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Today, the ideal job candidate is an innovative, forward-thinking worker who can do more in less time (and do it well). But, eventually, this kind of culture leads to serious productivity loss and burnout. To battle burnout and successfully lead teams, managers need to rethink their approach. First, they need to focus on reducing stress in the workplace by increasing psychological safety, setting boundaries around time outside of work, and looking into flexible work policies. Next, they need to build employee engagement by making sure people are in the right roles, giving their teams autonomy, and creating a culture of recognition.
We all know that excessive stress is a health hazard. What is less talked about are the effects of burnout on business performance. Stress makes people nearly three times as likely to leave their jobs, temporarily impairs strategic thinking, and dulls creative abilities. Burnout, then, is a threat to your bottom line, one that costs the U.S. more than $300 billion a year in absenteeism, turnover, diminished productivity, and medical, legal, and insurance costs.
This best practice guide is for employers and managers. It explains the advantages of taking a best practice approach to managing underperformance, and how to identify, address and minimise underperformance. It also has practical tips and case studies to help you move your business towards best practice. Download the best practice guide:
Working at best practiceBest practice employers have regular discussions with employees about performance. They set clear goals and provide feedback and support to help employees perform at their best. If underperformance occurs, they take steps to manage it appropriately, sensitively and promptly. Every workplace can enjoy the benefits of taking a best practice approach to managing underperformance. These may include:
Understanding underperformanceUnderperformance or poor performance can include:
Underperformance doesn’t just affect the output of an individual employee – it can also impact co-workers, customers and business productivity. There are many reasons why an employee might perform poorly. Some common reasons include:
Underperformance isn’t the same as serious misconduct Serious misconduct includes deliberately unprofessional, dangerous or unlawful behaviour, such as theft, fraud, sexual harassment or assault, which may warrant instant dismissal. Employers should seek specific legal advice when terminating employment because of serious misconduct. Using best practice to manage underperformanceBest practice doesn’t look the same for all employers. The way to achieve best practice will vary because of things like the number of employees, industry and the business environment. Below are suggestions and initiatives that can help you move your business towards best practice. Implement a performance systemA performance system provides employees and managers with a framework for goal setting, constructive feedback, continuous skill development and regular discussions about performance. This helps reduce the chance of underperformance occurring. A performance system doesn’t have to be complicated or time-consuming. To implement best practice in your workplace you could consider:
Find out more about implementing performance systems in your workplace with our free Managing performance online course available at www.fairwork.gov.au/learning
Use everyday language to avoid alienating both managers and employees. For example, if terms such as ‘KPIs’ (Key Performance Indicators) aren’t part of everyday language in your workplace, don’t use them in performance agreements or discussions. Address underperformanceAddressing underperformance can be challenging for both managers and employees. Failure to address underperformance appropriately, sensitively and promptly, can have a significant impact on your workplace culture and productivity. The issue is unlikely to go away on its own, and other employees may lose motivation if they have to carry the burden of poor performing colleagues. Address underperformance issues straight away. It will make it easier to resolve issues and avoid more serious problems. It will also assist if you decide later to dismiss an employee for underperformance. Here’s a 5-step best practice approach: Step 1 — Identify the problem Write down:
Get any documents that demonstrate the problem, such as business statistics, examples of the employee’s work or customer feedback. Make copies to give to the employee. Step 2 — Assess and analyse If you identify a problem, consider:
Once you have assessed the problem, organise a meeting with your employee to discuss it. Let the employee know the reason for the meeting in advance so they can adequately prepare. If you will be going through specific documents, provide copies to the employee before the meeting. Explain to the employee they can bring a support person of their choice to this meeting. A support person may be a co-worker, family member, friend, or union representative. Their role is to support the employee during the meeting - not to speak or advocate for them.
Joelle is a new car salesperson. She has been very successful over the years, but recently her performance has declined. Joelle’s manager, Mark, finds several mistakes in paperwork Joelle prepared. Mark speaks to Joelle informally about the issue. He checks her paperwork again the following month but finds things have not improved. Mark decides to meet with Joelle about her performance. To prepare for the meeting Mark checks her sales results and finds they have fallen. He also reviews customer surveys and notes several negative comments about Joelle’s attitude and enthusiasm in the last 3 months. Mark organises the meeting and tells Joelle what the meeting is about. He gives her copies of her sales results and other documents they will be discussing. He invites her to bring a support person if she wants to. Step 3 — Meet with the employee It’s important the meeting takes place in a private, comfortable, non- threatening environment, away from distractions and interruptions. The meeting should not be overheard by others. During the meeting you should:
Take notes during any discussions about performance and follow up the discussion with an email or letter confirming what was said and agreed. Give employees a chance to suggest any changes. Keep these notes, emails and any other documents relating to underperformance on the employee’s employment file. These may be helpful if the problem re-occurs, if there is a disagreement about what was discussed, or if the employee later makes a legal claim (for example, unfair dismissal). Step 4 — Agree on a solution After discussing the problem, you and your employee should work together to find a solution. Employees are more likely to improve their performance if they feel they have contributed to this process. When developing a solution, you should:
Consider recording the agreed actions in a performance improvement plan. This is a document that sets out what the employee needs to do to improve their performance. It should:
Both you and the employee should keep a copy of any performance improvement plan.
