Performance management: Between a rock and a hard place?

Performance management is a term used to describe the process of assessing an employee’s performance in meeting the standards set by your business. Dealing with underperformance can be challenging and there is no “one size fits all” approach to managing people. However, it is important that you deal promptly with employees who do not meet your expectations or who breach work practices, procedures and/or rules, and that you take active steps to fix the problems.
Good performance management has at its heart three essential elements:
  1. Setting expectations.
  2. Supporting performance.
  3. Evaluating performance.
Underperformance frequently becomes an issue when your expectations (including work practices, procedures/policies and rules) and the consequences of failing to meet your expectations are unclear (or have not been set). As an employer, you should:
  • Clearly identify and communicate to your employees the standards expected from the beginning and throughout employment and the consequences of failing to meet your expected standards.
  • Ensure employees have adequate resources, training and equipment to achieve the standards.
  • If the standards are not being met, deal with this immediately.
Most employers will at some time be in the unenviable position of dealing with an underperforming worker. Not all underperformance warrants a formal, structured process. However, it is crucial that you try to resolve issues as early as possible. Issues that are not addressed can become more serious over time and can have a negative effect on your business as a whole.
The best way to deal with underperformance depends on its seriousness. Where the performance issues relate to misconduct, you must act quickly and in accordance with your policies (including, where necessary, investigating the misconduct).
The reasons for this are twofold. First, delayed or protracted investigations might suggest to an employee that your business does not consider the matter serious (or even condones it) and it can be stressful to the employees involved (this has in the past led to compensatory workplace injuries).
Second, it may not be apparent that the conduct has occurred or that the employee was involved. Taking action based only on suspicions could expose you to legal claims. For example, in accepting a teacher’s stress claim, the Administrative Appeals Tribunal held that the employer should have fully investigated a student complaint before commencing formal disciplinary procedures. The tribunal accepted that the employer’s actions were not reasonable and it was liable for the worker’s incapacity (Reubinson v Comcare [2010] AATA 676 (7 September 2010)).
If you are satisfied there are issues with an employee’s performance/conduct, it is critical that you have a fair procedure in place and follow it consistently. 
This will mean that, at a minimum, an employer should always:
  • Make the employee aware of concerns about their performance/conduct – employees are entitled to expect you to explain how they have failed to meet your workplace standards. Managers who fail to provide such information could expose the employer to allegations of bullying and harassment.
  • Allow the employee the opportunity to respond/defend the issues presented to them (and consider their response, including any mitigating circumstances).
  • Allow the employee to have a support person present at any meetings (which may include a union representative).
A failure to apply procedural fairness can have significant legal consequences. For example, if you have resolved to terminate an employee, a failure to afford the employee procedural fairness will usually result in a finding that the dismissal was unfair, thus entitling the dismissed employee to a remedy (which could include compensation or reinstatement). 
In a recent case, a worker who was given only 30 minutes’ notice of a meeting to discuss his performance and possible disciplinary action was found to have been unfairly dismissed because he was denied procedural fairness when at such short notice his union representative could not attend. His employer also handed him a letter of termination before giving him an opportunity to raise any mitigating circumstances (M v City of Holdfast Bay [2012] SAIRComm 14 (4 December 2012)).Lastly, you should always act on your findings.
The action you take with respect to underperformance largely depends on the circumstances and how serious the underperformance is. For example, the way you handle an employee who fails to follow your leave procedure will likely be different to how you deal with an employee who breaches your drug and alcohol policy.
There is a continuum of responses, from counselling the employee or warning the employee about his/her behaviour, putting the employee on a formal performance management plan or, where the conduct is serious or could not be resolved, termination of employment. 
However, additional legal risks exist that should be considered. Employers sometimes feel like they are between a rock and a hard place when it comes to disciplining employees because of the myriad legal claims that may be levied against them, such as claims for workers’ compensation, discrimination, bullying, unfair dismissal and breach of the general protections provisions.
However, the reality is that if you have acted reasonably and can point to objective reasons for the actions you have taken (including the dismissal of the employee), and if you have operated under a fair process, you will be in the best position to defend any claims brought against you.
Performance management is an ongoing process, not a one-off event. Employers are responsible for ensuring staff are aware of expected standards and ensuring adherence to such standards. Ignored performance issues rarely go away and can become more difficult to tackle later down the track.
In summary, employers should:
  • Ensure management processes, including investigations into employee behaviours, are timely and efficient and avoid unjustifiable delay.
  • Meet with underperforming employees with a view to discussing and exploring solutions to the problem and, where appropriate, develop an action plan to address performance/conduct issues (and advise employees of the consequences of a failure to improve).
  • Avoid leaping to conclusions about employee behaviours. Employers need to make inquiries into possible breaches and put such evidence to the employee concerned. The employee should be given a chance to respond before further steps are taken.
  • Follow up and monitor performance and if performance does not improve, consider the appropriate next steps.
  • Keep a written record of all discussions relating to underperformance in case further action is required and as evidence if legal action is taken about the matter. •
Louise Houlihan is a partner and the head of employment and industrial relations and Joanna Shields is an employment and industrial relations lawyer at Cornwall Stodart.

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