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Giving the boot

By Frances Martin

Wednesday 1st October 2003

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When the owner of a small Auckland manufacturing company heard that his sole salesman had lost yet another client he was beside himself. He knew the salesman was trying his hardest. But in the two years the guy had been with the firm he'd let thousands of dollars of business slip through his fingers. Though the owner felt sorry for the salesman, he'd had enough. He called the guy into his office the next morning and told him to leave.

He spent the rest of the day feeling slightly upset - the man had a wife and kids to support. But that was nothing compared with how upset he felt months later when the Employment Court ordered that he pay several thousand dollars to the salesman, who'd taken a personal grievance claim against the company and won.

Sacking an employee is one of the worst jobs most managers ever do. And sacking someone for performance, rather than disciplinary, reasons is even more unpleasant because it tends to cause more emotional damage. But managers who do this job wrong can do more than crush someone's ego. They can sour their relationship with other employees, attract unwelcome media attention and they can cost the company a lot of money.

Worse, they can end up having to re-employ the underperforming staffer. "That's because the primary remedy under the Employment Relations Act is reinstatement," says Geoff Summers, human resources director at Victoria University and vice-president of the Human Resources Institute of New Zealand.

The thing that trips up most managers is not that they don't have good grounds to sack an employee, it's how they went about it, he says. "For employment cases that go to court on unjustified dismissal, where the court finds against the employer it is nearly always on the basis of process. You've got to get the process right."

The law says the process must have two key elements: it must be fair to the employee and the employer must act in good faith. That means, for example, that when a manager calls someone in to discuss their performance they've got to listen to the employee's side of the story. One of the biggest mistakes employers make is calling someone into a meeting, then handing them a dismissal letter that was written before the meeting began, says Jennifer Mills, a senior associate with law firm Bell Gully. In that situation the employee can easily argue the meeting was a sham and the outcome was a foregone conclusion. Mills says other common mistakes include: not following procedures in the staff member's employment contract or the company's manual; suspending an employee when there's no provision for suspension in their contract; and forgetting to advise the employee of the potential consequences of a meeting or that they can bring along a support person. Another mistake is when the person making the decision to dismiss is not the person who's been meeting with the employee. In that situation, it's hard to argue you've given them a fair hearing.

Sacking someone in a humane and legally "safe" way is a laborious process that ties up considerable management time, Summers says. But cutting corners is a dangerous mistake. "Here, if we're not sure we did one of the steps right we go back and do it again." And don't even start the process unless you can show the courts you've already tried hard to bring the employee round, by giving them things like extra training or mentoring.
But say you have reached the end of the road, how do you sack someone "well"?

Step one
Set up a "performance" meeting. Make sure the employee gets fair notice of this meeting and understands that they are approaching the end of the line. Tell them they can bring a support person and bring one for yourself. If you don't have an in-house HR manager, consider hiring an HR consultant. Find out who the employee is bringing. If it's a lawyer, think seriously about getting your lawyer in too.

Step two
Meet with the employee. At this meeting the manager should lay out in clear terms where the performance is lacking. Spell out what the role needs, what the employee is providing and identify the gap. If you can't spell out this gap clearly, don't go into the meeting. Give the employee an opportunity to answer and ask what they think needs to be done. Consider their comments and investigate further if needed. Take notes during the meeting and file them. Draw up an action plan that takes account of the employee's comments. But make it clear to the employee that after a certain period, if things don't improve, they will be called to another meeting where they are likely to be told they're sacked. Start the action plan and monitor the results. Generally, employers should give the employee three to six months to lift their game. However, if the employee's incompetence is threatening to sink the business, the process can be dramatically shortened.

Step three
The dismissal meeting. This should be set up like the first meeting, with support people present and with the employee having a good idea of what it's about. Again, go through a "gap" analysis between what the job entails and what the employee provides. Say that the final effort to improve the situation has failed. Give the employee a chance to respond and consider their comments. Make it clear to the employee why you are at the end of the line, regardless of their comments. Tell them they can no longer work for the company.

Step four
Getting them out the door. Be prepared for tears. Don't humiliate the employee by holding this meeting in your office if that means they'll have to walk past all their colleagues to get out of the building. To save face, some employers allow a sacked staff member to tell everyone they've quit and to work out a notice period. That's fine, but make sure the employee doesn't have access to crucial computer files, equipment or customers. One legend HR managers love to tell involves an encyclopaedia publisher who allowed a sacked employee to clear his desk unattended. The employee had enough time to get into the database and replace the word "Jesus" with "Ella", ruining the print run and costing the company thousands of dollars.

Companies also need to make sure they've got clear employment contracts and good performance review systems, says Ross Henderson of Auckland firm HR Contracting Services. They need to be able to show the court that someone, somewhere has made it clear to the employee what was expected of them in the job. Be determined, get good advice and document everything, Henderson says. "You wouldn't believe the number of cases that are lost for the want of a file note. If the employee is late for work, note that down, along with what you did about it. The main reason I was able to beat off one personal grievance claim recently was because the client had made diary notes on several exchanges over the last year."

Henderson advises against tactics like trying to force an employee to resign by giving them too much work, or conducting a sham redundancy. You may get away with it. Then again, there's a high risk you'll get hit with a grievance claim. What's more, you'll have trouble getting other staff to believe you when you do go through a genuine redundancy.

Paying people to leave is an option. But Henderson says this can be legal dynamite in the wrong hands and employers shouldn't attempt it on their own. Broaching this subject is extremely delicate and the conversation needs to be scripted, he says. Wrong timing or the wrong words can lead to claims that the employer has already decided to exit a staff member and any performance review process is just a sham. The safest approach is for the employer not to mention the subject, instead leaving their representative to have a confidential and off-the-record chat with the employee's representative.

By far the most important thing is for the employer to avoid getting angry, he says. The employee's incompetence may have driven off yet another client. But if you call them into the office, tear strips off them and show them the door, their personal grievance claim has a high chance of succeeding because you didn't follow a fair process. "I see so many employers get themselves in a pickle because they let ego or testosterone get in the way." Henderson's advice is to go home, let your rage subside, and deal with the matter in the morning. That poor performer's already drained away too many of your company's resources. Don't give them an opportunity to get their hands on any more.

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