Managing Poor Employee Performance - dummies

By Marc Bishop, Sharon Crooks

Telling one of your small business employees that they are underperforming may be a daunting prospect. You may be wondering where to start. First, get a handle on what underperformance means, in HR terms, then think about what might be causing it. Understanding why it’s happening will help you to decide what to do next. Follow these steps to identify and deal with underperformance effectively and fairly.

  1. Figure out whether you’re dealing with underperformance or misconduct.

    An employee who is underperforming is either failing to perform the duties of his or her role or failing to perform them to the standard required by the business. Employers sometimes confuse underperformance with misconduct. Here are some examples to highlight the key distinctions:

    Underperformance Misconduct
    Poor quality of work Unacceptable lateness or absence
    Not hitting deadlines Poor attitude to manager or colleagues
    Poor productivity for the time spent on work Violence or disruptive behaviour
    Not meeting the required standard or work Theft, fraud, breach of company policies

    Misconduct is usually something the employee does deliberately, and you can address it by taking disciplinary action. But an employee could be underperforming for lots of different reasons, and not always deliberately, so you may need to take different action, depending on the underlying cause.

  2. Identify the possible causes of underperformance.

    It is important to identify possible causes before you consider whether you will take an informal or formal approach to managing the under-performance. Consider the following:

    • Have you made your expectations clear?

    • Has the employee had sufficient training to carry out the work requirement?

    • Is the workload too high?

    There may be other possible causes such as:

    • You hired the wrong person for the job.

    • Personal outside influences are distracting the employee or limiting his or her ability to do the job.

    • Poor communication between the employee and his or her manager, colleagues or clients.

    Once you have considered the above, you can set out a plan for improvement.

  3. Come up with an informal plan.

    ACAS (Arbitration, Conciliation and Advisory Service) is an independent government organisation devoted to preventing and resolving employment disputes. It takes into account UK employment law when offering advice and guidance. ACAS guidelines state that before considering formal action, you should be able to demonstrate the following:

    • The employee is clear as to what is expected of him or her.

    • You have provided feedback on the employee’s performance.

    • The employee is clear about the gap between his or her performance and the required performance.

    • You have an agreed plan outlining what improvement you expect of the employee and by when, and the support you have provided to help the employee improve.

    • The agreed action plan has been in place for long enough for the employee to demonstrate some improvement.

    • You have been clear to the employee about what will happen if his or her performance doesn’t improve.

    • You have a clear audit trail of all of the above.

  4. If necessary, develop a formal performance improvement plan, using SMART objectives.

    If the informal approach hasn’t worked, and the employee is still under performing, you should develop a formal performance improvement plan before considering any formal disciplinary action. Set some Specific, Measurable, Achievable objectives, with a Realistic Timeline for the person to achieve them. Put them in writing and ask the employee to commit to achieving them. You should clearly explain in writing that the consequence of not meeting the objectives set out in the plan may be formal disciplinary action.

  5. Move on to disciplinary action if there’s still no improvement.

    If there is still no improvement in performance, you may proceed to the formal stage of a disciplinary process which involves:

    • Inviting the employee in writing to a formal disciplinary hearing, giving reasonable advance notice

    • Allowing the employee an opportunity to be accompanied

    • Clearly setting out the reason for the disciplinary hearing

    • Allowing the employee to provide their feedback and any evidence before you make a decision on the level of sanction.

    • Setting out the sanction at the end of the meeting and following up in writing.

    • Allowing the employee the right of appeal within 5 days of receiving the decision in writing.

  6. Sanction or dismissal?

    UK employment law recognises that small businesses may not be able to sustain an underperformer for a lengthy period of time; therefore, the guidance in the previous steps has taken this into account. A sanction following a disciplinary hearing could range from a written warning through to dismissal.

    An employee with less than two years of continuous service is not eligible to bring an unfair dismissal claim to a court other than for discrimination or breach of contract. Always play it safe and follow the correct procedure, even if your employee has less than two years of service.