7 tips for managing performance and terminations

Pointers for more productive employees and better business

As a business owner or manager, you’ll no doubt aim to be amongst the best in your industry and stay one step ahead of the competition. That means it’s vital that both employees and managers are performing at their best.

While high performance can mean different things for different businesses, some common goals are increased productivity, an engaged and committed workforce, and the ability to retain and motivate your high performing employees. 

On the flipside, clearly poor performing employees can have a negative effect on your business. Unhappy customers or clients, high employee turnover, and an unmotivated, underperforming team are just some of the issues that you may face.

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That’s why as a business owner, unfortunately there will be times when you need to manage the performance of employees – or sometimes, even terminate their employment altogether.

We asked the MDL Employment Law team to share some of their top tips for ensuring that the performance management and termination process is as smooth as possible.

1) Set clear expectations for your employees from the outset

In the afterglow of successfully attracting a new employee, it can be easy to forget to clearly document what the employment expectations are.

While such omissions may be understandable, they can create difficulties with performance management in the future, if it means you can’t clearly define why or where underperformance has occurred.

That’s why you shouldn’t engage an employee without some form of written employment contract and formal induction program. Make sure you appropriately detail key performance criteria, so both you and your employee know what constitutes acceptable workplace performance.

2) Develop and document a clear performance management policy and process

Take the time to prepare a clear performance management policy, that sets out the formal and informal steps of the process. Make sure you include the relevant steps for both possible circumstances, whether:

  • The employee complies with your requirements as an employer, justifying the end of the performance management process; and
  • The employee does not comply with your requirements as an employer. As a worst case scenario this may lead to termination of their employment.

Make sure you keep detailed records of any meetings and correspondence with your employee, both to ensure they receive procedural fairness and to reduce the risk of a claim by the employee, should they disagree with the outcome of the performance management process. 

3) Be fair in following the Performance Management Process

It’s important to keep in mind that performance management isn’t simply a process to be conducted only after you’ve already decided to terminate an employee. 

For this reason, try to pursue performance management at an early stage, before the relationship sours irreparably.

Approach the process with an open mind, with a view to identifying the issues of concern. Explore the causes of underperformance (and their potential solutions), establish an acceptable timeline and benchmarks for improvement, and try to re-establish a rapport with your employee.

4) Be formal in following the Performance Management Process

There’s no doubt performance management is a serious step in the employment relationship; one which should be conducted formally.

When notifying your employee of the meeting, ensure the communication:

  • Sets out the matters to be discussed (in a non-inflammatory way)
  • Invites the employ to attend with a support person (note that you should have a witness attend for yourself too)
  • Allows the employee sufficient time to arrange their attendance, and
  • Warns of the potential consequences of the meeting (such as an informal warning, a written warning, or termination).

5) Ensure you document and follow the agreed plan of action

If the performance management process results in an agreed way forward, with agreed benchmarks and a review period to assess improvement, make sure you document it.

If your employee’s performance doesn’t improve, you’ll have their failure to meet these new targets as a basis for further action. Clearly, taking action will be much easier if there is not a further dispute as to what was agreed.

Remember too that if you’ve agreed to take action, or review performance by a certain date, then it’s important that you meet this commitment. This is especially the case when your employee is expected to honour their side of the agreement.

6) Act promptly to deal with employee misconduct

Once you’ve identified negative behaviour or poor performance from an employee, it’s important to act quickly. It is extremely unlikely that the problem will simply “fix itself” – and in fact it’s likely to become worse – possibly even affecting other team members.

You might be perceived to be condoning misconduct, if you’re aware of poor performance or behaviour and don’t act quickly to deal with it. Move promptly, and deal with the situation in accordance with the nature and severity of the misconduct.

7) If termination is required, make sure everyone “gets a fair go”

Obviously, the “end of the line” for performance management, where the process hasn’t worked and an employee continues not to meet their benchmarks, is termination.

When terminating an employee, remember it’s all about the process. Take emotion out of the equation as much as possible, and make sure that every box has been ticked and procedural fairness has been provided.

Need advice on managing performance or terminating employees?

For guidance on all areas of personal law, get in touch with our experienced team. We have a number of employment lawyers who can advise you on a range of issues from franchising agreements to employee performance management and terminations. 

To discuss your business’s situation with our Employment Law team, contact McCarthy Durie Lawyers on 07 3370 5100 or fill out the contact form here.