Employee Life Cycle: Step 6 Capability and Performance Management

  1. Why is managing performance important?

Managing your employee’s performance is important as:

  • It is central to the relationship between managers and employees;
  • It can be a key element of good communication;
  • It fosters the growth of trust and personal development; and
  • It is central to how well your employees will be engaged in their work, and how well they will perform.

If your employees are engaged in their work, they are more likely to be doing their best for your organisation.

An engaged employee is someone who takes pride in their job and shows loyalty towards their Line Manager, team, and/or organisation and goes the extra mile, particularly in areas like customer service, or where employees need to be creative, responsive, or adaptable.

  1. Identifying performance issues

 If you have concerns about an employee’s performance you should:

  • Undertake an assessment to decide if there are grounds for taking formal action;
  • Review their personnel file, including any appraisal records;
  • Gather relevant documents;
  • Monitor their work;
  • Interview them; and
  • Interview others confidentially.

It is essential that you investigate the reasons for underperformance. You should try and find out if there are any external or internal reasons for an individual’s poor performance. Have there been changes in the Company? Do they have a new Line Manager? Are they unsure of the work that is expected of them now? Have they lost confidence in their abilities? Or are there personal factors which are impacting on their work? For example, an employee may have had a recent bereavement you were not aware of or their child may be ill or their health may have deteriorated. Knowing the cause of the poor performance is key as this will help you decide how best to tackle it.

  1. Informal and formal approaches

 First instance and minor instances of capability should be dealt with informally through counselling or training. They should be addressed with their Line Manager as part of their day-to-day management. You should keep a note of any such informal discussions on the employee’s personnel file. These should be ignored for the purposes of any future capability hearings.

Informal discussions may help:

  • Clarify the required standards;
  • Clarify the level of performance expected;
  • Identify areas of concern;
  • Establish the likely causes of poor performance;
  • Identify any disabilities that may be affecting the employee’s performance;
  • Identify any training, or supervision needs; and/or
  • Set targets for improvement and a time-scale for review.

The formal procedure should be used for more serious cases, or in any case where an employee has failed to improve an informal warning. An employee would not normally be dismissed for performance reasons without previous warnings. Dismissal without previous warnings may be appropriate for serious cases of gross negligence. At all stages of the procedure an investigation should be carried out.

  1. Considerations during the process

When carrying out a capability or performance management procedure there are certain considerations which need to be thought about during the process. These are:

  • Disabilities – You must consider whether the unsatisfactory performance is related to a disability. If is then consider whether there are any reasonable adjustments that could be made, or making other working arrangements such as changing duties or providing additional equipment or training. You may even need to make amendments to your capability procedure. You should enquire whether they have any medical conditions which require adjustments.
  • Confidentiality – Aim to deal with performance matters; sensitively, with due respect for the privacy of the individual, and to treat any information confidentially. You must notify all involved in the process that they must treat any information communicated to them as confidential during this process. You should also normally tell the employee of the names of the witnesses whose evidence is relevant to their capability hearing.
  1. The purpose of the performance review meeting

 The purpose of the performance review meeting is to:

  • Set out the required standards that you consider the employee has not met, and go through any relevant evidence that you have gathered;
  • Allow them to ask questions, present evidence, call witnesses, respond to evidence and make representations;
  • Establish the likely causes of poor performance (including any reasons why any measures taken so far have not led to the required improvement);
  • Identify whether there are further measures, such as additional training or supervision, which may improve performance; and
  • Where appropriate, discuss targets for improvement and a time-scale for review.

If dismissal is a possibility, you should establish whether there are any further steps that could reasonably be taken to rectify their poor performance, and to establish whether there is any reasonable likelihood of the required standards of performance being met within a reasonable time, and to discuss whether there is any practical alternative to dismissal, such as redeployment to any suitable available job at the same or lower grade.

