This is “Handling Performance”, section 10.1 from the book Beginning Management of Human Resources (v. 1.0).
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As you know from reading this book so far, the time and money investment in a new employee is overwhelming. The cost to select, hire, and train a new employee is staggering. But what if that new employee isn’t working out? This next section will provide some examples of performance issues and examples of processes to handle these types of employee problems.
One of the most difficult parts of managing others isn’t when they are doing a great job—it is when they aren’t doing a good job. In this section, we will address some examples of performance issues and how to handle them.
While certainly not exhaustive, this list provides some insight into the types of problems that may be experienced. As you can see, some of these problems are more serious than others. Some issues may only require a warning, while some may require immediate dismissal. As an HR professional, it is your job to develop policies and procedures for dealing with such problems. Let’s discuss these next.
To handle attendance problems at many organizations, a no-fault attendance plan is put into place. In this type of plan, employees are allowed a certain number of absences; when they exceed that number, a progressive discipline process begins and might result in dismissal of the employee. A no-fault attendance policy means there are no excused or unexcused absences, and all absences count against an employee. For example, a company might give one point for an absence that is called in the night before work, a half point for a tardy, and two points for a no-call and no-show absence. When an employee reaches a certain number determined by the company, he or she is disciplined. This type of policy is advantageous in industries in which unplanned absences have a direct effect on productivity, such as manufacturing and production. Another advantage is that managers do not need to make judgment calls on what is an excused versus an unexcused absence, and this can result in fairness to all employees.
One such company with a no-fault attendance policy is Verizon Communications. However, the Equal Employment Opportunity Commission (EEOC) investigated this policy and announced that Verizon will pay $20 million to resolve a disability discrimination lawsuit.Jim Evans, “EEOC Finds Fault with Company’s No Fault Attendance Plan,” Zanesville Times, July 17, 2011, accessed August 1, 2011, http://www.businessmanagementdaily.com/19860/eeoc-finds-fault-with-no-fault-attendance-policies. The lawsuit said that the company, through use of the no-fault attendance policy, denied reasonable accommodations required by the Americans with Disabilities Act (ADA). As a result, hundreds of Verizon employees were disciplined or fired. In this case, the EEOC cites paid or unpaid leave as one way for an employer to provide reasonable accommodations for an employee with a disability. The policy specified there would be no exceptions made to the no-fault attendance policy to accommodate employees with ADA disabilities. When discussing the case, the EEOC chair justified the agency’s position by saying, “Flexibility on leave can enable a worker with a disability to remain employed and productive, a win for the worker, employer, and the economy. By contrast, an inflexible leave policy may deny workers with disabilities a reasonable accommodation.”Jim Evans, “EEOC Finds Fault with Company’s No Fault Attendance Plan,” Zanesville Times, July 17, 2011, accessed August 1, 2011, http://www.businessmanagementdaily.com/19860/eeoc-finds-fault-with-no-fault-attendance-policies. Part of the settlement also involved additional training to Verizon employees on ADA and how to administer the attendance plan. This successful lawsuit shows that even the most seemingly clear performance expectations must be flexible to meet legal obligations.
What would you do if you saw a coworker taking a box of pens home from the office?
When an employee isn’t performing as expected, it can be very disapointing. When you consider the amount of time it takes to recruit, hire, and train someone, it can be disappointing to find that a person has performance issues. Sometimes performance issues can be related to something personal, such as drug or alchol abuse, but often it is a combination of factors. Some of these factors can be internal while others may be external. Internal factors may include the following:
Some of the external factors may include the following:
All the internal reasons speak to the importance once again of hiring the right person to begin with. The external reasons may be something that can be easily addressed and fixed. Whether the reason is internal or external, performance issues must be handled in a timely manner. This is addressed in Section 10.1.3 "Defining Discipline". We discuss performance issues in greater detail in Chapter 11 "Employee Assessment".
If an employee is not meeting the expectations, discipline might need to occur. DisciplineThe process that corrects undesirable behavior. is defined as the process that corrects undesirable behavior. The goal of a discipline process shouldn’t necessarily be to punish, but to help the employee meet performance expectations. Often supervisors choose not to apply discipline procedures because they have not documented past employee actions or did not want to take the time to handle the situation. When this occurs, the organization lacks consistency among managers, possibility resulting in motivational issues for other employees and loss of productivity.
