Active Law on Performance Management at Work

3 March 2021


  • Performance management in the workplace is often dreaded by employees and employers alike. Michelle Cowan, Senior Associate, Active Law (ACS Queensland's Preferred Legal Partner) talks about when is it required, and the importance of doing it right.

The phrase ‘performance management sends shivers through most employees and employers alike but, that should not be the case. The better view of ‘performance management’ is that it is a continuing cycle of feedback and assessment to assist all employees to understand the strategic direction of the organisation; and a tool for managers to understand how effective their management is with regards to those strategic objectives.

Continuous improvement

The businesses that thrive are the ones that aim for continuous improvement. Particularly in the digital age, to not improve is to go backwards. If a business goes backwards, everyone in it loses. Strong performance relies on everyone in a team performing at their best, in line with the standards and strategies that their managers have clearly communicated and supported.

However, the success of the team relies heavily on the standards set by their leader. Steve Job’s quote sums it up perfectly: “Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.”

To inspire high standard performance requires managers to lead, coach and manage their team. This approach will also help an organisation to retain its valued employees and will likely build its reputation as an employer of choice. The commercial outcome is that a great team commonly equates to high quality work and great client outcomes.

Establishing the standards

Establishing the standards in an organisation is not a simple case of the CEO deciding the organisation will take a certain approach. How you deal with staff and contractors is heavily influenced by workplace laws, and it is essential that leaders and managers understand or get advice about how workplace relations laws affect the proposed decisions for their organisation. There are some very clear do’s and don’ts when you are developing business strategies and performance managing employees.

To ensure that your organisation’s approach to performance management is fair, reasonable, equitable and consistent with the law, it is important that you get professional advice to set up your employment framework. Advice and planning at the start will minimise the risk of costly outcomes later.

Having contracts, regular reviews, policies and procedures on key issues will help you to establish the ‘game plan’ for your organisation. Your employees will know when they are diverging from the path you have set and will understand what they must do to return to that path. These documents are essential tools in helping to manage the performance of your team. They will also provide good evidence of the organisation’s approach if you are faced with employment claims later. If you can show that staff were regularly trained in policies and the policy standards were consistently applied, your organisation will be in a better position to successfully defend an employment claim.

Managing the anomalies

If you think an employee is underperforming, it is recommended that you meet privately to discuss the situation. There may be underlying issues that are affecting their work or, they may not clearly understand what you are looking for from them. Often, this initial discussion will help them to understand what is required and you to gain some insight into your employee, improving the working relationship for the future.

You have made a substantial investment bringing the employee into the work group and it warrants some perseverance to properly assess if they will give you the return you are looking for.

If you have met previously with an employee but their performance has not improved, you may need to meet with them formally. In this situation, it is a good idea for you to tell your employee what the meeting is about and ask them if they would like to bring a support person along. In this meeting:

  • you must be clear about what the issues or concerns are;
  • listen to the employee’s responses to understand their position;
  • make sure you both have discussed and agreed on a solution together, including clear and reasonable steps for improvement;
  • document the meeting and outcomes; and
  • schedule a time (or times) to follow up on their progress.

Underperformance, or poor performance, is when an employee is not doing their job properly, or their behaviour at work is unacceptable. It includes:

  • not carrying out their work to the required standard;
  • not doing their job at all;
  • not following workplace policies, rules or procedures;
  • unacceptable behaviour at work, e.g., telling inappropriate jokes; or
  • disruptive or negative behaviour at work, e.g., constantly speaking negatively about the company.

There is a difference between underperformance and serious misconduct. Serious misconduct is when an employee causes serious and imminent risk to the health and safety of another person or to the reputation or profits of their employer's business; or deliberately behaves in a way that is inconsistent with continuing their employment. Examples of serious misconduct include:

  • theft;
  • fraud;
  • assault;
  • being drunk at work; or
  • refusing to carry out reasonable work duties.

Serious misconduct is behaviour that is so serious that it cannot be tolerated and will give grounds to immediate dismissal. The law is quite clear on this area and not what many people expect, so it is recommended that you seek legal advice before dismissing someone for serious misconduct.

Harsh, unjust or unreasonable

Ultimately, if an employee cannot or will not improve their performance or conduct, you may need to bring the employment relationship to an end. The law around this issue is clear, and there are recommended processes set out about how a dismissal should occur, including the performance discussions mentioned above.

If an employee files a claim for unfair dismissal, the Fair Work Commission will look to whether the dismissal was harsh, unjust or unreasonable. How they determine that is a review of the processes you put in place during the employee’s engagement to assist them to understand what you needed them to do and how they must behave at work.

That framework will come from a strategic performance plan

Having the foundations right and applying the standards in a fair, reasonable and lawful way, will assist you to manage a claim. Additionally, those standards will help your organisation to maintain standards, recognise good employees and demonstrate that you are a fair and reasonable employer. Performance management is the ounce of prevention that can alleviate you having to find a cure to a range of workplace ailments that hold your organisation back from being the best it can be.

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If you would like assistance with employment concerns, you can read more here