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Performance management for your employees

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How to handle and document the process properly

As a business owner or manager, creating and maintaining strong working relationships with your employees will no doubt be one of your key tasks.

Performance reviews can be a great two-way means of communication between management and employees, to make sure everyone’s on the same page and working effectively together towards your business’s goals. 

But what happens when everything isn’t sailing quite so smoothly?

Whether it’s because of customer complaints, complaints from their fellow members of staff, or general poor productivity or performance, there may be times when you decide to put in place a formal performance management process for an employee. 

In this news post, MDL’s Employment Law team take you through the steps needed for an effective performance management process.

Step 1) Information gathering

The first steps of performance management should be to gather as much detail as possible about the issue.   

As much as you can, take the emotion out of the process and try to critically analyse the situation.

If the complaint has come from another party, such as a customer or staff member, get in touch with that person and obtain a detailed statement from them.

If on the other hand you’ve noticed the problem yourself in your capacity as manager or business owner, make sure you clearly document the issue yourself.

As far as possible, take the time to ensure you have a complete and accurate picture of the situation before moving on to step two.

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Step 2) Talk to the employee

Now that you’ve gathered the relevant information, it’s time to speak to the employee in question about the issue.

The format of this meeting will depend on the seriousness of the issue. If it’s a less serious issue that you feel can be addressed with a simple conversation, then an informal face-to-face meeting could be the way to go.

If the issue is more serious, it will call for a more serious response. You should send a meeting notification in writing to the employee, and give them an opportunity to consider and respond before the meeting.  

Think about whether you need a witness to the performance management meeting. Again, you can be guided by the seriousness of the situation. If you suspect or know that termination will be the outcome, then a witness will definitely be required. If you are going to give the employee a formal written warning, having a witness is recommended.

Consider allowing the employee to invite along a support person to the meeting. While this isn’t mandatory, it can be a good idea, especially if you bring along a witness yourself.

This support person can be anyone that the employee is comfortable with, whether a friend or family member, or another employee from your business. Ensure that you impress upon the support person the need for the discussion to be confidential.

Step 3) Next steps

Once you’ve given the employee their chance to respond, it’s time to make a decision on what action to take, based on all of the information you now have at your disposal. 

Or, if you feel you still need more details, you may need to talk to more witnesses such as other members of staff, or clients. 

In terms of your decision, you’ll have to choose to either:

  • Drop the matter
  • Give the employee a formal warning, or
  • Terminate their employment.

In spite of what you may have heard or been told, there is no “three strikes” rule around performance management and terminations. If an employee is found to have been responsible for a very serious breach of conduct, termination may be the commensurate response immediately.

Step 4) Following up

If you’ve given the employee a formal warning as the outcome of the performance management process, it’s important not to leave the matter there 

Remember that a warning doesn’t always have to be the ‘beginning of the end’. You and your employee can still build a productive working relationship if you treat the warning as an opportunity to grow and improve.

For example, instead of giving a warning that will sit on their employee file permanently, you could instead say that, if the employee hits their KPIs for the next 6 months, the warning will be removed from their record. 

Need advice on managing performance at your business?

If you’d like more advice on the performance management process, including but not limited to the potential termination of employees, MDL’s Employment Law team can help.

To discuss your situation, contact McCarthy Durie Lawyers on 07 3370 5100 or fill out the contact form here.

We have assembled a highly experienced, capable team of legal practitioners, committed to delivering you expertise across all legal services. Find your local office: