Performance Management: Getting the Basics Right

OWEN WEBB - AHA|SA WORKPLACE RELATIONS MANAGER

The AHA|SA Workplace Relations team provide a significant amount of advice in the area of performance management and disciplinary processes.

In this article we look at some of the most important areas that employers need to cover when undertaking the performance management and disciplinary process with employees.

MINIMUM EMPLOYMENT PERIOD / PROBATIONARY PERIOD

Prior to onboarding an employee it’s important that employers understand the significance of the Minimum Employment Period under the Fair Work Act 2009 (Cth) (Fair Work Act). Under s.383 of the Fair Work Act an employee may make an application for unfair dismissal remedy if they have been employed for a period of 6 months (for nonsmall businesses) or 12 months in the case of a small business. A small business under the Fair Work Act is one which employs fewer than 15 employees. For the purposes of calculating the number of employees employed by the employer at a particular time a casual employee is not to be counted unless they are a regular casual employee of the employer, and any associated entities of the employer are to be taken as one entity.

It is therefore very important that employers closely monitor the overall performance and conduct of an employee within their initial period of employment, as an employee that has been employed beyond the minimum employment period will potentially be able to make a claim for unfair dismissal.

WHAT ARE WE MEASURING PERFORMANCE AGAINST?

It’s important that when an employer is measuring an employee’s performance, both the employee and employer understand what criteria an employee is being measured against.

The best place to start is for the employee to have a clear and transparent position description that has been signed by both parties. Not only does the position description outline the key requirements and responsibilities of the role, but it also helps to clarify what the employee’s performance is going to be measured against.

Aligned to the position description, the employer may also want to establish some key performance indicators (KPI’s) to help determine what the expectations are for the employee and employer. KPI’s could be in areas such as revenue and gross profit margins, labour cost percentages, and customer service standards.

With respect to employee’s conduct and behaviour, formalised policies and procedures are also critical to ensure that there are clear guidelines around what the employer’s expectations are of employees.

HOW DO WE MONITOR PERFORMANCE?

Employers informally measure individual employees’ performance on a day-to-day basis by providing ongoing guidance and feedback which assists the individual to try and perform at their optimum level.

However, there are some more formalised processes that employers can go through to monitor and document performance. For example, many employers will undertake a performance appraisal/ review process.

When undertaking a formal performance review process there are a few key elements that employers need to undertake to ensure that the process is working effectively, such as:

• Ensuring that both management and employees are on board with the process and it doesn’t just become an administrative ‘tick and flick’ process.

• Aligning the performance review to employee’s key duties and responsibilities and any KPI’s that have been set for the individual.

• Ensuring that any managers that are going to be conducting performance reviews of their team are made accountable and trained in how the process is going to work.

• Ensuring that both the employer and the employee see some sort of benefit out of the process by following through on any promises or commitments made in the performance review.

• Ensuring that there are regular reviews of the employer’s overall performance review process.

COUNSELLING

So, what does an employer do when an employee is performing poorly and how do they ensure that the employee is afforded procedural fairness?

Rather than jumping straight into a disciplinary meeting, its often more appropriate to undertake a counselling meeting with the employee, particularly where it relates to initial performance issues that have not been previously addressed with the employee. It may also be necessary to counsel the employee if their behaviour or conduct is not appropriate but not to a level that would warrant the issuing of a formal written warning.

The counselling process involves the employer documenting a process (improvement plan) with the employee which outlines the following:

• Identification of the specific areas of performance and or conduct concern

• Outlining what is expected of the employee in relation to their performance and or conduct

• Dissecting those factors that may be affecting poor performance/conduct

• Outlining how the employee can improve their performance/ conduct

• Establishing a review period

By undertaking such a process, the employee becomes aware that there is an issue and at the same time is provided with an opportunity to try and fix the issues before a formal disciplinary process is engaged. A written record of any informal process used should be kept on the employee’s personnel file.

DISCIPLINARY MEETINGS

It may unfortunately be necessary to undertake a formal disciplinary meeting where an employer has exhausted the counselling process or where an employee has potentially seriously breached a policy or procedure of the employer. Where it is likely that an employee could be issued with a written warning or potential termination of employment it is very important that the employer follows an appropriate course of action which involves following the principles of procedural fairness.

