Cameron HeroldFounder of the COO Alliance & Invest In Your Leaders Training

Why 80% of Your Employees Are Wasting Your Money

10 Jul 2026 · 1 min

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In this segment, Cameron Herold explains that roughly half of a company's output is generated by the square root of its total workforce, using a 200‑employee example where about 16 people produce 50% of results. He then applies the Pareto principle, noting that 20% of employees (around 40 in the example) generate 80% of output, defining a core group of high‑performers that must be protected and developed. Herold advocates investing in these "racehorse" or emerging leaders through dedicated leadership courses and mentoring, arguing that once they are secured, the organization can safely let go of low‑performing "C" players who contribute minimally.

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50% of your output as a company is produced by the square root of your number of employees. How many total employees do you have? Let's say at your corporate offices, about 200? Yeah. So the square root of your number of employees would be about 16 people. So 16 people produce 50% of your company's output. And then you go to the Pareto principle, which says 20% of your people produce 80% of your output. So 40 people produce 80% of your output. Somewhere between 16 and 40 people is your core. God forbid they ever quit your company. We need to make sure that they're handcuffed and we need to grow them. Those are your emerging leaders. We need to give them the skills. We need to put them through Invest in Your Leaders course. We need to give them mentoring. If we really take care of those racehorses, you can actually get rid of most of your C players who aren't producing enough to even worry about.