Problems in performance management

2 February 2023

Performance management can be challenging and time-consuming. The first step is to determine whether the problem is a capability issue that needs to be addressed under a performance management procedure or, alternatively, whether it is a conduct issue to be dealt with under the disciplinary process. As a rule of thumb, capability relates to the employee’s abilities and competence, whereas conduct involves carelessness or laziness.

It is important to get this first decision right in order to ensure you follow the right procedure and increase the chances of any dismissal being fair. In this article, we outline the performance management process, look at some common problems and highlight some alternative options.

Key steps

The purpose of a performance management policy and procedure is to give the employee the opportunity to improve within a given timeframe, with any suitable training and support. Different organisations specify different time periods for improvement and a different number of ‘chances’ under their policies, but the principle is usually the same.

Performance is assessed during the set time period, typically one or two months, and at the end of this period the manager meets with the employee to review their performance. If there has been sufficient improvement, the process is concluded. If not, a further time period is set with clear objectives, monitoring and support. Warnings can also be given for a longer duration of, say, 12 months. If the employee’s poor performance reoccurs in this time, the procedure can be started again, but the employee will have fewer chances to improve before being dismissed.

It is usually only after the employee has exhausted their chances, without sufficient improvement, that it will be fair to consider dismissal. The employee should be invited to a meeting to discuss this. As with most dismissals, employers should consider any alternatives to dismissal, consider the employee’s side of the story and offer the employee the right to appeal against the dismissal.

Employers should look out for any disability issues that may be relevant to the employee’s poor performance or the way the process is applied. At all stages of the process, the legal obligation to make reasonable adjustments may arise. We can advise you further on the employee’s individual circumstances.

Common problems which can occur along the way include:

• Employee takes sickness absence
  We see a lot of cases where an employee takes sickness absence because they struggle to cope with the scrutiny and pressure of performance management, particularly if the poor performance has gone unchallenged for a long time. If the employee is absent for a long period of time, the time periods for monitoring performance may need to be extended to take account of the time off. Again, be alert to any potential disabilities that may be relevant to the sickness absence.

• Employee raises a grievance
  Even when the process is handled as sensitively as possible, the employee may feel that their treatment is unfair and raise a grievance. Managers may regard this as a tactic to deflect or delay the performance management procedure or as demonstrating that the employee is unable to take responsibility for weaknesses in their performance. Despite these concerns, in many cases the grievance still needs to be addressed, particularly if the employee alleges that the manager is pursuing a personal agenda against them or that the process is discriminatory. This may mean delaying the procedure or, if possible, bringing in a different manager to carry out the performance monitoring.

• Employee improves, but not for long
  After the hard work of managing an employee’s performance, managers can be frustrated to find that, having done enough to get through the process, the employee swiftly slips back into old habits after monitoring officially stops. If the employee still has a live warning, as discussed above, the procedure can be restarted at a later stage, and it will be quicker to progress to dismissal. Otherwise, a lot of managerial time can be consumed in keeping the employee on track, resulting in an expensive and frustrating performance management cycle. Under these circumstances, employers may consider whether, on balance, it makes sense to make an exit payment to the employee to end their employment under a settlement agreement.

Alternatives to performance management

Prevention is better than cure. Robust recruitment processes may help to ensure you have the right person for the job; nevertheless, some employees give a great interview only to fail to deliver. Make sure your contracts include a probationary period and that you use this period to properly scrutinise each employee’s performance.

If concerns arise about an individual’s performance and you think the situation is not rectifiable, remember that the employee cannot bring a claim for unfair dismissal unless you have employed them for at least two years. Until then, you can dismiss without the risk of an ‘ordinary’ unfair dismissal claim. However, employees can still bring an unfair dismissal claim if they can show that they were sacked for a prohibited reason, for example, whistleblowing or raising concerns about health and safety. Employees also do not need two years’ service to bring a discrimination claim, which could arise, for example, if an employee with Asian heritage is dismissed and alleges that their white peer was kept on while performing at a similar level.

You could consider an alternative role for the employee that might suit them better. Any move would need to be agreed with the employee. We can advise you on how to handle this scenario, since it could risk triggering a resignation and a claim for constructive unfair dismissal, particularly if the new role is perceived to be of lower status.

Finally, if you wish to avoid the challenges of performance management, you could agree an exit package with the employee, who signs up to a settlement agreement. 

How we can help

Managers can be wary of pursuing performance management, but with our support, you can follow a tight process that leads to a fair dismissal. We can also help you with the specific challenges each case brings. For further information, please contact the team at Synchrony Law.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.