What Is a Performance Gap? (And How Can You Close It)

The performance gap is one of the simplest but most overlooked business concepts out there. Miss it, and you could be putting the very survival of your company at risk.

Simply put, a performance gap is the difference between intended and actual performance. This can happen at any level of the organization. For example there can be a performance gap with one particular salesperson who doesn't hit their target, with an entire sales team who falls short of the goal, or with the sales process itself not responding promptly to requests.

Performance gaps are a real problem and you'll need to bridge them if you want to stay profitable long after the competition has come and gone. Let’s take a look at a few common causes for performance gaps and how to avoid them altogether.

What Causes Performance Gaps?

Let’s start with one of the most common causes of a performance gap: Lack of clarity.

Despite rampant advice to establish clear goals and expectations from day one, many employees feel completely left in the dark about what is and isn't ok at work. In a 2015 Gallup survey, only 50% of the American workers surveyed said they firmly knew what was expected of them at work.

Employees can’t meet performance standards if they don’t know about them. By simply setting and maintaining clear performance targets for your people, you can prevent many of the most common (and costly!) performance gaps.

Performance Gap Examples

Here are the examples of performance gaps that you might find at your organization.

Example 1:

Your sales team has a quota of 10 meetings per month. The long-tenured sales team has no trouble hitting the goal, but your newest employee has only set 8 meetings over the past month. This is a performance gap that can either be addressed in a couple ways; you can lowering the goal for new employees or you can provide training to the new employee to get their numbers up.

Example 2

The marketing department is expected to drive 30,000 visitors to the website every month. The visitors come from different sources like PPC ads, organic content, and social media marketing. The social media specialist is driving 10,000 visitors per month, and the organic content specialist is driving another 10,000. The PPC ad specialist however, is only driving 6,000 visitors per month.

As a result, the marketing team is falling short of their goal. This is a performance gap for the whole marketing team, but it's highlighted by the PPC team's performance gap. You can fix this by adjusting the goal for the PPC specialist, or providing them with more resources to help them carry their weight on the marketing team.

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How to Set the Right Goals

The first step to closing a costly performance gap is to get crystal clear what the real goals and expectations are in your organization. (Hint: they aren't the same thing.)

Not sure what goals and standards to set, change or replace? Why not ask the people who know you best? Start with your customers. Ask them why they continue to work with you and what they want to see more of. Then, it's time to check in with your employees.

By reaching out to employees (through surveys, one-on-ones and regular performance reviews), you can get an accurate assessment of what standards to set. You'll also get a clearer picture of the standards that aren’t being met, and the exact steps to take to prevent future performance gaps.

With real-world insight at your fingertips, it will be much easier to set challenging yet reachable goals. When setting goals, be sure to make them SMART: specific, measurable, achievable, relevant, and time constrained. These five categories keep you away from the type of flimsy goals that are inherently prone to misinterpretation. (Values like, “Always try your best” are great ideals, but they're nowhere near clear enough to be bona fide goals.)

What about Skill Gaps?

Clear goals are a must, but sometimes the problem can be a simple lack of skills or tools.

A skill gap occurs whenever the goal can’t be reached because some part of the company, whether that be an individual employee or a whole branch, lacks the skills needed to reach it.

Skill gaps are pretty common — especially when industries shift. Coders have to learn the latest cutting-edge platforms, customer service pros need to stay up-to-date on the latest best practices, and so on. Anticipating a skill gap takes the kind of research and high-level thinking few of us have time for. Luckily, closing them is a bit simpler.

For the most part, you can either train or hire your way out of a skills gap. If your business is running well overall — meaning there are no major problems in leadership, management, staffing, etc. — feel free to train away! But if your business is understaffed, overworked, or simply pointed in the wrong direction, no amount of training can help close those gaps.

In those situations, a focus on performance makes all the difference.

Motivation Cures Performance Gaps

Even if you're convinced your employees know exactly what targets to hit, and that they have the skills to hit it, they will miss if they don’t feel like pulling the trigger in the first place.

Business consultant and author of Good to Great, Jim Collins says it best in brief. The question isn’t, “ ‘How do we motivate unmotivated people?’. It’s, ‘How do we lead in such a way as to not demotivate people?’ ”

To avoid demotivating people, Jim recommends three strategies:

1. Address problems - no one wants to feel left in the dark, especially on things that could result in termination.
2. Don’t come into a meeting with a decision already made - employees want to be heard, know how to have a dialogue.
3. Show tangible results - people want to see proof that their work matters.

Building performance expectations on a foundation of clear, data-driven goals will earn you a ton of respect from your employees and keep them motivated to steer clear of performance gaps. Instead of arbitrarily expecting them to hit targets they don't understand, you're using data-backed insights to set metrics that matter.

After that, all you have to do is follow up to let them know you care enough to keep paying attention and ensure that they have the skills and tools they need in order to get the job done.

When those boxes are ticked, you’ll be closing gaps well before you fall into them.