Managing Poor Performance by Ascent HR Management Consultants

Managing poor performance
ASCENT HR – Presentation
June 2014
(c) Ascent HR - www.ascenthr.com.au 1

Why is performance management
hard?
Requires honesty –
Difficult to tell someone face-to-face their performance is poor.
Requires clear identification of short falls in
performance –
Difficult where no clarity on expected standards.
 Requires time and commitment –
Difficult if looking for a quick fix.

Why is performance management
important?
Financial risk –
Company will not be successful if staffed by underperformers.
Litigation risk –
Company will not be able to safely dismiss poor performing employees
if performance management process not followed.
Reputational risk –
Company reputation damaged if poor performance leads to poor
delivery to customers.

What are the benefits from managing
poor performance?
 Creating a high performance culture – part of the
Company’s Total Performance agenda.
 Improved productivity and service.
 Ultimately freeing up management time.
 Avoiding unfair dismissal claims!

Let me introduce you to…
Roger, new finance department manager.

… and Roger’s team

Roger’s first few months
 Roger starts his new role in February.
 After a few months, Roger starts to have some
concerns about the performance of some of his team
members.
 In particular, he’s concerned about:
Ed, accountant;
Amy, accounts clerk; and
Caroline, Roger’s PA.

Diagnosing the problem
 Roger meets with Anna in HR – “What am I going to do
about these poor performers?”
 Anna: “Need to diagnose the problem – why are they
performing poorly?”
 Poor performance could be due to:
 incapability - can’t do;
 ill health – illness preventing from doing;
 misconduct – won’t do.
 Why are Ed, Amy and Caroline not performing?

Diagnosing the problem (cont.)
Ed:
no ill health issues;
does the work – but does it poorly;
incapability?

Managing poor performance –
“Classic” poor performance

“Get rid of him!”

The law: unfair dismissal
Fair Work Act 2009 (Cth):
 Person has been unfairly dismissed if:
 Person has been dismissed.
 Dismissal was harsh, unjust or unreasonable.
 Dismissal was not a genuine redundancy.

The law: unfair dismissal (cont.)
Factors in deciding whether a dismissal is harsh, unjust or
unreasonable:
 Was there a valid reason for dismissal (conduct or capacity)?
 Was the person notified of that reason and given an
opportunity to respond?
 Where dismissal is for poor performance, was the person
warned about the impact of poor performance prior to
dismissal?
NOTE: Primary remedy for successful claim is reinstatement!

Golden rule
Employee must know what’s coming down the barrel of the
gun!

Can Roger Dismiss Ed?
 Potentially have a valid reason for
dismissal on the basis of capacity –
if Roger can demonstrate Ed’s poor
performance.
 BUT Roger:
 Never told Ed this was an issue
previously;
 Never warned Ed of impact on poor
performance (eg, potential for dismissal);
and
 Never provided Ed with an opportunity to
improve.
Any dismissal of Ed now will almost certainly
be an unfair dismissal!

Roger’s options
Two options:
 Dismiss Ed now… and write a cheque for unfair
dismissal costs (max. award 6 months’ salary) – or
be ordered to reinstate him.
OR
 Give Ed an opportunity to improve… and if he fails
to improve performance, dismiss him fairly.

Managing Ed – the right solution
 Provide Ed with the opportunity to improve –
through performance management process.
 Options:
 Informal action:
• Quiet word, counselling, opportunity to improve before going
into a formal process.
 Formal action:
• Performance management process & performance
improvement plan.

Performance management process
 Dismissal for poor performance will only be fair where:
 employee understands performance expectations;
 has been informed that s/he is not meeting expectations; and
 has been given the opportunity to improve her/his performance.
SO…

Performance management process
(cont.)
 Meet with the employee and inform her/him that performance is
below expectations.
 Explain what the expectations are.
 Put the employee on a performance improvement plan (“PIP”).
 Consider training/informal coaching to assist in performance
improvement.
 Monitor performance against the PIP on a regular (eg, monthly)
basis.
 Take disciplinary action if performance does not improve.

Preparing for the meeting
Prepare in advance of the
meeting:
 Rough script of what will be covered
– see hand out.
 Evidence of poor performance.
 Performance improvement plan –
see hand out.

Preparing for the meeting (cont.)
Rough script
 Manager:
 presents concerns and evidence;
 listens to the employee’s explanations;
 discusses the situation with the employee; and
 develops performance improvement plan.
 Common pitfalls to avoid:
 losing control of the meeting/not covering all points;
 being too nice/benefit of the doubt; and
 being too defensive/closed minded.

Establishing poor performance
 What should the employee be doing?
 Job description.
 Employment contract.
 Organisational chart.
 Other sources?
 What is the employee doing?
 Emails.
 File notes.
 Appraisals.
 Records from informal
performance discussions.

 In preparation for the meeting, Anna gets out Ed’s 2009
performance appraisal:
– End of year: “Ed has achieved all of his objectives. Ed has received
excellent comments from his customers which reflects his commitment
to the businesses he works with.”
 Roger: “What?! His performance is terrible!”
 Previous positive performance appraisal makes it difficult
to establish poor performance.
Do yourself a favour – give honest performance
appraisals!

Performance Improvement Plan
 Specific targets
 Measurable targets
 Achievable targets
 Realistic targets
 Time based targets
Must ensure employee is crystal clear about what the
expectations are and when they must be met.

During the meeting…
 Ed’s very angry about the
allegations of poor performance:
 Never been an issue before – see past
performance appraisals.
 Issue arises because Roger just doesn’t like
him – it’s a personality clash with new
manager.
 Targets set in the PIP aren’t achievable –
none of the accountants meet these
standards.

Responding to Ed’s comments
 Anna & Roger listen to Ed’s
comments.
 However, have documented
examples of poor performance –
e.g., objective evidence of poor
performance.
 What about allegation re
unreasonable targets set under the
PIP?

Warne v ANZ Banking Group
 Facts:
 Warne employed as business development manager.
 Placed on PIP – and ultimately dismissed for failure to
meet sales targets.
 Commission:
 Performance targets not realistically set – as evidence by
the fact that all business development managers in WA
were not meeting.
 On that basis, no valid reason for dismissal.
Ensure targets set are reasonable and being
achieved by the rest of the workforce!

First review meeting
 After investigating Ed’s comments about the targets,
Roger & Anna revise the PIP and commence
managing Ed against the PIP.
 Six weeks later, at the first review meeting, Ed has
met some but not all of his performance targets.
 Roger’s question to Anna: “He’s had a chance to
improve, can I dismiss now?”

How long is long enough?
Need to be given long enough to improve before
taking disciplinary action.
Factors in how long is long enough:
Nature of the job – how difficult it is to learn new skills;
Employee’s status/seniority within the organisation;
Employee’s length of service; and
Employee’s performance history.

Taking it one step at a time
Rarely, if ever, acceptable to go
straight to dismissal for
performance reasons – step
through the process:
 Verbal warning.
 Written warning.
 Second & final written warning.
 Dismissal.

Managing Poor Performance by Ascent HR Management Consultants

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