Few people leaders or human resources professionals would argue that effective performance management is essential. The way in which a manager responds can be the difference between high performing teams that stay, and disputes, turnover and reputational damage.

Specific case rulings continue to define the parameters of recent legislative changes. Yet it is becoming clear the Fair Work Commission doesn’t simply consider whether an employee was underperforming when assessing unfair dismissal and wrongful termination cases. Consideration is given to whether the employer acted fairly, reasonably, and consistently. Most claims arise not from a lack of reason, but from reactive, inconsistent, or poorly documented processes.

People leaders therefore need the capability to avoid common performance management mistakes, know how to manage disciplinary action and have access to human resources or workplace relations professionals for support.

Common performance management mistakes

The most common performance management mistakes occur more often than you would think, no matter the type of organisation. These include:

• Delaying intervention
• Failing to provide clarity
• Relying on informal feedback
• Lack of documentation

Employers often find themselves defending decisions that could have been avoided with structured management. Procedural fairness is the foundation of defensibility. Employees need to be clearly notified of concerns, given specific examples, and provided with a genuine opportunity to respond. Vague statements about attitude or performance rarely hold up. Objective standards, such as KPIs, position descriptions, and documented expectations, reduce ambiguity and strengthen an employer’s position.

Both early intervention and specificity is therefore critical. One of the most common reasons an issue escalates is because it is ignored. A people leader, who has failed to manage the performance of an employee across multiple issues over time, will finally intervene on a specific issue that may or may not be significant. When the employee defends their actions, their frustrated manager will proceed to reference a string of past grievances that they have never been discussed with the employee.

Undocumented conversations or delayed feedback significantly increase exposure if termination becomes necessary. It is equally important to distinguish between capability and misconduct.

Managing disciplinary action

Underperformance in isolation is not misconduct, and blurring the two can escalate issues and increase legal exposure for employers.

Underperformance is a proactive and ongoing process that focuses on   capability, support and expectations, and is not punitive. Management of underperformance will generally focus on skill gaps or output expectations. Often the discussion will focus on the factors blocking an individual from reaching those goals, and how the manager or team can help them, whether that be with training, development, regular feedback, access to information or people, or assistance with prioritisation. To effectively manage underperformance, a fair and structured process should be followed to give an employee time and support to improve, accompanied by clear goals and in many cases, a development plan.

Disciplinary action on the other hand is a reactive and formal process. It applies when an employee's conduct, rather than their competency, is the problem. Some examples of misconduct include:

• Insubordination or inappropriate behaviour
• Refusing to comply with lawful requirements
• Not following reasonable directives
• Breaches of organisational policy
• Serious misconduct such as bullying, theft, or harassment

Misconduct requires an investigation, to which the employee has the right to respond. The employer needs to provide sufficient notice prior to a formal meeting and allow the employee to bring a support person with them. Clear identification of the alleged conduct issue is essential, as is procedural fairness, proper documentation at every stage, and reasonable outcomes based on evidence. Employers need to focus on addressing conduct risk in a way that is fair, consistent and defensible. This extends to improvement plans, which must be genuine and incorporate documented review periods and meetings. Keep in mind processes that appear predetermined or superficial can escalate manageable issues into costly claims.

Escalation should also be proportionate and consistent. Final warnings without prior documented steps, unless the conduct is serious, can undermine the credibility of the employer. Ensuring that every employee is treated consistently will reduce the risk of allegations of unfair treatment.

Building people leader capability

Performance management training is essential for leaders of people. It is a core management skill set, yet many employees are promoted to management with little or no instruction in this area. Furthermore, as processes change over time to comply with best practice or shifting legislation, long-term leaders are often not provided with refresher training.

How leaders communicate, document, and follow policy often determines whether a process is defensible. Different approaches can also lead to inconsistency. It is also worth noting that probation doesn’t remove exposure - adverse action risk must also be considered in this scenario. 

The capability needs to sit with people leaders, not just Human Resources or Workplace Relations experts, who should be there to provide support or to help manage more serious incidents or escalation, not day to day performance management.

Organisations that act early, document consistently, and align policies, contracts, and practice are far better positioned to reduce issues and unfair dismissal risk, while protecting operational stability and leadership credibility. 

We’ve put together a simple pre-termination checklist to assist leaders. If you’re an employer who needs assistance with policies, procedures, investigations or support, learn more about our workplace relations servicesor call me for a confidential discussion on 03 9864 6000.