How To Manage Employee Performance?

One of the most difficult aspects of being an employer or a manager involves managing the poor performance of an employee. It can be a tricky (and legally fraught) area to navigate at the best of times. To provide some assistance, we have addressed some key steps in this article to help you get the performance management process right.

1. Are you commencing the process for the right reasons?

It’s important when managing employee performance issues to commence the process for the right reasons. Management of performance is not intended to be a tool or a box-ticking exercise for an employer to get rid of an employee that they do not want. It is supposed to be a genuine attempt to improve employee performance.

Ask yourself, if the employee meets the reasonable improvement standards that you identify as part of the process, would you be happy keeping the employee on? If the answer is no, you should examine the real reason why, and re-evaluate.

With the best of intentions, the performance management process can be a great opportunity to help people meet their goals. With the right approach, you can create a system that will help employees achieve their targets and leave them feeling positive about their role with the business in the future. Done badly the performance management process can have the opposite effect. Employees can tell when this process is not a genuine one, and an employee who feels hard done by or set up is more likely to bring a claim and are less likely to fully engage in the process as they (perhaps correctly) feel like they are going to be fired anyway.

2. Identification of the performance issues

Clearly identify for yourself (and the employee) the standards of performance and behaviour that the employee is expected to meet, and how they have not been meeting those standards. Provide clear and real examples, which are not trivial. Ideally, the employee should have failed to meet the standards on multiple occasions (i.e. don’t commence a performance improvement process because an employee was five minutes late on one occasion). Make sure they are also matters that the employee has control over or form part of their role.

Ideally, the standards should already be set out in writing (such as in a position description) and the employee should be well aware of them before any formal process commences. Choosing a performance improvement process as the time to impose ‘new’ standards on employees, or to rectify poor communication of standards, can (if not handled carefully) make it look like your performance standards are arbitrary.

It is vital that the performance issues are clear. If the issue is not one with a clear measurable metric, clarity is even more important. For example, if there are issues with communication, be clear about what the expectations are and how the employee has not met those expectations. Use examples to make sure the issues are clearly understood.

You should provide the employee with time to consider the performance issues, and an opportunity to raise any matters that may have been affecting their performance to date.

You should also make it clear that the goal of the process is to improve the employee’s performance, however, if performance improvements are not seen within a reasonable time, their continued employment may be at risk.

3. Provide a meaningful opportunity for improvement 

In most cases, a performance improvement plan is not (and should not be) a ‘quick’ process. If the issues have not been raised properly with the employee before (and by properly we mean formally, and ideally in writing), it is important that the employee is offered a real opportunity to improve their performance. The length of time will depend on the nature of their role, and the improvements they are required to demonstrate.

As part of forming a plan, you and the employee should agree on what ‘improvement’ looks like and the timeline, and this should be clearly recorded (and success or failure easily identified). Listen to their concerns regarding whether the targets are reasonable. If they require additional training or support, consider how this can be provided as part of the process.

Set weekly or fortnightly catchup meetings to monitor progress, identify and provide positive encouragement in relation to identifiable improvement, and try and address any areas where the employee is not improving. Offer the employee the opportunity to explain why performance is not improving to make sure you are being fair.

4. Consider whether you are singling out the employee or if you have a part to play in the performance issues

If they haven’t been meeting particular KPIs, do they have a reason why? We recommend employers engage in some introspection as part of this process. All human beings can be impacted by unconscious biases, and it is worth making sure that such biases are not affecting your approach or decision-making. Consider objectively:

• Have you communicated your expectations clearly and unambiguously in writing?
• Have your employees demonstrated that they understand the expectations?
• Have expectations changed recently?
• Are your expectations the same for all employees (where appropriate). If you have different expectations of different employees (which are unrelated to the nature of the work they are performing), consider very carefully why you have those differing expectations.
• Do you let some employees get away with the same behaviour or performance as the employee in question? As above, examine why this may be the case.
• Are the expectations reasonable?
• Have you tolerated the performance issues for a long period of time without taking any steps to address them? If so, whilst the performance still should be addressed is it really now something that needs to be addressed immediately failing which their employment might be terminated?
• Has there been a large change in the business recently which may be impacting performance? Has the employee been required to take on work not initially in their job description?
• Has the employee only recently started to underperform after demonstrating excellent performance in the past? If so, have you considered whether there might be something in the workplace affecting the employee, or have you considered whether there might be something in the person’s personal life affecting them?

5. Keep records

This should be obvious, but in our experience, it is often not done.

• Keep a record of what performance improvement measures the employee has agreed to, and the plan to assist the employee to improve their performance;
• When you have meetings with the employee, take detailed notes of what is discussed. If there are key matters, confirm those matters in writing with the employee afterwards;
• If you provide verbal feedback, keep a record of this;
• If the employee is not meeting the targets of the plan, have the records to back your position up.

6. Termination

The goal of a proper performance management process is not termination (again if this is your intention in commencing the process, consider why, and whether you have a role to play in the employee not performing).

However, there will be occasions when an employee is provided with a fair opportunity to improve, and they are not able to do so. In those circumstances, termination may be a valid response.

Once the process has ended, you should be able to clearly demonstrate how the employee has not met the reasonable requirements for improvement and offer them a final opportunity to ‘show cause’ as to why their employment should not be terminated. This is not a ‘box ticking’ exercise either, but an important final opportunity for the employee to be heard. A decision should not be made until after the employee is offered a final opportunity to ‘show cause’.

In our experience, how you treat an employee during the termination process is key to avoiding claims, or disgruntled former employees bad-mouthing your business. Be clear, but also empathetic. Provide them with the details of any support services and how they can access these services. Treat the employee with respect (which we discuss in more detail in our article ‘Practical Tips For Employers When Making A Role Redundant In Australia’).

Finally, consider this; an underperforming employee could be costing you a lot of money, but so can hiring a replacement. Taking time to properly manage a currently underperforming employee might actually save you thousands in the long run (particularly if they performed well previously). It is appropriate, however, to approach the process with the proper goal in mind, which is performance improvement, and not termination.

Summary Of Managing Employee’s Performance

• Make sure the process is genuine and focused on improving performance
• Develop a plan where you are able to measure improvement
• Keep records of the process
• Provide a reasonable time for improvement
• Make sure you haven’t contributed to the problem
• If the employee does not improve, provide them with an opportunity to show cause as to why their employment should not be terminated and consider their response before making a decision

Let Our Employment Lawyers In Sydney Help You

Our team of skilled employment lawyers in Sydney can assist you with navigating this difficult area.

Book a complimentary 15-minute consultation or call us at 1300 80 67 80.