Best Employment Law Feature 2008

Poor performers are a danger not only to themselves but to their colleagues and the organisation as a whole. Annie Hayes finds out whether 'tough love' is the only solution.

A lot of fuss about nothing?

When times are good poor performers can generally 'get away with it', excused from sacking by the feel good factor. Now that the economic downturn is in full throttle, however, forgiveness is becoming less palatable. So are there any hiding places left, and if the organisation is one of the lucky ones to be weathering the credit crunch storm, does it matter anyhow?

Anthony Pierce, associate director at global recruitment and talent management consultancy Hudson, says rank plays a part: "The degree of damage can be determined by the level of the individual. A poor performer at senior level can ruin a business. It also depends on the job – anyone in a client or customer-facing role can quickly spoil the business, whilst those in operational roles can last for longer, unseen."

The complexions of blame begin because poor performance at entry and junior level can often be the product of bad management. Olwyn Burgess, director of client services at HR consultancy Chiumento, says that failure to meet financial targets is a keen indicator that senior players are failing to manage their teams: "If they haven't got the skills to do it then it’s not going to happen. There are often gaps in the softer skill sets such as giving people feedback. A big problem is that many managers can’t bite the bullet."

Confrontation is a thorny issue and one that inexperienced and reticent managers prefer to shy away from, even in the face of poor results. Burgess says: "Giving negative feedback is the hardest thing to do. Managers often 'bottle it up'."

Many organisations make the huge mistake of allowing the 'status quo' to continue. The problem is, says Pierce, colleagues start to lose respect, not only for their under-performing colleagues but also the management. "Performance often drops to the lowest common dominator," he adds.

In many companies, workers will lower their standards to rank just above the poorest performers and as those benchmarks get ingrained in the organisation, and are left unchallenged, it becomes harder to turn things around.

HR's role

Burgess believes that HR has a key role to play in eradicating the bad eggs and says she is beginning to see more clients put their emphasis on managers as coaches: "There has to be a culture change, you get more out of people if you allow them to make mistakes; you need to support them to improve too."

Pierce states that it's also incredibly important to empower line managers and ensure they have the tools of management at their fingertips: "Many line managers are actually promoted from the ranks but at the same time aren't given the training to equip them for the new role."

Setting standards is also incredibly important, says Pierce: "Employees need to know what the minimum standards are. When you ask staff to set their own objectives you often find that they will set the bar above what you expect."

Burgess agrees that clear guidelines are a must and emphasises the role of measurement: "Targets can be financial and also qualitative. In a retail environment it can be as simple as keeping your area tidy."

Workers that lack the 'va va voom' can't always be managed out of their rut and there does come a time when slapping them with the legal process is sadly necessary.

The capability game

Leon Deakin, solicitor at Thomas Eggar LLP, and Jog Hundle, partner in the employment team at Mills & Reeve, explain that capability is one of the 'fair reasons' for dismissal under the Employment Rights Act 1996. Legally, capability is defined as being assessed by "reference to the employee's skill, aptitude, health and any other physical or mental quality".

Deakin remarks: "As a result, if an employer is faced with an employee who has accrued one year's continuous service and is performing below expectations, they will be obliged to address this through a full capability procedure. As the tribunal places a great emphasis on the fact that the aim of any capability process should be to bring the employee up to the required standard of work, employers should be aware that it is extremely difficult to move straight to dismiss with an employee who is underperforming."

He adds: "Also, the tribunal will expect employees to have been given sufficient opportunity to improve their performance. As a result, a fair dismissal which is not preceded by the full complement of formal disciplinary warnings is rare."

For this reason, many employers will now have a written capability procedure or policy setting out how many warnings will be given and what will be discussed with the employee if they are underperforming. If a written policy is in place it is obviously important to follow that, says Deakin.

If there is no written capability policy, the employer will generally have to show that they have first informally warned the employee of exactly what the issues with their performance are, how they require them to improve these and to have set a specified time limit by when this improvement should be attained by.

"Of course, the expectations of the employer and time limits for achieving the improvement should be reasonable, which entirely depends on the specific circumstances of each case," adds Deakin.

If the employee does not improve sufficiently when the set time period has expired, the employer may then progress to instigate formal disciplinary action on the grounds of capability. As before, but also as part of the formal disciplinary process, the employee should at each stage be informed how their performance has fallen below what is expected and why disciplinary action is being taken.

Deakin says that, at this point, a further period of review should be set along with clear guidelines as to how they should improve.

"They should also be informed of the disciplinary action and warned that if the requisite improvement is not made within the new time limit, then further disciplinary action will be taken. If the requisite improvement continues not to be attained, the employer may be able to move through the full range of warnings and eventually effect a fair dismissal. However, as it is necessary to show that the employee has been given a reasonable amount of time to improve at each stage of the disciplinary process, a capability dismissal can take quite a long time to effect fairly."

Disciplinary procedures

To make matters even more complicated, each stage of the formal disciplinary process must be carried out in accordance with the statutory disciplinary procedures (which are to be phased out over time) including the provision of the chance for the employee to appeal.

"It is also worth highlighting that the employer is obliged to try and assist the employee to improve sufficiently by offering reasonable support and additional training," says Deakin.

As the requirement to give the employee a fair period of time to improve their performance often conflicts with the employer losing patience with an underperformer, one area where employers can fall foul during a capability procedure is by setting unrealistic time frames, which then render the process unfair. Deakin says that, as a result, it is generally worth taking a bit longer even if this seems frustrating.

"Similarly, employers often fail to address an underperforming employee for several years and then decide they need to drastic action," he adds. "In this case, the employer should be aware that if the employee can legitimately state that they were not aware they were doing anything wrong, the tribunal will expect them to be given sufficient time and assistance to rectify the issues before they are dismissed."

A further and increasingly common problem for employers when dealing with capability procedures is the employee either getting themselves signed off sick with work-related stress and/or raising a grievance on the basis they feel they are being picked on by the employer or a particular manager.

Deakin warns that both courses of action can result in a rapid deterioration of the relationship between the parties as well as a significant delay in addressing the performance issues. In these circumstances, Deakin says it is crucial that employers seek specific advice.

Employers shouldn't be scared of sacking under-performers so long as they follow the correct procedures, and managers' actions can be justified as consistent and fair. Allowing poor performance to fester not only spells problems later on when late action must be defensible, but also damages the organisation over a longer period. Biting the bullet is the management challenge that must therefore be faced.