Performance Management, Defined
Performance management is when an employer uses strategies to improve work performance, increase the quality of an employee’s work, or increase their output. It is a tool used to help employees work in alignment with the objectives of the employer and work more efficiently. In practical terms, when an employee is placed under performance management, there is already a previous history of poor performance or under performance by the employee.
There is poor performance when an employee does not produce the output expected from or agreed upon between them and the employer. Under performance can mean that the employee is not performing work that conforms to the standard of the employer. This can also include failure of the employee to follow workplace rules or procedures that affects the output of the employee. Performance management, thus, prevents further or continued under performance and poor performance by the employee.
What Employers Do When Employees Under Perform or Poorly Perform
Employers usually set quotas or key performance indicators and they use measurements and standards that assess and rate the performance of employees as well as their strengths and weaknesses. The employers usually have a period called a performance review where supervisors and managers meet to assess the performance of individual employees. Performance reviews are usually scheduled annually.
These performance ratings and reviews are helpful to the employer because employers gain insight into what further training employees need and what skills they need to gain. Employers usually meet with employees to inform them of the results of their performance review.
Once the performance review shows that the employee is under performing or poorly performing, the employer can call a meeting or give the employee a notice listing in detail the issues that point to under performance. There must be evidence to substantiate the poor performance rating.
At this meeting, the employee can and should bring a support person. They must be willing to discuss with the employer the issues and concerns raised about their performance. Concrete steps to increase performance must be suggested and agreed upon, and time should be given to the employee to improve. These details are usually contained in what is referred to as a Performance Improvement Plan (PIP) or Performance Management Plan (PMP). The plan does not have to be in any particular format but the employer must set clear expectations from the employee as to how the employee can improve.
Why Employers Should View Performance Management as Essential Feedback?
A poor performance rating does not always mean that the employee is not suitable for the job they were hired to do. Often, there are factors or circumstances in the work environment that contribute to the poor performance.
There may be issues of miscommunication, confusion as to policy or procedure, or differences in personality and management styles. In any case, the poor performance rating of any employee must be approached by the employer as vital feedback from employees on their job satisfaction, job competence, and the general working environment.
Employers in Australia can learn from their employees. If the poor performance is due to poor communication, there may be a need to improve the communication infrastructure. If the poor performance is due to confusion regarding policy or procedure, these may be reviewed or explained more fully to employees. Employees may be re-trained in various procedures to increase employees’ confidence in following policies or procedures. If there are problems arising from personality differences or management styles, then complaints of workplace bullying and harassment may be prevented if personality and management clashes can be threshed out.
Warnings When Employees Do Not Improve Despite a PIP
No employer can be forced to keep in its employ a person who does not do the work they were engaged to perform. However, the employer cannot immediately terminate the employment of the under performing employee.
The employer must give the employee a warning that they are in danger of losing their job because of their under performance or poor performance. In the case example discussed below, the Fair Work Commission even required that the under performing employee be given notice that the warnings will be issued in addition to the meetings with the managers.
The warning must be in writing; it must alert the employee to their poor performance and specifically enumerate the ways that the employee has under performed. The warning must include a statement that failure to improve their work performance will cause the employee to be disciplined and may be terminated. The warning may also state that if a similar under performance or poor performance by the employee occurs, the employee will be terminated from employment. Finally, the under performing employee must be given the opportunity to respond to the written warning given.
In the case where the employer decides, after due deliberation, to terminate the employee due to the employee’s failure to improve their performance despite warnings, the employer must give the employee the opportunity to explain why their employment should not be terminated.
Case Example
In the case of Andre McCormick v Colliers International (SA) Pty Ltd T/A Colliers International [2019] FWC 1517, a building manager was hired to manage buildings that were managed by a real property management company. After working for two years, no concerns about the building manager’s performance were raised. The building manager began having personality differences with his line manager and he made a complaint against the line manager for bullying. While the investigation of the allegations were under way, the building manager was given a different line manager to report to.
At the end of 2017, a tenant in one of the buildings managed by the building manager complained about the building manager. The building manager was given a first warning and was advised to improve his communication with tenants and supervisors. The building manager was placed on a performance management plan and given a month to improve his performance. A new performance review was scheduled. In the meantime, the employer concluded that the complaint made by the building manager for bullying was not substantiated.
The building manager passed the performance review and he was removed from performance management. However, right after this, there was an electrical shutdown that affected some properties managed by the employer. When the building manager received a call from one of the affected tenants, the building manager immediately sent an urgent request for an electrician. The building manager failed to send an email to his line supervisor informing them of the electrical shutdown. After the building manager requested for an urgent work order for an electrician, and during the time that the electrician was working, the building manager refused to answer any more calls from the tenants because he had no update for them about the issue.
The building manager was called to the second performance review and the issue of failing to communicate with his supervisor and with the tenants was again raised. At this point, the building manager was fearing for his job, however, he was not given any indication that he would be terminated. He was scheduled for a new performance appraisal meeting on 14 August.
And then, during the weekend that followed, there was a fire in a dumpster outside one of the buildings. The fire fighters were called to the scene and they attended to the matter. The fire services informed the building’s fire marshal but not the building manager. The fire marshal of the building informed the employer but did not inform the building manager.
It was on Monday, when the building manager was at the office that he found out about the fire. The second performance review which was previously scheduled for 14 August was advanced to 9 August. When he left the office that day, he overheard line managers talking and he heard words to the effect that the issue could not be put off anymore.
Stressed out that he had been kept outside the loop, and afraid that he was going to be terminated from employment, he asked that the meeting on 9 August be postponed to the previously scheduled meeting on 14 August. He informed his line manager and the HR that he was taking a stress leave and that he was going to see his doctor. He sent them medical certificates from his doctor. The employer refused to reschedule the performance appraisal meeting back to 14 August. The line manager and HR Manager decided that the meeting take place even in the absence of the building manager.
At that meeting on 9 August the building manager was terminated for failure of duty to inform the employer of the fire incident and for failing and refusing to attend the performance review meeting on 9 August.
The building manager lodged a complaint for unfair dismissal. The Fair Work Commission found that there was no evidence that the fire service or the fire marshal informed the building manager of the fire. Not having been informed, he could not have breached the duty to escalate the fire incident to his line supervisor.
The FWC concluded that the building manager was unfairly dismissed because there was no valid reason for his dismissal. The performance deficiencies warranted counselling and warning but it was not a valid reason to dismiss the building manager even when all the performance issues were treated together.
The FWC also found that an overly negative view of the building manager’s work performance was made in the same period that the building manager lodged a complaint for bullying against a former line manager. This coloured the assessments made by subsequent line managers.
The building manager could no longer be reinstated as the employment relationship had irretrievably broken down. More importantly, the building manager stated specifically that he lodged the complaint for unfair dismissal to redress the unfairness of his dismissal and not for any desire for financial gain. The building manager was awarded one month’s pay in lieu of notice and six-months’ compensation computed at $8,615.60.
