Stop Spending Money to Make Performance Worse

Most organizations respond to performance declines with fixes that sound responsible: more metrics, tighter oversight, more training, stronger accountability. The intent is rational; however, the problem is that these moves often make performance worse.

Not because leaders are careless, and not because employees suddenly forgot how to do their jobs. The problem is misdiagnosis. Under sustained pressure, organizations often treat capacity failures as competence problems, then invest in interventions that add pressure and further reduce capacity. The result is a widening performance gap: profit, productivity, engagement, and retention that the organization has already paid for become harder to access.

A Familiar Pattern

In an organization I am familiar with, performance was strong for years. Then market conditions shifted. Pressure increased. Leaders tried to reassure employees that layoffs would not happen, but layoffs eventually occurred and trust eroded. At the moment when clarity and transparency were most needed, priorities competed, decisions stalled, and the strategy kept shifting.

People still wanted to do good work, but execution became less reliable anyway. Coordination weakened. Follow-through slipped. The organization worked harder and got less back.

This pattern is common: performance declines without a sudden drop in talent. The conditions change, pressure rises, and execution becomes harder to sustain.

The Performance Gap

The performance gap is the space between knowing what to do and being able to do it reliably when pressure increases.

In this context, pressure is not “stress” in the casual sense. It is higher stakes and tighter constraints on time, control, or information. In practice, this shows up as compressed timelines, shifting priorities, heightened visibility, and unclear decision rights. Under those conditions, capable teams can start to look inconsistent, not because competence disappears, but because access to competence becomes constrained.

Why Leaders Misread It

When performance erodes, leaders tend to default to familiar explanations:

• People do not have the right skills.
• People are not motivated.
• People do not understand the strategy.
• People are not trying hard enough.
• People need more rigorous performance management.

These explanations feel intuitive because they focus on what is visible and measurable. They also align with how most organizations are designed to solve problems: training, incentives, oversight, and consequences. So, the response is predictable: add structure, add monitoring, add reporting, add performance management.

The trouble is that many struggling performers were high performers under more stable conditions. From the outside, it looks like a discipline problem. From the inside, it often feels like overload.

What Pressure Does to Execution

The mechanism is straight forward. As pressure increases, people pay more attention to managing the environment and themselves. Worry increases. Self-monitoring increases. Outcome fixation increases. Teams start tracking threats, anticipating consequences, and managing impressions. That costs bandwidth. Less bandwidth remains for judgment, planning, prioritization, and coordination.

Attention can also narrow. Under pressure, people focus on what is urgent, visible, and risky. That can help with simple tasks. However, it tends to hurt performance when work requires flexibility, cross-functional coordination, and good judgment.

When these effects persist, execution gets noisier: more rework, more missed handoffs, more delays, more conflict. People are still competent. The system is making competence harder to access consistently.

The Performance Iceberg

Performance problems show up first as visible symptoms: missed deadlines, weaker execution, conflict, disengagement, slow decisions, inconsistent follow-through. Those symptoms matter, but they are often downstream.

Think of performance as an iceberg. What leaders see above the waterline is shaped by conditions below it. Under sustained pressure, execution becomes increasingly dependent on conditions that are rarely measured directly, such as:

• Clarity: priorities, roles, success criteria
• Perceived control: decision rights, autonomy, ability to act without excessive friction
• Trust: willingness to raise risks early and tell the truth fast
• Cognitive bandwidth: attention available for judgment and planning
• Emotional regulation: steadiness under scrutiny, uncertainty, and conflict
• Recovery: fatigue, pace sustainability, time to reset

When these conditions erode, performance symptoms rise. If leaders intervene only at the symptom level, the underlying conditions remain unchanged.

How Organizations End Up Paying To Make It Worse

Here is the loop that makes this expensive.

1. Pressure increases (uncertainty, change, visibility, constraints).
2. Capacity declines (attention, coordination, decision quality).
3. Performance slips (execution inconsistency, rework, slower cycles).
4. Leaders add surface-level controls (new metrics, more reporting, additional training, tighter performance management).
5. Those controls consume bandwidth and increase scrutiny.
6. Capacity declines further and performance degrades again.

A concrete example: after a downturn, leadership introduces new metrics, adds training, tightens performance management, and increases status reviews to “drive accountability.” The intent is understandable. The effect is often predictable. Meetings multiply. Reporting expands. Decision latency increases. Evaluation pressure increases. Focus fragments. Execution declines further. Leaders interpret that decline as evidence that even more oversight is needed.

This is why misdiagnosis matters. It turns a solvable performance issue into a persistent business cost, and it creates the illusion that the organization is acting while performance erodes in slow motion.

The Diagnostic Shift, Before you Spend

You do not need a new initiative to start seeing this differently. You need a better diagnostic question:

Is this a competence problem, or a capacity problem created by pressure?

A few questions can help you locate the source before you invest in fixes:

• What changed recently in clarity (priorities, roles, strategy coherence)?
• Where has control decreased (decision rights, autonomy, dependency chains)?
• What has increased evaluation pressure (visibility, scrutiny, consequences)?
• How much time is being consumed by coordination overhead (status meetings, reporting, approvals, rework)?
• What are the signals that recovery is failing (fatigue, irritability, rising cynicism, preventable errors)?

These questions do not solve performance problems by themselves. They prevent you from funding interventions that quietly intensify the conditions causing the problem.

Closing

Yes, the performance gap should be closed, just not in ways organizations traditionally try to close it.

If performance is slipping and the usual fixes are not working, consider the possibility that you are not dealing with a competence problem at all. You may be dealing with a capacity problem created by sustained pressure. In that case, adding pressure will not be the cure. The fastest way to lose money is to keep investing in fixes that widen the gap.

If this pattern is familiar, I am developing a diagnostic assessment to help leaders identify the pressure conditions driving the gap before investing in performance fixes.