Managing Employee Performance Issues: 3 Common Mistakes to Avoid

Managing employee performance effectively is important for maintaining productivity, supporting employees and addressing issues before they become bigger workplace problems.

Poorly managed performance issues can create risks for both employees and employers, including workplace conflict, psychosocial risks and potential unfair dismissal claims.

The good news is that many performance issues can be managed constructively when expectations are clear, concerns are addressed early and employees are given a fair opportunity to respond and improve.

What mistakes should employers avoid when managing employee performance?

Effective performance management is not simply about documenting problems or preparing for dismissal. It is a process for clarifying expectations, addressing concerns and giving employees a fair opportunity to meet the requirements of their role.

Here are three common mistakes employers should watch out for when managing employee performance.

1. Failing to set clear expectations

Employees need to understand what is expected of them, including the standards of performance and behaviour required in their role.

Vague, inconsistent or changing expectations can make it difficult for an employee to understand what they need to improve and for an employer to assess whether performance has improved.

Best practice: Set clear and reasonable expectations from the outset. Make sure employees understand their role requirements, performance standards and any relevant workplace policies or procedures. Document important discussions and agreed expectations.

2. Waiting too long to address performance concerns

Delaying difficult conversations rarely makes a performance issue easier to manage. Concerns can become more difficult to resolve, workplace relationships can deteriorate and employees may miss an opportunity to improve.

Performance concerns should be addressed promptly and appropriately, giving employees an opportunity to respond to concerns and work towards improvement.

Best practice: Address concerns early through constructive conversations. Focus on the specific performance issue rather than the individual, listen to the employee's response and agree on reasonable steps for improvement. Keep appropriate records of discussions and follow up on progress.

3. Overlooking legal and workplace obligations

Performance management needs to be handled consistently with applicable workplace laws, awards, agreements, employment contracts and workplace policies.

This is particularly important when performance management may ultimately lead to disciplinary action or termination of employment. A dismissal for underperformance can be challenged as unfair if the employer does not have a valid reason or has not followed a fair process.

Employers should also consider whether workplace health and safety obligations are relevant. Performance management systems can contribute to psychosocial risks where, for example, expectations are unclear or feedback is unfair, excessive or focused on matters outside a worker's control. Clear expectations, constructive feedback and a focus on matters workers can reasonably control can help reduce these risks.

Best practice: Before taking formal disciplinary action, consider the circumstances carefully and check the requirements that apply to the employee. Make sure expectations, concerns and any improvement requirements are clearly communicated, and give the employee a reasonable opportunity to respond.

What happens if performance doesn't improve?

Not every performance issue will require formal disciplinary action, and termination should not be the automatic outcome of underperformance.

Depending on the circumstances, employers may need to consider further performance discussions, additional support or training, formal warnings or other appropriate action.

If termination is being considered, employers need to ensure they have a valid reason and have followed a fair process. Before taking formal action or terminating employment for underperformance, employers should generally give the employee a reasonable opportunity to respond to the concerns and improve their performance.

There is no general rule that an employee must receive three warnings before their employment can be terminated. What is appropriate will depend on the circumstances, including the nature and seriousness of the performance issue and the employee's response to previous discussions or warnings. The Fair Work Ombudsman confirms that there is no requirement for a set number of warnings before dismissal.

Good performance management protects people and organisations

Effective performance management is not simply about dealing with underperforming employees. It is about creating clear expectations, addressing concerns early and giving employees a fair opportunity to succeed.

Handled well, performance management can improve productivity, support employee development and reduce the risk of workplace disputes and costly mistakes.

If you are unsure how to manage a performance issue, getting advice early can help you understand your options and approach the situation fairly and appropriately.

How Workplace Plus can help

Workplace Plus provides practical HR advice and support to employers managing employee performance issues, difficult conversations and workplace disputes.

Book a confidential discovery call to discuss how we can support your organisation.