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LeadershipManagement

Overlooking high performers can be a costly mistake

Trey Williams
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Trey Williams
Trey Williams
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Trey Williams
By
Trey Williams
Trey Williams
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March 18, 2024, 8:00 AM ET
The top 1% of workers account for 10% of a company's output, but overlooking these high performers can be costly for organizations.
The top 1% of workers account for 10% of a company's output, but overlooking these high performers can be costly for organizations.Maskot—Getty Images

More often than not, business leaders spend their time trying to fix what’s not working. 

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When it comes to talent management, that means spending endless hours and energy identifying, supporting and trying to boost lower performing workers. What companies worry less about, but what also puts them at risk, is ignoring their top employees.

High performers are a tiny fraction of the workforce, but they can have an outsized effect on productivity and culture. And failing to recognize, acknowledge and properly manage those workers within an organization can produce a ripple effect of costly outcomes, corporate and human resource experts tell Fortune. Those range from employee burnout to a drop in work quality, and a particularly damaging type of attrition. 

“The cost of losing workers can substantially decrease productivity,” says Aaron De Smet, a senior partner and culture and leadership expert at consulting firm McKinsey & Co. “Especially when thinking of the value that these stars create individually and for the team.” 

The value of high performers

High-performing workers are hard to come by. Just 4% of employees can be considered “thriving stars,” according to a recent report from consulting firm McKinsey & Co. 

Those top performers consistently produce high quality work without getting burned out. Around 38% of workers can be categorized in the tier below, and considered “reliable and committed,” according to McKinsey. A portion of this second-tier group may be able to perform at a high level, but their contributions and production are not as sustainable.  

A lot of companies struggle to identify their true high performers. According to a McKinsey survey of Fortune 500 executives, 82% say they don’t believe their companies recruit highly talented people, and only 14% say their company knows who the high and low performers are.

But even when organizations do pinpoint their superstars, they usually mismanage them by giving them too much work, according to De Smet.

“They are using them with relative inefficiency by involving these rare employees in way too many projects simultaneously,” he says. “Companies are not getting the most or the best out of these talented workers and, over time, they are burning them out or creating conditions where they are looking for opportunities elsewhere.”

Attrition is the most visible cost of overworking high performers. Companies pay a high price when any worker leaves—it takes around $4,700 to hire a new employee, according to the Society of Human Resource Management. But when it comes to high performers, the cost can be more painful to an organization than simply backfilling a role.

The top 1% of workers account for 10% of an organization’s output, and the top 5% account for 26% of output, according to one study that relied on data from more than 600,000 researchers, entertainers, politicians and athletes. When it comes to highly complex jobs—including roles in the information, software, and management industries—top performers can be upwards of 800% more productive than the average worker, according to data from McKinsey.

“The loss of a top performer will have a greater negative impact on the productivity of the company because of the multiplicative value they have with the rest of the workers on their team,” says De Smet. 

Even if high performers aren’t simply walking out the door, they risk either burning out or disengaging if they feel they’re being overworked, treated unfairly, or laboring without acknowledgement.

“If you see someone else getting the same output or reward as you with far less input, you’re likely to say: ‘Well, I’m not going to work as hard because I’m not getting anything for it,’” says Fresia Jackson, lead researcher and people scientist for HR and performance management platform Culture Amp.

Beyond those top-line costs, there are also a handful of more hidden risks. Overlooking or overworking top performers makes them less likely to recommend the organization to their network, damaging brand recognition, says Stephan Scholl, CEO of benefits and human resource service provider Alight Solutions. “Because you’re not willing to do right by your top performers, you end up doing right by no one,” he says.

And when the top workers are unhappy, that has a big impact on company culture, according to Heidi Brooks, a senior lecturer in organizational behavior at the Yale School of Management. High performers often contribute to the overall health of a team by motivating their colleagues, as well as sharing knowledge and expertise. If they become disinterested in their job because of a lack of meaningful work, career advancement, or feeling overworked, that can be a real contagion factor. 

“Just because you’re not paying attention to those folks, doesn’t mean they don’t have needs,” Brooks says. “And usually their needs are very simple.”

More than just compensation

Keeping top performers happy is easier said than done, but there are things that companies and managers can do to support their most valuable employees. 

Rewarding them financially doesn’t hurt. Leaders have to be willing to reward high performers for their contributions without the move seeming like a punishment to the rest of the workforce, Scholl says. 

But high performers often aren’t motivated by compensation alone, according to Jackson. Pay was toward the bottom of the list of reasons given by high performers in exit surveys, according to research from Culture Amp. They were more concerned with purpose, career development, and whether the vision from their company and leadership aligned with their own.

Constant feedback and recognition of the work they do and culture they help create can be more helpful than leaders realize, according to Brooks. “Simple acknowledgement goes a long way, she says. 

She also advises managers to show their appreciation by asking top workers to weigh in on office culture, as well as the growth and direction of the company. 

“Letting your high performers know you see them and value them can be a great way to ensure you’re producing quality work and that energy is good—not just in performance, but in contributing as a whole,” Brooks says. “It’s easy to overwork people because we’re indexing against end results, not process. But that process of the work is what so often makes places a great place to be.”

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