Dealing with poor performance: case study 1

Caroline Noblet of Squire Sanders Hammonds continues a series of articles on dealing with poor performance with a case study that looks at a situation in which a manager wants to dismiss an employee for her poor performance even though the employer has failed to address the poor performance to date. 

Carol is a claims administrator with Rest Assured plc, a life assurance company. In her mid 60s, she is one of the company's longest-serving employees and has an unblemished disciplinary record. Derek, the claims team manager, who joined the company recently, arranges a meeting with the HR manager, Elaine, to discuss a problem he is having with Carol. Some of Carol's colleagues have complained to him that she is not pulling her weight and is dealing with her claims allocation very slowly. They are having to cover for her to prevent a backlog of claims building up.

Derek explains to Elaine that he has been told that Carol's poor performance has been a problem for some time but the previous claims team manager did nothing about it. There is no documentation showing that the problem was being addressed. The previous manager allowed Carol to coast along, so much so that it appears to Derek that she has become somewhat "set in her ways". Because of the effect that Carol's underperformance is having on the rest of the team, Derek does not want to waste time waiting for her to improve. He wants to dismiss her.

What advice should Elaine give Derek?

Elaine needs to outline to Derek the steps that he should take to address Carol's underperformance. He should take action promptly before Carol's performance issues escalate further, and follow a performance management procedure. He must also take care to comply with the requirements of the Acas code of practice on disciplinary and grievance procedures (PDF format, 1.58MB) (on the Acas website), which covers poor performance (see Dealing with poor performance: checklist in this series for more details).

However, before he takes formal action against Carol, Derek must investigate whether or not she is underperforming and, if she is, why. He will need to meet Carol to discuss the possible cause of her below-standard job performance. He should make it clear to her that this meeting is investigatory and is not, at this stage, part of the formal disciplinary process.

Prior to the meeting, Derek should collect relevant and objective evidence, for example customer complaints and other evidence to demonstrate that Carol has not been dealing with claims in a timely manner. (If they had been available, he would also have needed to obtain copies of Carol's appraisals and details of discussions that her previous manager had with her concerning her performance.)

Assuming that the evidence indicates that Carol has been underperforming, based on the evidence that he collects and his subsequent meeting with Carol, Derek should try to establish whether Carol's underperformance is capability or conduct related, and whether or not there are mitigating reasons for it. Poor performance that is capability related may be attributable to inadequate or insufficient training, poor communication, the employee's lack of understanding of his or her goals and objectives, lack of feedback, poor quality supervision and/or support, excessive workloads, unrealistic targets and deadlines, poor working relationships and personal problems. Alternatively, poor performance may be the result of idleness or lack of commitment. If Carol's poor performance is conduct related, Rest Assured should follow its disciplinary procedure rather than a performance management process.

If Derek identifies that Carol's poor performance is capability related, he should agree specific action points and targets with her, together with a realistic timescale in which she should achieve them. He should also arrange training or other remedial steps if these are appropriate and schedule a follow-up meeting to review Carol's performance.

It is essential that Derek keep a record of the meeting (including the agreed targets for improvement) and of the arrangements for the follow-up meeting. He should continue to monitor Carol's ongoing performance by way of the appraisal process. If Carol's performance does not improve after Rest Assured has followed the performance management procedure, he may be left with no alternative but to dismiss her on capability grounds.

Elaine should also explain to Derek that, if he dismisses Carol without going though the performance management process, an employment tribunal is likely to find that Rest Assured unfairly dismissed her, if she brings a claim against it. There is also a risk that the tribunal will uplift by up to 25% any compensation that it awards against Rest Assured, if it unreasonably fails to follow the Acas code.

To avoid Carol being able successfully to claim unlawful discrimination against Rest Assured, for example because of her age, Derek should deal with her performance in the same way as he would for other employees in the team. This is particularly relevant following the abolition of the default retirement age (see the Retirement section of the XpertHR employment law manual for more details). Prior to this, subject to the (now repealed) statutory retirement procedure, employers could compulsorily retire employees when they reached retirement age. As a result, many employers overlooked performance issues in older members of staff who were approaching retirement age because they would be leaving anyway. Derek cannot use the fact that Carol may have attained what was previously the company's retirement age as a reason to end her employment. Nor can he assume that she will want to retire at this point. If he treats Carol less favourably than other employees because she is close to, or has reached, a particular age, this will amount to unlawful age discrimination. Conversely, if he treats her more leniently than other members of the team for the same reason, Rest Assured could be vulnerable to claims of age discrimination by them.

Derek gathers his evidence and meets with Carol to discuss his concerns. At first Carol is defensive and claims that her performance is no worse than that of the other members of the claims team. She does not believe that there have been customer complaints about her so she cannot see what the problem is. However, when Derek shows her evidence that her closure rate of claims files has consistently been the lowest in the team and that some customers have complained about the slow handling of their claims, she breaks down in tears and confesses to Derek that she has been struggling to cope with the volume of work since a new computer system for handing claims records was installed over a year ago. Although she received training when the new system was introduced, she is not as computer literate as some of the other members of the team and has struggled with it.

Having established that Carol's performance issue is capability and not conduct related and that her underperformance appears to be due to a training need, Derek decides to give Carol an informal warning. He tells her that she needs to improve her performance or she may be moved to the next stage of the performance management process, which could ultimately lead to formal warnings and her dismissal on capability grounds.

Derek arranges for Carol to receive one-to-one refresher training on the new claims records system. Once the training is complete, Derek agrees with Carol that, over a period of three months, she must ensure that her claim closure rates are at, or above, the claims team's average. He also agrees with her that he will sit down with her at the end of each month during this period to discuss how she is progressing towards meeting the target and any concerns that she may have.

At the end of the three-month period, Carol's performance shows a consistent improvement and the informal warning that Derek gave her expires. He continues to monitor her performance by way of regular meetings and Rest Assured's appraisal process.

Derek's experience with Carol demonstrates the benefits for employers of having robust and fully documented appraisal processes and of dealing with performance issues as and when they arise. Employers that have failed to address poor performance at the outset may have to tolerate a longer period for improvement than they otherwise would, because the employee will have become used to performing at the lower level. Further, an employer that takes formal action against an employee when there is no documented evidence of a performance issue risks liability for unfair dismissal, constructive dismissal and/or unlawful discrimination claims. By carrying out an investigation into the poor performance, the employer should be able to identify whether it is due to capability or conduct, and follow the correct procedure as a result.

Next week's topic of the week article will be a second case study on dealing with poor performance and will be published on 14 November.

Caroline Noblet (caroline.noblet@ssd.com) is a partner at Squire Sanders Hammonds.

Further information on Squire Sanders Hammonds can be accessed at www.ssd.com.