To have an effective discipline process, rules and policies need to be in place and communicated so all employees know the expectations. Here are some guidelines on creation of rules and organizational policies:
Of course, there is a balance between too many “rules” and giving employees freedom to do their work. However, the point of written rules is to maintain consistency. Suppose, for example, you have a manager in operations and a manager in marketing. They both lead with a different style; the operations manager has a more rigid management style, while the marketing manager uses more of a laissez-faire approach. Suppose one employee in each of the areas is constantly late to work. The marketing manager may not do anything about it, while the operations manager may decide each tardy day merits a “write-up,” and after three write-ups, the employee is let go. See how lack of consistency might be a problem? If this employee is let go, he or she might be able to successfully file a lawsuit for wrongful termination, since another employee with the same performance issue was not let go. Wrongful terminationWhen an employer has fired or laid off an employee for illegal reasons, such as violation of antidiscrimination laws or violation of oral and/or written employee agreements. means an employer has fired or laid off an employee for illegal reasons, such as violation of antidiscrimination laws or violation of oral and/or written employee agreements. To avoid such situations, a consistent approach to managing employee performance is a crucial part of the human resources job.
Besides the written rules, each individual job analysis should have rules and policies that apply to that specific job. We discuss performance appraisal in further detail in Chapter 11 "Employee Assessment", but it is worth a mention here as well. The performance appraisal is a systematic process to evaluate employees on (at least) an annual basis. The organization’s performance appraisal and general rules and policies should be the tools that measure the employee’s overall performance. If an employee breaks the rules or does not meet expectations of the performance appraisal, the performance issue model, which we will discuss next, can be used to correct the behavior.
Because of the many varieties of performance issues, we will not discuss how to handle each type in detail here. Instead, we present a model that can be used to develop policies around performance, for fairness and consistency.
We can view performance issues in one of five areas. First, the mandated issue is serious and must be addressed immediately. Usually, the mandated issue is one that goes beyond the company and could be a law. Examples of mandated issues might include an employee sharing information that violates privacy laws, not following safety procedures, or engaging in sexual harassment. For example, let’s say a hospital employee posts something on his Facebook page that violates patient privacy. This would be considered a mandated issue (to not violate privacy laws) and could put the hospital in serious trouble. These types of issues need to be handled swiftly. A written policy detailing how this type of issue would be handled is crucial. In our example above, the policy may state that the employee is immediately fired for this type of violation. Or, it may mean this employee is required to go through privacy training again and is given a written warning. Whatever the result, developing a policy on how mandated issues will be handled is important for consistency.
The second performance issue can be called a single incident. Perhaps the employee misspeaks and insults some colleagues or perhaps he or she was over budget or late on a project. These types of incidents are usually best solved with a casual conversation to let the employee know what he or she did wasn’t appropriate. Consider this type of misstep a development opportunity for your employee. Coaching and working with the employee on this issue can be the best way to nip this problem before it gets worse.
Figure 10.1 The Process for Handling Performance Issues
Often when single incidents are not immediately corrected, they can evolve into a behavior pattern, which is our third type of performance issue. This can occur when the employee doesn’t think the incident is a big deal because he hasn’t been correct before or may not even realize his is doing something wrong. In this case, it’s important to talk with the employee and let him know what is expected.
If the employee has been corrected for a behavior pattern but continues to exhibit the same behavior, we call this a persistent pattern. Often you see employees correct the problem after an initial discussion but then fall back into old habits. If they do not self-correct, it could be they do not have the training or the skills to perform the job. In this phase of handling performance issues, it is important to let the employee know that the problem is serious and further action will be taken if it continues. If you believe the employee just doesn’t have the skills or knowledge to perform the job, asking him or her about this could be helpful to getting to the root of the problem as well. If the employee continues to be nonperforming, you may consider utilizing the progressive discipline process before initiating an employee separation. However, investigating the performance issue should occur before implementing any sort of discipline.
When an employee is having a performance issue, often it is our responsibility as HR professionals to investigate the situation. Training managers on how to document performance failings is the first step in this process. Proper documentation is necessary should the employee need to be terminated later for the performance issue. The documentation should include the following information:
With this proper documentation, the employee and the manager will clearly know the next steps that will be taken should the employee commit the infraction in the future. Once the issue has been documented, the manager and employee should meet about the infraction. This type of meeting is called an investigative interviewWhen a discipline procedure takes place, the interview with the employee is used to make sure the employee is fully aware of the discipline issue and allows the employee the opportunity to explain his or her side of the story. and is used to make sure the employee is fully aware of the discipline issue. This also allows the employee the opportunity to explain his or her side of the story. These types of meetings should always be conducted in private, never in the presence of other employees.
In unionized organizations, however, the employee is entitled to union representation at the investigative interview. This union representation is normally called interest based bargainingA type of bargaining, mutual interests are brought up and discussed, rather than each party coming to the table with a list of demands.National Labor Relations Board website, “Administrative Law Judge Orders San Juan Company to Respect Employee Weingarten Rights,” March 28, 2011, accessed August 17, 2011. referring to a National Labor Relations Board case that went to the United States Supreme Court in 1975. Recently, Weingarten rights continued to be protected when Alonso and Carus Ironworks was ordered to cease and desist from threatening union representatives who attempted to represent an employee during an investigative interview.National Labor Relations Board website, “Administrative Law Judge Orders San Juan Company to Respect Employee Weingarten Rights,” March 28, 2011, accessed August 17, 2011.