A technology business has a policy that sets out a process for dealing with underperformance. The policy requires that the first conversation about a performance issue must focus on finding out why there has been a decline in performance. At the end of the discussion, the manager and employee need to agree on action points. At least 1 action point must be something the manager will do to support the employee. For example, the manager could arrange for the employee to work with a more senior colleague for 3 shifts. Under the policy the manager can’t take any further steps (such as a performance improvement plan or giving a written warning) until the agreed actions have been completed. This approach allows performance issues to be addressed quickly and simply, and helps build trust with the employee. Step 5 — Monitor and review Once you have a solution in place, make sure you:
It often takes more than one conversation to resolve an issue. A follow up meeting is a good chance to acknowledge the employee’s progress and focus on the improvements that are still required. Remember, give the employee a reasonable period to improve. What is reasonable will depend on the employee’s role and the duties they perform. If you have a performance improvement plan in place, update the plan at the follow-up meeting to specify:
Both you and the employee should keep a copy of any updated performance improvement plan. Once the performance has improved to a satisfactory level, acknowledge that the issue has been resolved and discuss how the improvements will be maintained. If an employee’s performance doesn’t improve after a reasonable period, you need to consider your options. In some cases, it may be appropriate to continue performance management or issue a formal written warning. If the employee is still underperforming after a reasonable period, it may be appropriate to dismiss them.
Remember, it’s likely to be more cost effective and efficient to work on improving an employee’s performance than it is to replace them.
Dismissing an employee for underperformance Ending an employee’s employment is a serious step. You must have a valid reason for the dismissal relating to the employee’s capacity or conduct, and follow a fair performance management and dismissal process. Employers cannot dismiss their employees in circumstances that are “harsh, unjust or unreasonable”. What is harsh, unjust or unreasonable will depend on the circumstances of each case. However, it is important to be fair to employees particularly when it comes to termination of employment. They should be given reasons for dismissal and an opportunity to respond to those reasons. It’s important that before dismissing an employee you can show you have:
Before dismissing an employee, provide the employee with written reasons why you are considering dismissal and give the employee a reasonable opportunity to respond to those reasons. You must take into consideration any response the employee provides before you make a decision about dismissing the employee. A failure to follow these steps before dismissing an employee may result in a successful unfair dismissal claim against you. Importantly, employers with fewer than 15 employees (based on a simple headcount) will be covered by special dismissal arrangements which are different to those that apply to larger businesses. Small business employees cannot make a claim for unfair dismissal in the first 12 months following their engagement. If an employee is dismissed after this period and the employer has followed the Code then the dismissal will be deemed to be fair. You can access the Small Business Fair Dismissal Code and checklist at www.fairwork.gov.au/ending-employment/unfair-dismissal It’s best practice to fill out the Small Business Fair Dismissal Code Checklist when any employee is dismissed. You should keep the checklist, along with the letter of termination, records of performance meetings, performance improvement plans and any written warnings with your employment records. These records can help you if an employee makes an unfair dismissal claim. You also need to give the employee written notice of termination and pay the employee any accrued or outstanding entitlements. For further information on ending employment visit www.fairwork.gov.au/ending-employment Train managers and employeesDealing with underperformance can be challenging for both employees and employers. Managers need clear procedures and organisational support. They also need the courage and willingness to manage the issue. Best practice employers give their managers and employees training and information about setting performance goals, giving feedback and managing underperformance. This helps managers to better identify and address issues of underperformance. Information and resources you could provide to help your managers include:
Use our free online courses. We have short courses on managing performance, managing employees and having difficult conversations in the workplace. These short courses contain interactive video activities about setting performance goals, giving feedback, reviewing performance, addressing underperformance and negative behaviours, dealing with attendance problems and employee mistakes. The courses are available at www.fairwork.gov.au/learning
Performance management and bullying Employers are entitled to expect high standards of performance from employees and can take reasonable management action to address underperformance. Employees sometimes perceive this as ‘bullying’. If you take reasonable actions in a reasonable manner this isn’t bullying. Taking a best practice approach to underperformance and dealing with problems appropriately, sensitively and promptly will help you minimise the risks of a bullying claim. Common performance issuesThe following provides a summary of common issues faced by employers and employees when managing performance and identifies key ways to improve performance management systems in the workplace.
Best practice checklistA best practice workplace involves more than just understanding and complying with the law. This checklist will help you work at best practice when managing and preventing underperformance within your business:
Links and resourcesResourcesLinksFair Work Commission |