Companies that develop and retain superior employees are making more money with fewer employees.
Having superior employees is a strategy that powerfully drives organizational performance. By the same token, being a superior employee can greatly improve your own career.
In May 2018, Time released a chart showing the median salary of the top paying companies by state. Drilling down on the data, I noticed an interesting correlation.
33 out of 49 top-paying companies in the US have fewer than 60 employees.
To put it another way, the companies with the highest number of employees were making less money than companies with fewer employees.
This has a few implications. First, the more employees a company has, the less they are paying their employees. Furthermore, although all the companies on the list are highly successful, the top half have significantly fewer employees than the bottom half. So apparently, the top companies are making more money with fewer employees. And interestingly, some companies are doing less with more people. That means lower results and higher payroll expenses.
Second, I want to note that there was one company that had no available data on the number of employees. That company, by the way, had the highest median salary by far of any other: $964,005. I don’t want to speculate on the number of employees. However, if it is like the other top paying companies, I’m guessing it has very few, very happy, very hard-working, and very well-paid employees. In other words, they don’t have average employees. They have suprior employees.
So, some companies are getting extraordinary results with just a few employees. How do they do that?
Superior Employees Matter
Although we don’t like to talk about it, not everyone gets the same results at work. Some people bring their full game, day after day, and push the boundaries. Some people get comfortable and settle into a routine. According to Michael Lombardo and Robert Eichinger, superior employees outperform average employees by 40% to 100% or more. According to McKinsey, the best employees perform up to 8 times more work than an average employee.
That means one superior employee can do the work of 8 average or low performers. No wonder the most profitable companies have the fewest employees. They can pay half or a quarter of the number of employees double salaries or more and still get outstanding results. That’s a win-win.
We’ve all heard there is a “war for talent.” The reasons are pretty obvious. We have historically low unemployment. Investment in public education has been falling since the 80s. There is a cohort of students who graduated during the recession, resulting in a demographic block that has fewer skills and experiences than they would normally have acquired. Now add to that the pandemic and political disruptions, and it’s no wonder that there are not too many people at the top of their game.
Hiring and Retaining Superior Employees is a Strategy
Companies that have a strategy to hire and develop superior performers are the ones doing more with less, sometimes a lot more. Superior employees don’t just appear on your doorstep. You need to hire people with right attitude, and you need to train them carefully to do excellent work.
For me, there are two takeaways:
- If I’m running a company, I’d invest in an employee development strategy plan now. Sure, it might take 5 years to pay off, but if I don’t do it now, I’ll be 5 years behind my toughest competitors in 5 years.
- If I’m an employee who wants to earn more, I’d invest in my own leadership development now. Sure, it might take 5 hard years before it starts to pay off, but if I don’t, I’ll be 5 years behind my toughest competitors in 5 years.
There are 50 years of research into leadership development. If you align business strategy with a talent strategy, extraordinary things can happen.
What side of this chart do you want to be on in 5 years?