Our last phase of dealing with employee problems would be a disciplinary intervention. Often this is called the progressive discipline processRefers to a series of steps taking corrective action on nonperformance issues.. It refers to a series of steps taking corrective action on nonperformance issues. The progressive discipline process is useful if the offense is not serious and does not demand immediate dismissal, such as employee theft. The progressive discipline process should be documented and applied to all employees committing the same offenses. The steps in progressive discipline normally are the following:
The chart below shows the typical progressive discipline process at the University of Iowa:
The Seven Tests of Just Cause
The seven test[s] of just cause represent a practical and effective way to determine whether a proposed disciplinary action is firmly and fairly grounded. It is fair to assume that these tests will be applied by arbitrators in the event that disciplinary actions are challenged, and it is therefore good practice to apply them prospectively when considering the imposition of progressive discipline.
New employee orientation
Reasonable Rules and Orders
Must be timely:
Equal treatment must be balanced against just application:
Source: Reprinted from the University of Iowa’s Office of the Vice President for Research, http://research.uiowa.edu/pimgr/?get=discipline and http://research.uiowa.edu/pimgr/?get=7steps (accessed September 15, 2011).
Another option for handling continued infractions is to consider putting the employee on an improvement plan, which outlines the expectations and steps the employee should take to improve performance. We address this in greater detail in Chapter 11 "Employee Assessment". The plan is detailed and outlined and ensures both parties understand the specific expectations for improvement. If the improvement plan does not work, a progressive discipline process might be used.
Figure 10.2 Sample of a Performance Improvement Plan
Whichever direction is taken with disciplining of the employee, documentation is key throughout the process to avoid wrongful termination issues.
Another option in handling disputes, performance issues, and terminations is alternative dispute resolution (ADR)A third-party resolution method used in conflict with the goal to obtain a resolution that works for the two parties involved.. This method can be effective in getting two parties to come to a resolution. In ADR, an unbiased third party looks at the facts in the case and tries to help the parties come to an agreement. In mediationA type of ADR in which the third party facilitates the resolution process, but the results of the process are not binding for either party., the third party facilitates the resolution process, but the results of the process are not binding for either party. This is different from arbitrationA type of ADR in which a third party reviews the case and imposes a resolution., in which a person reviews the case and makes a resolution or a decision on the situation. The benefits of ADR are lower cost and flexibility, as opposed to taking the issue to court. We discuss these types of systems in greater detail in Chapter 12 "Working with Labor Unions".
Some organizations use a step-review systemA system in which a performance issue is reviewed by consecutively higher levels of management, should there be disagreement by the employee in a discipline procedure.. In this type of system, the performance issue is reviewed by consecutively higher levels of management, should there be disagreement by the employee in a discipline procedure. Some organizations also implement a peer resolution systemA system in which a committee of management and employees is formed to review employee complaints or discipline issues.. In this type of system, a committee of management and employees is formed to review employee complaints or discipline issues. In this situation, the peer review system normally involves the peer group reviewing the documentation and rendering a decision. Another type of ADR is called the ombudsman systemA system in which a person is selected (or elected) to be the designated individual for employees to go to should they have a complaint or an issue with a discipline procedure.. In this system, a person is selected (or elected) to be the designated individual for employees to go to should they have a complaint or an issue with a discipline procedure. In this situation, the ombudsman utilizes problem-solving approaches to resolve the issue. For example, at National Geographic Traveler Magazine an ombudsman handles employee complaints and issues and also customer complaints about travel companies.
This longer video shows an example of dispute mediation between two employees.
Employee separation can occur in any of these scenarios. First, the employee resigns and decides to leave the organization. Second, the employee is terminated for one or more of the performance issues listed previously. Lastly, abscondingWhen an employee decides to leave the organization without resigning and following the normal process. is when the employee decides to leave the organization without resigning and following the normal process. For example, if an employee simply stops showing up to work without notifying anyone of his or her departure, this would be considered absconding. Let’s discuss each of these in detail. Employee separation costs can be expensive, as we learned in Chapter 7 "Retention and Motivation". In the second quarter in 2011, for example, Halliburton reported $8 million in employee separation costs.Brad Lemaire, “Halliburton Posts 54% Q2 Growth,” Proactive Investors, July 18, 2011, accessed August 1, 2011, http://www.proactiveinvestors.com/companies/news/16404/halliburton-posts-54-q2-profit-growth-16404.html.
