How to deal with executive poor performance
Confusion reigns among employers about what they can do when a senior employee doesn’t perform up to expectations. Much of this confusion is because arbitrators make apparently inconsistent findings. However, the problem isn’t with their findings; it’s with how these findings are interpreted.
Item 9 of the Code of Good Practice: Dismissal in Schedule 8 of the Labour Relations Act (LRA) says that when someone (for convenience sake, let’s call him John) decides if the dismissal of another (again, to make life easier, let’s call him Mark), because of poor work performance, is unfair, the following needs to be considered:
- Did Mark meet the required performance standard?
- If he did, did he know (or was he reasonably expected to know) about the standard; was he give a fair opportunity to meet the standard and was dismissal an appropriate sanction for not meeting the standard?
Items 8(2) and 8(3) of the code say that:
Employees must not be dismissed for poor performance unless the employer has evaluated, instructed, guided, trained or counselled the employee. If, after an appropriate amount of time, he’s still performing poorly, the dismissal procedure may be instituted against the employee. However, this procedure must include an investigation into why the employee was performing poorly.
The employer must consider any means (not dismissal) to remedy the situation.
At the CCMA, it’s the sole responsibility of the employer to prove that:
- It followed procedure, and
- The decision to dismiss was appropriate under the circumstances, regardless of what procedure was followed.
Be more careful when dealing with senior employees’ poor performance
For example:
- Where a senior executive doesn’t manage his division properly, the whole division could be brought down and could even cause the whole organisation harm.
All arbitrators agree employers have the right to terminate the employment of senior employees who don’t perform if the consequences, or potential consequences of the non-performance, are serious.
The big question revolves around how this must be done. That is, can the executive be fired without having received:
- Clarity on the required performance standards?
- Counselling?
- A chance to improve?
As shown above, the LRA requires that performance standards are set clearly at the outset, that the employee receives counselling and a chance to improve he is dismissed. In addition, it is vital that there is an investigation, part of which includes the employee’s opportunity to explain the alleged poor performance.
Statutory dismissal procedures for senior executives are not strictly applied
Many arbitrators believe that a senior employee requires fewer prior warnings, if any, before being dismissed. While this less protective approach is fairly standard, this doesn’t mean that the employer may ignore all the legislation when it wants to dismiss a poor-performing senior executive.
In the case of Fortuin vs Shoprite (2004, 3 BALR 314):
- Fortuin, a store manager, was dismissed for poor timekeeping and stock losses.
- The arbitrator found that there were no good reasons to justify the dismissal and that proper procedure had not been followed.
- Although the employee was a manager, he was still entitled to be counselled and given an opportunity to improve.
- As this had not happened, the manager was awarded one year’s remuneration in compensation.
This case throws doubt on the belief that a senior executive can, in all circumstances, be dismissed for a first poor performance offence. It also means that, unless employers improve their understanding and implementation of the law, more and more senior employees will be taking them to the CCMA and winning huge compensation awards.
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Ivan Israelstam is the Chief Executive Officer of Labour Law Management Consulting. He is known as a leading practitioner in labour law and pragmatic labour relations management with many years experience in corporate human resources management. He has an honours degree from The University of the Witwatersrand and an IPM diploma in Personnel Management and in Training. Contact Ivan: This e-mail address is being protected from spambots. You need JavaScript enabled to view it. . |
