Is Some Revenue Better Than No Revenue?

The knee jerk reaction to the question, “Is some revenue better than no revenue,” is probably a resounding, Duuuuhhhhhh, well why wouldn’t it be??!

But let me provide a little context. I just had an exchange with a reader commenting on a post I wrote a couple of years ago, We Can’t Ignore Poor Performers! One of his points about poor performers was, “at least they are producing some revenue,” implying, “Why rock the boat?”

His view is actually not that uncommon. Too many managers tend to accept what they know is bad performance, with the excuse of “At least they are producing some revenue.” Alternatively, “If I got rid of that person now, I couldn’t afford the revenue hit.” These are smart, high performing managers.

I have some sympathy for harried managers and executives facing these performance issues. But we have to be very careful when we embark on this path.

First, it’s our job as managers and leaders to maximize the performance of everyone in the organization. If someone cannot achieve the expected levels of performance, it’s unfair both to the individual and to everyone else in the organization.

We have to fill the gap in performance, so we increase the burden on those that are performing well, to cover the non-performers. Inevitably, this leads to real morale and workload problems—and it’s with those we can least afford to have morale problems, our better performers.

This pressure is reflected back onto the poor performer through peer pressure, bad attitudes (though justified), and does nothing to help them improve their own performance. The longer it persists, the greater the separation between the poor performer and the rest of the organization. They become excluded, isolated, which leads to a death spiral of morale and performance in the organization.

It erodes the credibility of the manager, further exacerbating the issues. People recognize performance issues, they recognize when managers don’t step up to addressing performance issues. When asked to fill the gap produced by low performers, resentment isn’t directed just to the poor performers, but to managers who don’t step up to managing performance issues.

The argument of having a person in place to “cover the territory, produce some revenue” has other challenges. It may not be just an issue of not making the numbers, it may be the poor performer is driving customers away. They are losing deals they shouldn’t be losing, they are probably not engaging customers the way they should be, they probably are annoying or even angering customers or prospects. As a result, customers take their business elsewhere. They take their business to companies and sales people that create value for them–through their whole buying and implementation process.

While the poor performer may be producing some short term revenue, they are losing opportunities others would be expected to win. They may be creating longer term reputation and relationship problems that are far more damaging, costing many more times than the gap in their current performance.

Related Article: 80/20 Management

In cases where the poor performing sales person is actually having a negative and adverse impact in their territory or within the rest of the sales organization, the “no revenue” option may actually be the most prudent. It may actually be cheaper to be sacrificing what little revenue the sales person is creating, because the negative consequences of keeping them on board far outweigh the revenue they are creating. If the damage the person will do is greater than what they contribute, then it is better to run with that position/territory vacant, seeking to fill it with the right person as quickly as possible.

Where then does the “some revenue” approach fit? I actually don’t believe it fits often. If it fits, it only fits for a very short period of time, and only when there is a very strong action plan to address the issue. But too often I see organizations living with this year after year. Managers fail to identify, address, and correct performance problems.

It is simply unacceptable to allow bad performance to persist, uncorrected, in the organization.

The some revenue argument is acceptable only if the negative repercussions I’ve outline in the earlier discussion don’t come into play, and there is a corrective action plan to performance bask to expected levels –either through the improved/corrected performance of the individual or by replacing that individual with someone that can perform at expected levels.

We can’t ignore poor performers. They are a drain on the organization and impact our long term relationships with customers. We may be far better off, sacrificing whatever short term revenue we get, building a stronger organization that can meet its goals.