When managing the disciplinary meeting process, the following basic steps are recommended:

1. Undertake a thorough preliminary investigation into the matter Employers prior to sitting down with the employee for the disciplinary meeting need to ensure that they have undertaken sufficient preparation for the meeting. Preparation can involve ascertaining detailed examples of performance concerns, reviewing position descriptions & KPI’s, reviewing policies/ procedures, reviewing CCTV and any necessary transactional records, and other necessary information relevant to the matter.

2. Notify the employee of the meeting and details of the allegations/concerns Prior to undertaking the disciplinary meeting, the employee needs to be notified in writing of what the allegations/concerns are. The employee should be given at least 24 hours’ notice of the meeting and the opportunity to have a support person or representative of their choosing present.

3. The employee needs to be provided with an opportunity to respond to the allegation(s) At the formal meeting the employee should be advised of the precise nature of the issue(s), including the gap between the actual behaviour/ performance and the required behaviour/performance. Prior to the employer making any decision as to the outcome from the meeting, the employer needs to ensure that the employee is given every opportunity to respond to the allegations/issues.

4. The employer needs to consider the employees response(s) The employer will need to consider the employee’s response(s) to the issues/ allegations raised. This may require the employer to take further time beyond the first meeting to consider the employee’s responses. It may also require the employer to undertake further investigations such as obtaining further statements from other employees.

5. Advise the employee of the outcome based on employee’s responses and available evidence Having considered the employee’s responses and the available evidence, the employer needs to notify the employee verbally of the outcome. The outcome will vary dependent upon a range of factors such as seriousness of the issues, available evidence and previous employment history and any prior warnings. The employee should be provided with confirmation of this outcome in writing post the meeting.

DISCIPLINARY ACTION - FACTORS TO CONSIDER

The employer needs to consider a range of different factors before ultimately determining what disciplinary action (if any) is required.

Factors to consider when determining appropriate action include:

Length of Service – For example an employee who has been employed with the employer for 10 years with an unblemished record would need to have that length of service taken into consideration.

Employment History – If an employee has an unblemished work history, that will impact upon the type of warning an employer may give or whether an employer terminates or not

Prior warnings – When it comes to areas such as performance prior warnings are going to become important when assessing potential disciplinary action

Seriousness of incident or performance issue – The level of seriousness of the incident is going to be very important to the level of disciplinary action taken. An incident such as theft is going to warrant immediate termination as opposed to ongoing performance issues.

Available evidence – To take disciplinary action it is very important that the employer has evidence to back up their claims.

The venue’s disciplinary policy – It is important that a venue’s disciplinary policy is followed if there is one in place.

Treating all employees equally - Ensuring that others in the same circumstances are treated the same.

Any mitigating circumstances - For example was the employee not shown something or didn’t understand a particular policy.

WHAT ACTION COULD BE TAKEN?

There are a range of actions that an employer could take following a disciplinary meeting dependent upon the circumstances of the matter. Such actions can include:

• No further action

• The employee being placed on a performance improvement plan

• The employee being issued a written warning and depending on the nature of the issues the employee also being placed on a performance improvement plan

• Termination of employment Other actions that the employer could choose to take as a result of the disciplinary action could include providing the employee with further training and reiterating any relevant policies and or procedures.

Where the employer has made a decision to terminate the employee’s employment, it is a requirement under s.117 of the Fair Work Act that all full-time and part-time employees are provided with a notification in writing of the termination of their employment.

The AHA|SA also recommends that casual employees who are terminated are provided with a letter of termination.

WHY IS IMPORTANT TO GET IT RIGHT?

Getting the basics of the performance management process right is important for so many reasons, but in particular:

• It ensures that the employer mitigates their risks associated with any claim that an employee could take due to disciplinary action including a potential workers compensation claim, unfair dismissal claim, general protections action or a bullying and or harassment claim.

• It ensures that employees are clear on what the expectations of the employer are and have a clear understanding of what their role and responsibilities are and how their performance will be measured.

Members with any queries regarding the performance management and disciplinary process should contact the Workplace Relations Team at the AHA|SA.