  1. Preparing for a performance review meeting

Before a formal performance review meeting you should ensure that your properly prepare for it. One of these preparations should be writing to the employee to invite them to attend the meeting. Your letter should;

  • Inform them of the date, time, and place of the capability hearing, as well as who will be present;
  • Give the employee the right to be accompanied;
  • Give them copies of any relevant documents and provide sufficient information to enable the employee to prepare their response, you should also ensure that sufficient time is given to do this;
  • Provide a copy of any relevant witness statements, except where a witness’ identity is to be kept confidential, in which case you should give the employee as much information as possible while maintaining confidentiality;
  • Provide a copy of the capability/performance management procedure or information on where it can be accessed;
  • Give the employee warning that a possible outcome might be a formal sanction under the relevant stage of the company’s performance review procedure (including, where appropriate, dismissal); and
  • Ask the employee to let you know if any reasonable adjustments need to be made in order for themselves or their companion to attend.
  1. During the meeting

During the meeting the employee should be given an opportunity to answer any allegations of poor performance or capability issues against them. They should be given the opportunity to provide any evidence and call any witnesses that can help them put their point of view across. The meeting should usually be carried out by the employee’s line manger but remember that you will need to have someone who is kept out of the process so there is someone to conduct the appeal should there be a need to. It is also best to have a note taker to take down minutes of the meeting which should be written up and then agreed by both parties. Where you have witnesses that are provided evidence against the employee, the employee should be given the opportunity to respond to any information given by the witness.

If any new evidence is presented, then the meeting should be adjourned so that this can   be investigated further by yourself or to allow the employee time to review the new evidence. You should give the Employee a reasonable opportunity to consider any new information obtained before the hearing is reconvened.

At the end of the meeting, you should adjourn the meeting and inform the employee of you next actions and when and how you are going to give the employee the outcome of the hearing.

  1. Set realistic targets and objective criteria

It is vital that employees know what is expected of them in relation to both specific and general targets. So set realistic targets and help employees achieve them within a sensible time frame by providing appropriate training and other support.

Objective criteria such as sales targets will help you assess performance, however, beware of comparing individuals with each other. Comparisons with performance in previous years can also be risky as the business climate may have changed or other circumstances may have changed. Sometimes performance is hard to assess which is why it is essential that you use a proper, fair and consistent process.

You will need evidence that the employee is, in fact, incompetent and underperforming.

  1. Give warnings

 If, after investigating and receiving support, an employee is still not reaching expected standards, it may be necessary to resort to issuing warnings. This should begin with a warning indicating how they are failing to achieve and what is required of them. They should then be given time to improve. The length of this period will depend on such factors as the employee’s length of service and the extent to which they are underperforming. Instant dismissal for poor performance can be justified however only for something extreme.

Generally speaking there are three stages to capability or performance management. These are:

  1. Stage 1 – first written warning or improvement note;
  2. Stage 2 – final written warning;
  3. Stage 3 – dismissal or redeployment.

It is also important to note that at each of the above stages the employee will have the right to appeal the decision.

  1. Common mistakes when dealing with capability and performance management issues

Listed below are the common mistakes that employers make during the capability and performance management procedure.

  • Ignoring poor performance or capability issues. The longer you leave performance or capability issues the more difficult they are to manage. If you tackle them as soon as they occur, you are more likely to resolve them satisfactorily.
  • Not making employees aware of what is expected of them. If you don’t know what is expected of you in terms of performance, then you will never know if you are performing well or underachieving. Suddenly being told that you are not performing when you are not aware of expectations can be very demoralising.
  • Thinking that a yearly appraisal constitutes performance management. Yes, appraisals are part of the process but managing an employee’s performance means much more than just yearly appraisals, especially for employee’s who aren’t meeting expectations.
  • Being critical without being constructive. If you are constantly berating an employee without offering any ways in which they can improve can be very demoralising and could potentially lead to a claim being brought against your company.
  • Treating everyone the same. Whilst you do need to ensure that you are making objective decisions there are some instances in which you need to consider whether there are any extenuating circumstances which may be the root cause.

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