "just getting by" is the norm.
Unknown Unknowns: One of the most insidious problems in a low-performance culture is that leadership is often unaware of the inefficiencies embedded in their systems. These "unknown unknowns"—issues that leaders don’t realize exist—can create bottlenecks and systemic failures that stifle productivity. Leaders might mistakenly label employees as low performers, not because they lack skill or motivation, but because the system they operate within is broken.
These behaviors reinforce MediocreCo.’s low-performance culture contrasts sharply with HighFly Inc., where managers encourage continuous learning, autonomy, and celebrate both failures and successes as growth opportunities.
The Consequences: A Culture That Costs
The hidden costs of a low-performance culture are staggering. A Gallup study[4] found that only 23% of employees worldwide are engaged in their jobs. This low engagement rate directly correlates with decreased productivity and performance.
The same study reveals that disengaged employees cost organizations between $450 and $550 billion annually in lost productivity. On the other hand, companies with high-performance cultures are 3.7 times more likely to be top performers in their industries.
Low-performance cultures lead to:
Inferior Customer Satisfaction: A demotivated workforce is less likely to go above and beyond for customers, impacting the company's bottom line. Customer-facing disengaged employees may not provide the level of service or care needed to delight customers, leading to dissatisfaction and lost business.
Decreasing Financial and Other Business Results: As productivity stalls and employee engagement drops, so do financial results. Projects run over budget, deadlines are missed, strategic goals are unmet, and many others. This economic strain further compounds the challenges faced by the organization.
High Performers Leave, Low Performers Stay: In an environment where high performers are overburdened, and low performers are not held accountable, it’s only a matter of time before the top talent looks for opportunities elsewhere, leaving behind a team of underperformers and further entrenching the mediocrity.
Higher Turnover: With the departure of high performers and the resignation of those who feel unchallenged, turnover rates soar. This disrupts team dynamics and incurs high costs associated with hiring and training new employees. [5]
Decreased Innovation: When creativity isn't encouraged, new ideas rarely surface, leaving the company stagnant and uncompetitive. Without a culture that fosters innovation, MediocreCo. struggles to keep up with the market, making them increasingly irrelevant.
At MediocreCo., they are beginning to see the signs: lower morale, reduced engagement, and increased voluntary turnover.
The wake-up call? The departure of a key engineer, who cited a lack of innovation and excitement, combined with a very high workload and bureaucracy.
A Glimpse of the Future: The Road to Change
Employee feedback is an invaluable insight into a company’s current state. Surveys and other vital data points like product utilization metrics, revenue performance, and customer satisfaction scores provide a wealth of information. However, collecting data is only half the battle. For an organization to truly benefit from these insights, it must have the capability to synthesize and interpret them in a meaningful way. Without the ability to connect these different data sources, companies risk forming incomplete or biased conclusions, preventing them from addressing the root causes of their challenges and achieving their full potential.
Having that in mind and after a particularly rough quarter, MediocreCo.’s CEO knew something had to change.
Inspired by the feedback from a recent employee engagement survey and a frank discussion with a few departing talents, he realized that the company was unwittingly reinforcing behaviors that stifled productivity and innovation.
The following changes were implemented to dismantle these unintentional reinforcements:
Empower Leadership Decision-Making: The CEO initiated leadership training programs focusing on decisive action and effective communication. The training had many elements about decentralizing decision-making while ensuring alignment with strategic themes. This created clarity and empowered teams to take action without waiting for top-down approvals.
Balance Workloads: High performers were no longer burdened with more work. Instead, exceptional outcomes were rewarded with professional development opportunities and high-impact projects aligned with their strengths.
Hold Low-Performers Accountable: Clear performance metrics were introduced, and low-performers, regardless of their role or position within the organization, were provided with targeted coaching and training programs. Managers were also held accountable for addressing performance issues openly and ensuring that improvement plans were implemented effectively
Let Go of Consistently Low Performers: Some employees consistently underperformed despite interventions. The leadership made the difficult decision to let them go, opening up space for new talent with fresh perspectives and ideas, ultimately refreshing the company culture.
Invest in Talent Development: A comprehensive talent development program, including mentorship, training, and career progression plans, was launched. This addressed People Debt's[4] and created a culture of continuous learning.
Encourage Innovation Over Cost-Cutting: Budgets were reallocated to support innovation initiatives, and employees were encouraged to take calculated risks without fearing immediate financial consequences. They’ve started by having a foundation in place that helps innovation. This foundation is based on continuous improvement, leading to relentless improvement and innovation.
Conclusion: The New Beginning
Fast-forward to a year later, and MediocreCo. is a different company. Employee engagement has risen, turnover is down, and a steady flow of innovation is shaping the company's future. Their latest product launch was a success not because they worked harder but because they worked smarter—together.
Here's my question to you: Are you unknowingly fostering a low-performance culture in your organization? Reflect on your practices, challenge the status quo, and take the first steps towards a more dynamic, high-performance future today.
[1] Federal Aviation Administration (FAA). (n.d.). Accident Cause Factors and Human Factors in Aviation Safety. Available: https://www.faasafety.gov/files/gslac/courses/content/258/1097/AMT_Handbook_Addendum_Human_Factors.pdf
[2] McKinsey, "Decision Making in the Age of Urgency," 2019. [Online]. Available: https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/decision-making-in-the-age-of-urgency
[3] JLS Just Leading Solutions, "People Debt," 2022. [Online]. Available: https://www.justleadingsolutions.com/people-runway-of-the-art/
[4] Gallup, "Sate of the Global Workplace," 2024. [Online]. Available: https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx
[5] Development Dimensions International Inc.(DDI), "Why Good Employees Leave," 2023. [Online]. Available: https://www.ddiworld.com/blog/why-good-employees-leave
