Are you (poorly) managing performance? Eight key issues for employers to watch for…

Managing poor performance seems to be a constant issue employers need to grapple with – with time constraints and business targets to meet, keeping a check on individual performance is a matter that can be easily overlooked, particularly at a senior level. But this isn’t without its own cost to businesses. As well as revenue lost due to the underperformance, a survey by the Chartered Management Institute earlier this year highlighted the on-going financial cost for employers with its finding that a third of underperforming bosses were awarded bonuses (see here). When matters come to a head, the failure to address issues earlier only serves to magnify the practical and legal issues which surface on dismissal for poor performance.

Eight key performance management issues for employers to watch for…

1. Is the employee aware of what their role is/the expectations on them?

Whilst many employers take time at the start of employment to explain to the employee their expectations of them, how often is this picked up again, save for the annual review? To the extent that an employee’s contract permits, an employee’s position can evolve considerably over time, even during the course of a year. Whilst there are obvious scenarios such as job promotions where performance expectations will change, there are equally less apparent ones such as strategy changes and technological advances. In these circumstances it is vital that an update is provided on an employee’s expected role. Without sufficient clarity it will be difficult to address any poor performance issues and establish that any dismissal was fair.

2. Avoid bolts out the blue – the inflated review syndrome…

With an eye on getting the next year off to the best start, it is tempting for managers conducting the annual appraisal to tick the boxes and avoid addressing the tricky performance issues. However, a history of inflated and misleading performance reviews will not set a performance management process off on the right track and leaves an employer more vulnerable to claims of unfair dismissal. There may also be direct financial implications where this inflation feeds into pay rises and bonus awards.

Many employers are now regularly monitoring employees rather than restricting performance reviews to the arguably outdated model of “annual appraisals” and there have been some big name employers announcing their move to this newer approach this year. Assessments run on an on-going basis not only benefit employees by tracking their improvements and setting short term goals but they equally provide a useful evidential basis during any subsequent performance related proceedings.

3. Are employers using probationary periods and exit interviews to best effect? 

Probationary periods and exit interviews are valuable tools in identifying and tackling performance issues. Probationary periods enable problems to be nipped in the bud early, whilst exit interviews with departing employees may bring to light hidden issues, such as training or unclear expectations amongst employees. However, both these tools are all too often easily overlooked allowing issues to grow with knock on time, legal and financial repercussions.

4. Take care to assess performance – not attitude or personal traits 

Ensure the focus of any performance assessment is on just that, the employee’s performance and not personal traits. A critique of an individual’s personal character potentially leaves an employer vulnerable to discrimination claims where that critique relates to a protected characteristic (even if the individual does not actually possess that characteristic). Care must be taken to ensure that discussions are carefully worded. Language which appears to be based on stereotypical assumptions should be avoided.

Indeed, both at the outset when measuring employee performance and during any subsequent performance and disciplinary measures it is vital that consistent criteria and approaches are applied to all employees. Uniform application assists in preventing discrimination claims arising and it is useful to keep employees’ protected characteristics in mind when formulating the policies. Where differences in treatment do arise than an employer must be prepared to explain the objective justifications behind them.

5. Reasonable adjustments?

Where an employee is disabled, an employer is under a duty to make reasonable adjustments. An employer must have an eye on its obligations in this respect particularly where performance issues are in play. It may be appropriate to obtain a medical report from the employee’s GP or occupational health.  

6. Keeping records

As always with employment law, the papertrail is key! It is vital that accurate and complete written records are kept of each and every meeting with the employee. These documents can have critical evidential value in any subsequent dismissal proceedings, particularly where issues of conduct or capability are involved or where differential treatment is alleged to be the result of discrimination rather than being genuinely based on lawful grounds.

7. Senior employees

Performance management can be particularly tricky where a senior and perhaps long serving employee is involved. Additional factors may come into play including managing performance in such a way as to avoid breaches of trust and confidence, avoiding inferences of age discrimination and considering the impact of any termination for performance on stock options and other financial rewards. Alternatives to performance management should be considered including the possibility of opening up a protected conversation or without prejudice discussion with a view on negotiating an amicable parting of the ways.

8. Avoiding the unexpected…

Many employers know to watch out for unfair dismissal where an employee has two years’ or more service and discrimination issues where an employee has a protected characteristic. But employers must also be aware of other claims which may be lurking including:

• Unfair dismissal due to miscalculating the two year service requirement. The way the rules work mean that an employee who commences employment on 1 April 2015 will accrue two years’ service for unfair dismissal purposes if his termination date is 31 March 2017 and notice periods and arrangements need to be factored in to this too.
• Unfair dismissal where the two year rule does not apply including where an employee alleges that his dismissal is for making a protected disclosure. Whilst to be protected a disclosure must be in the public interest, recent case law has indicated that this public interest threshold is a low one to meet.
• Discrimination protection even where the employee himself does not possess the protected characteristic. Associative discrimination can be easy to overlook and a recent European decision suggests that it may extend beyond direct discrimination to claims of indirect discrimination.
• Victimisation. Where an employee raised a previous complaint or proceedings it is important that any subsequent discussions on performance remain impartial and that care is taken to avoid any actions being perceived as retribution or reprisal for that. Any negative comments should be made independent of the earlier issues and that there is sufficient evidence to substantiate them. Where the earlier issue has raised allegations of discrimination, particular care must be taken to avoid statutory claims of victimisation.

Finally, employers should ensure that they have a clear understanding of the process to be followed in addressing poor performance on a formal footing. This is key to ensure that any subsequent dismissal is fair and also to avoid surprises where a lengthy informal performance improvement procedure is followed but the employer then needs to go back to ‘square one’ with a more formal procedure (involving a series of warnings and improvement periods) that meets the ACAS Code requirements.