This week the experts, Martin Brewer and Esther Smith advise on how to handle a poorly performing manager.

The question:

I have inherited a poor performing line manager in my team, the issues are:

• There is no team motivation in his department
• He is not spending anytime training & developing his new team members
• He is not addressing the poor performers in the team

As a result of this his department has the highest staff turnover and sickness absence of the 5 departments. His operating costs are 30% higher than the other departments (Recruitment costs/overtime payments)

 Some other facts:

• There are no personal problems behind this, he is well paid and knows he will not get a job with the same salary/benefits easily.
• The previous middle manager/executive allowed this manager to perform this way.
• This line manager took a grievance out against the previous middle manager/executive for bullying when he was approached about his poor performance.
• Although there were clear facts of poor-performance the organisation upheld the complaint to appease the situation.
• The company owners will not consider paying him off or transferring him!

I know have to treat this line manager ‘fairly and reasonably’ the question is this:
 What do I do, where do I start?

Legal advice:

Martin Brewer, partner, Mills & Reeve

There are probably three viable options for dealing with this chronic underperformer (on the assumption that no formal process has been tried before). 

1. Take a decision to dismiss without any further process. This is a bold move and is highly likely to end up in litigation. But maybe that’s not the end of the world. In the absence of any discrimination claim you know that the maximum liability for an unfair dismissal claim will be around the £70,000 mark. So the question is – is the cost of his poor performance, his mistakes, the impact on the business and the cost of paying him whilst you go through a performance process (which may well end in dismissal and a claim anyway – see below) greater than the financial risk in ET?  If so, just dismissing is not necessarily as odd as it at first seems.
2. Follow a standard performance process. This requires you to identify some key goals you want the manager to achieve over a defined period and warn him that if he does not hit them he may end up facing dismissal.  If he hits the targets, all well and good, but if he does not then the warning is ramped up, much like a disciplinary process through to dismissal. You will also need to consider what, if any, support you/the company can offer to help him to achieve the goals set. This can take several months. As mentioned above, he may well end up dismissed anyway and no doubt you will face a claim.
3. You can do a deal; perhaps starting at ‘we won’t dismiss you if you resign’, and building up to some ‘compensation’ payment in return for an ordered termination (and a compromise agreement).

I appreciate what you say about the company not wanting to pay him off; owner/managers often feel this way.  It’s also concerning that they seem to have backed this manager previously despite the difficulties. So, of course, instant dismissal carries real risk, but so do the alternatives of doing nothing or following a process -including the cost of doing so, dismissal and the cost of litigation – so this seems like an odd and highly uncommercial stance. Before you do anything, you need to lay some groundwork. It may be worth considering putting a board paper together outlining the potential cost of each course of action to get senior management buy-in. The basis is that there is no course of action which is risk-free. Yes, dismissal carries risk, but keeping him and doing nothing carries risk and cost (effect on staff, staff turnover, impact on customers and quality, recruitment costs etc), as does following a process.

Martin Brewer can be contacted at martin.brewer@mills-reeve.com. For further information, please visit Mills & Reeve.

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Esther Smith, partner, Thomas Eggar

I think my first comment would be that you should not be deterred from taking action simply because this employee previously instigated a grievance against their last manager when the performance issue was raised. Doing nothing is not the answer, and in these difficult economic times, the business cannot afford to carry the poor performers particularly where they are costing money, in terms of both their own salary costs and the turnover issues their underperformance is giving rise to. Also, doing nothing does not give a particularly good message to the other employees in the business who undoubtedly are aware of this employee’s shortcomings.

My recommendation would be to start the performance management process, possibly on an informal basis initially to get things going. The employee is likely to fight against this, and may raise further grievances, but these will just have to be dealt with by the business through the normal channels. Given that you have not been the manager for long, it is hard to see how he can construct any arguments of bullying and harassment against you, unless you are a fast worker!

Assuming the information process does not work you will need to move to the formal performance/disciplinary route. This will either result in a progression of warnings being issued, culminating in dismissal or, looking on the bright side, it might actually improve and address the performance issues you have here. No one has ever tried before, so corrective action might just bear fruit. The alternative is that the employee takes umbrage to the extent that he leaves the business.

The whole process is going to be time consuming and costly in terms of management time, but if the company owners will not consider a settlement or a transfer, you don’t really appear to have any options.

Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.