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Managing employees is a challenge for anyone who runs a business. This is particularly true when each employee has their own set of goals that they want to achieve and problems that they need to fix. This article will describe the importance of implementing the performance management lifecycle for employers. Additionally, it will outline the steps to take when an employee is underperforming, including appropriate ways to terminate the employment relationship. 

Is a Proactive or Reactive Approach More Appropriate?

Deciding if you should take a proactive or reactive approach to performance management will ultimately depend on the individuals involved. It will also depend on the dynamic of the relationship between you and your employees.

Generally, a proactive approach to performance management can lead to a healthier, happier and more productive work environment for both employee and employer. This is because both parties feel valued, respected and heard.

A Proactive Approach

A proactive approach to performance management begins as soon as the employee is hired. It involves:

  • regular and ongoing discussions;
  • constant appraisals; and
  • monitoring.

The proactive approach also promotes clear communication of expectations. This is essential as it will alert the employee to any issues and gives them an opportunity to improve.

If there is no improvement after this process, more serious action may be required. For example, disciplinary action or termination of the employment relationship

A Reactive Approach

In contrast to a proactive approach, a reactive approach means that the performance management process only commences when problems arise. Often, the issues will have become noticeably detrimental and will require serious action on your part as the employer.

If the situation calls for a termination of the employment contract, this will be a difficult stage to implement typical performance management tools. As a result of the lack of a proactive approach to performance management, the employee will not have had a real chance to improve their performance before serious action was taken.

An Ongoing Process

Because performance management is a cycle, it is essentially an ongoing process that involves both the employer and employee. So, what does this process look like?

  1. meetings to discuss expectations and goals;
  2. regular check-ins to see how the employee is progressing with meeting these expectations and whether they are performing in a way that aligns with your business’ values;
  3. documenting meetings and measuring progress to see if there is improvement;
  4. verbal and written warnings where problems occur and a reasonable opportunity to improve; and
  5. rewards for employees who are improving as per your feedback.

How Do I Know if My Employee Is Underperforming?

Your employee may be underperforming if they do not:

  • regularly complete their work to an appropriate standard;
  • follow the rules or policies surrounding the quality, timeliness and accuracy of work; or
  • show a reasonable amount of care for their work and also for the business.

Underperformance can also be about the:

  • quality of the employee’s work;
  • employee’s timeliness; and
  • accuracy of the employee’s work.

The employee should be aware of the standard of work expected by the business at the outset of their employment. Ideally, you will have a written policy outlining expected behaviour and cultural values. Further, the employee should be able to access the written policy easily.

Steps For Managing Underperformance

Four key steps to take when managing an employee’s underperformance are:

  1. identify the problem and ascertain how serious it is;
  2. discuss your concerns in an encouraging manner;
  3. collaboratively create a solution. This may involve more training or clarification of the role’s scope; and
  4. monitor performance while you maintain an open dialogue with the employee about their progress.

What if There Are Ongoing Problems and No Improvement?

If the employee continues to demonstrate unfavourable behaviour, you can:

  • pinpoint the significant issues and ways the employee can improve;
  • meet with the employee to discuss the issues; and
  • create a collaborative plan to help the employee improve.

Furthermore, it may be beneficial to offer additional training to the employee. This will help improve their confidence and provide an opportunity to fill any gaps in their knowledge.

Giving the employee a warning letter outlining the issues and possible consequences will be your final step before terminating their employment. Of course, this should only occur where the employee has been given the opportunity to improve their performance. 

Are There Any Risks?

One key risk associated with the poor implementation of a performance management lifecycle is the possibility of the employee bringing an unfair dismissal claim. This can occur if the employee was not:

  • notified about problems with their performance; or
  • given a chance to fix these problems.

Above all, it is vital that meetings with the employee are documented. You can provide these documents as evidence that due process was followed. In an unfair dismissal claim, the Fair Work Commission (FWC) will want detailed records showing that you gave your employee the best chance of success.

Similarly, a risk may arise if you merge performance management steps with official warning letters. The ongoing performance management process should not mean that the employee is always on the verge of termination. The process should focus on general professional development and overall improvement.

However, the final stages of performance management may involve official warning letters. These warning letters will likely state that the employee’s position may be terminated if they do not improve as per your feedback. The purpose of each performance management step should be clear to the employee. This is so the employee can assign the appropriate degree of importance to the process.

Key Takeaways

Ultimately, performance management will promote a healthier and more productive work environment. Typically, a good performance management approach will:

  • foster a better relationship between your business and your employees;
  • provide you with procedures for dealing with underperformance; and
  • encourage you to solve issues with employees as early as possible.

As an employer, knowing that performance management is an ongoing process will help you adjust your expectations and will, above all, ensure that you are not at risk of any legal action. If you have any questions, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.


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