This video shows the progressive discipline process and the termination of an employee when he continually failed to meet expectations.
ResignationWhen an employee chooses to leave the organization. means the employee chooses to leave the organization. First, if an employee resigns, normally he or she will provide the manager with a formal resignation e-mail. Then the HR professional usually schedules an exit interview, which can consist of an informal confidential discussion as to why the employee is leaving the organization. If HR thinks the issue or reasons for leaving can be fixed, he or she may discuss with the manager if the resignation will be accepted. Assuming the resignation is accepted, the employee will work with the manager to determine a plan for his or her workload. Some managers may prefer the employee leave right away and will redistribute the workload. For some jobs, it may make sense for the employee to finish the current project and then depart. This will vary from job to job, but two weeks’ notice is normally the standard time for resignations.
If it is determined an employee should be terminated, different steps would be taken than in a resignation. First, documentation is necessary, which should have occurred in the progressive discipline process. Performance appraisals, performance improvement plans, and any other performance warnings the employee received should be readily available before meeting with the employee. It should be noted that the reliability and validity of performance appraisals should be checked before dismissing an employee based upon them. Questionable performance appraisals come from the real-world conditions common to rating situations, particularly because of limitations in the abilities of the raters.Jeff Weekley, Academy of Management Journal 32, no. 1 (1989): 213–22. Reliability and validity of performance appraisals are discussed in detail in Chapter 11 "Employee Assessment".
Remember that if the discipline process is followed as outlined prior, a termination for nonperformance should never be a surprise to an employee. Normally, the manager and HR manager would meet with the employee to deliver the news. It should be delivered with compassion but be direct and to the point. Depending on previous contracts, the employee may be entitled to a severance package. A severance packageIncludes pay, benefits, or other compensation to which employees are entitled upon leavingthe organization. can include pay, benefits, or other compensation for which an employee is entitled when they leave the organization. The purpose of a severance plan is to assist the employee while he or she seeks other employment. The HR professional normally develops this type of package in conjunction with the manager. Some considerations in developing a severance package (preferably before anyone is terminated) might include the following:
The last topic that we should discuss in this section is the case of an absconded employee. If an employee stops showing up to work, a good effort to contact this person should be the first priority. If after three days this person has not been reachable and has not contacted the company, it would be prudent to stop pay and seek legal help to recover any company items he or she has, such as laptops or parking passes.
Sometimes rather than dealing with individual performance issues and/or terminations, we find ourselves having to perform layoffs of several to hundreds of employees. Let’s address your role in this process next.
RightsizingRefers to the process of reducing the total size of employees, to ultimately save on costs. refers to the process of reducing the total size of employees, to ultimately save on costs. Downsizing ultimately means the same thing as rightsizing, but the usage of the word has changed in that rightsizing seems to define the organization’s goals better, which would be to reduce staff to save money, or rightsize. When a company decides to rightsize and, ultimately, engage in layoffs, some aspects should be considered.
First, is the downturn temporary? There is nothing worse than laying people off, only to find that as business increases, you need to hire again. Second, has the organization looked at other ways to cut expenses? Perhaps cutting expenses in other areas would be advisable before choosing to lay people off. Finally, consideration should be given to offering temporary sabbaticals, voluntary retirement, or changing from a full- to part-time position. Some employees may even be willing to take a temporary pay cut to reduce costs. Organizations find they can still keep good people by looking at some alternatives that may work for the employee and the organization, even on a temporary basis.
If the company has decided the only way to reduce costs is to cut full-time employees, this is often where HR should be directly involved to ensure legal and ethical guidelines are met. Articulating the reasons for layoffs and establishing a formalized approach to layoffs is the first consideration. Before it is decided who should get cut, criteria should be developed on how these decisions will be made. Similar to how selection criteria might be developed, the development of criteria that determines which jobs will be cut makes the process of cutting more fair, albeit still difficult. Establishing the criteria ahead of time can also help avoid managers’ trying to “save” certain people from their own departments. After development of criteria, the next phase would be to sit down with management and decide who does or doesn’t meet the criteria and who will be laid off. At this point, before the layoffs happen, it makes sense to discuss severance packages. Usually, when an employee signs for a severance package, the employee should also sign a form (the legal department can help with this) that releases the organization from all future claims made by the employee.
After criteria have been developed, people selected, and severance packages determined, it’s key to have a solid communication plan as to how the layoffs will be announced. Usually, this involve an initial e-mail to all employees, letting them know of impending layoffs. Speak with each employee separately, then announce which positions were eliminated. The important thing to remember during layoffs is keeping your employees’ dignity; they did not do anything wrong to lose their job—it was just a result of circumstances.
We know that communicating a layoff announcement is important. This video, starring Kermit the Frog, is a good example of how not to announce layoffs—even on Sesame Street.