Phew – annual Performance Reviews done! This is an often heard at this time of year. Unfortunately, performance management and annual or bi-annual reviews instill dread in both the employee and managers tasked with conducting performance reviews. However, despite the angst and stress that accompanies performance reviews, not much else is achieved as a result of the review, other than to tick the relevant box stating they have been done. This surely cannot be the purpose of performance reviews. It certainly does not constitute appropriate performance management.
So then what is performance management and how should it be done? Firstly, let me say that performance management, if done properly and appropriately can be a very powerful tool to ensure sustained growth, profitability and a stable and happy workforce. The positive results from proper performance management are numerous and far reaching, so why then do so few organisations get it right, and far too often get it horribly wrong?
The simple answer to this issue, is that just like anything done well, it needs a modicum of time and effort, two commodities that when it comes to soft skills and expertise, are all too frequently overlooked. It is also assumed by most organisations and certainly small to medium sized businesses, that just because an employee has a title of “Manager”, they actually know how to “manage” other staff. This is often the not the case. In this article, we set out what we consider the essence of proper performance management and what should be done by all organisations that wish to get the best out of their employees, as well as explain what should not be done, but all too often is what passes for “performance management”.
What is performance management?
Proper performance management is the appropriate and constructive provision of feedback and guidance to employees for the purpose of ensuring employees are meeting the expected requirements of the role for which they were employed. Implicit in this statement is the very need to ensure that the following criteria are met prior to the employment of the relevant employee:
• The manager actually knows what the position requirements are and the necessary skills and competencies essential for the proper performance of the role; and
• The manager hires a candidate that has the relevant skills and competencies to suit the position.
It is almost impossible to ensure an employee will be successful in a role if they are not the appropriate person for the role because they lack the essential skills needed to be successful in the position. Such competencies should include soft skills such as interpersonal skills, confidence, presentation skills, cultural fit and the like.
Unfortunately, all too often the actual requirements of the position are not clearly defined or understood and it is inevitable that there will be a level of frustration when the employee then does not meet the managers internal expectations. Therein lies the key to appropriate performance management – ensuring both employee and manager are aligned as to the requirements of the role, the performance expectations and the deliverables. How best then to make this happen?
Appropriate Performance Management Steps
1. Know what the duties, skills and expectations, the position requires;
2. Ensure the employee hired is the right person to fulfil the requirements for the role;
3. On commencement of employment, ensure that the employee is made aware of the expectations, requirements and duties he or she is expected to fulfil. This means that the employee and manager should formally meet in the first days of employment to discuss this and set the ground rules, targets and expectations of the position and the manager.
4. To ensure that the employee remains on task, the manager and employee should meet on a regular basis and at least fortnightly to discuss how the employee is travelling, to discuss any issues and to ensure that both employee and employer remain on the “same page”. These regular meetings should be conducted in a collegiate and non-threatening manner with the express purpose of providing the employee guidance and an opportunity to raise matters of concern. Likewise, it should be an opportunity for the manager to raise issues early so they can be addressed with a minimum of fuss or anxiety.
5. If the manager notices a recurring issue, it is appropriate for this to be addressed in these regular meetings. In this way, it is likely the employee will either address the issue or explain why he or she is having difficulty with meeting the requirement, and this can then be addressed.
6. If it becomes apparent that despite these regular meetings, the employee is not performing, or there is an ongoing conduct issue, then it is appropriate to move into a more formal warning procedure, during which the employee is informed that their performance or conduct is unsatisfactory and despite the numerous attempts to address it informally, this has not occurred. The employee should be provided a written warning as a result of this meeting.
7. Depending on the company’s performance management procedures, if there is still no improvement in the performance or conduct of the employee despite the formal warning, then a further formal meeting should be held with the employee to provide the employee with a further warning and depending on the circumstances a final warning.
8. These formal meetings should not replace the regular fortnightly meetings. However, the regular meetings should re-enforce the formal warning and be an opportunity for the manage and employee to discuss how to assist the employee to meet the relevant performance requirements.
9. If the employee continues to fail to perform, it is at this point that the company may move to termination.
10. Half yearly and annual performance reviews should be used to reset the benchmark for the coming year. It is an opportunity to assess whether the employee has met the targets and goals set in the previous performance review. It also should be the opportunity for the manager to set the expectations, targets and goals required of the employee as well as form the basis for the regular fortnightly meetings, such that the both manager and employee are aligned as to what is required to achieve the goals set in the review. It should not be the occasion during which issues with the employee’s performance or conduct are raised for the first time.
However, if an organisation adopts the approach set out above it is extremely unlikely that they will need to exit an employee for poor performance. It is far more likely that the employee will rectify any deficiencies if given the appropriate support and guidance. If it is apparent however that the employee lacks the necessary skills and competencies, they will usually make the decision to leave long before the need for formal warnings. In any event, if the Company does need to move to termination, if the manager has adopted this approach (and kept a file note of any issues they have raised during the informal meetings) the company will be able to defend any potential proceedings brought by the employee after termination.
What proper performance management is not
Appropriate and constructive performance management does not include:
• Withdrawing opportunities from an employee;
• Restricting what tasks are given to an employee for fear they may not perform them adequately;
• Belittling employees in front of others, or berating them for failing to perform;
• Providing subtle references to concerns regarding performance;
• Giving feedback over a coffee in circumstances where the employee is not aware that the discussions are meant to constitute a warning;
• Placing additional pressure on an employee to perform without a clear understanding of the barriers (if any) to performance;
• Requiring an employee to meet unexplained or inappropriate expectations without support or appropriate guidance;
• Informing an employee that they are not performing but without providing specific examples or constructive assistance as to the manner in which the employee can improve.
The benefits of proper performance management
It stands to reason that if an employee knows what is expected of them, is capable of achieving those expectations and receives the support and guidance of their manager, they are far more likely to be engaged and actually achieve the goals and requirements of their role. In turn, it is self-evident that this will result in a high performance culture which will drive profitability. The corollary of course is that an environment of high levels of stress, a passive aggressive management style and no clear direction will result in high levels of turnover, low engagement and significant wasted management time. It is also in these environments that bullying claims and stress related personal leave are the norm.
If managers spend a small amount of regular time meeting and talking with their subordinates in a constructive and collegiate environment, they will by default be performing appropriate performance management. The real benefit however, is that they will not even realise that this is what is occurring and in the process, they may in fact become your organisation’s most valuable asset.
A recent decision of Robert Etienne v FMG Personnel Services Pty Ltd [2017] FWC 1637 has recognized that regular informal discussions regarding performance will suffice in meeting the procedural requirements to defend an unfair dismissal claim.
For your organisation’s bottom line, proper performance management makes good business sense.
If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to your employment relations framework, please do not hesitate to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.