Is your performance in capable hands?

27 March 2006

A recent survey suggests that UK employees have a lot to do in order to increase productivity levels at work. In the Tough Love survey, respondents reported, on average, 16% of their workers could be classed as poor performers. If the average wage of these employees is £22,000, with the average company size of those surveyed at 9,000 employees, this would add up to nearly a staggering £32 million in wasted wages per year. The UK’s productivity continues to be lower than that of France and the US.

Such facts should provide the necessary incentive for all employers to take another look at how they manage performance in their own organisations. So how can performance management be effective?

According to recent research, 25% of UK workers believe they would become more productive if they received performance-based pay. A survey of 19,000 workers across 12 European countries, found that just 14% of UK respondents were on a scheme of performance related pay. This was one of the lowest rates in Europe, where the average was 21%. So employers may well wish to think about introducing such a scheme.

Proper training, supervision and encouragement are essential. If employers fail to provide instruction and support at the outset, or sets unrealistic standards for an employee, then a subsequent dismissal for incapability may be unfair. Do not forget to maintain adequate records of appraisals, informal discussions, warnings etc on the employee's file.

Employers need to have a genuine belief based on reasonable grounds that the person is not performing. Employers therefore need evidence of the poor performance. Employers should consider:

the job specification and/or expectations of the job. Have expected standards been achieved? Does employee know what the standards are?
the views of the employee's relevant superiors;
objective evidence e.g. the fact that the employee failed to do part of her job or achieve targets; complaints by customers or other staff;
historic evidence, e.g. of past warnings, counselling, job appraisals, and similar.

Check to see if there is inconsistent evidence e.g. a complaint that someone is not performing does not necessarily tally with a recent pay rise or bonus payment.

If the evidence shows that there is a capability issue, you should set up a meeting with the employee. Discuss with the employee the difference between their actual performance and the performance that you expect, so that the employee understands properly what the issues are. See if there is any support that the employee thinks s/he needs from the company or training, which s/he has not yet received, or any other reason for the under-performance. Warn the employee of the consequences of failing to improve. Give the employee a reasonable chance to improve – realistic targets for improvement should be set over a reasonable period of time. Employees must be warned of the consequences of failing to adequately improve.

After the meeting, you should monitor the employee’s performance carefully. It is best to hold regular review meetings to discuss his/her progress, and if necessary to notify him/her that they are failing to meet the targets. Normally, at least two warnings should be issued before considering dismissal. Whether or not employers are then in a position to dismiss fairly, will depend on whether the improvements sought and time scale set were reasonable, the extent of any improvements in performance and what steps you have taken, as may have been necessary in the intervening period.

There may be circumstances where the failure of work performance is so serious that it leads to instant dismissal. Such instances are rare, and preferably employers should always follow the performance management procedure fully. This procedure will apply where potentially disastrous consequences will result from just one mistake (e.g. if the employee is a train driver). Even in such circumstances, a full investigation must be carried out and the findings confirmed in writing with the opportunity to appeal offered.

Remember, before taking any action about performance, employers must consider whether the employee has a physical or mental impairment, which severely affects their ability to carry out day-to-day activities, which has a substantial and long-term effect. If they do, then the employee is likely to have a disability as defined under the Disability Discrimination Act. Employers must be prepared to make reasonable adjustments and carefully consider alternative employment as part of the review process.

Further, any employee with over a year’s continuity of employment has the ability to pursue a claim of unfair dismissal, if appropriate. If a capability dismissal is required for such an employee, it is essential that a reasonable capability procedure be followed to defend an unfair dismissal claim. If you haven’t already got a clear policy in place, then why not purchase our Capability policy?