In a perfect world, every staffer would be a superstar—and these superstars would manage themselves. Alas, the real world is peopled by the satisfactory and the barely satisfactory. How to handle your laggards? For author and human resources expert Pierre Mornell, the answer is simple: Ditch them. Notes Mornell: "If you hire okay people, you'll have an okay company."

On the other hand, turnover is costly and the repeated axing of C players will kill morale. Instead, try polishing your nonstars, so they shine at least a little. Let them know that you're concerned about their performance, says Leigh Thompson, a professor at Northwestern's Kellogg School of Management. Express confidence in their potential. Help them set very specific goals—even daily goals, if that's what it takes. Give them a month to improve. If they don't start throwing meaningful glances toward the door.

Remember, staffers cannot exceed expectations if they don't know what those expectations are. Communicate your own goals by publicly recognizing those who meet them. Cross-fertilize best practices: If one high performer has top-notch sales strategies, make sure she shares them with the rest of the team. "You can't tell a person how to have their next brilliant idea," says Thompson. "But you can create the kind of culture that makes it easier for that to happen."