KEY POINTS:
Underperforming employees are so costly and the employment laws so ill-conceived that many business owners are simply paying poor performers off just to make them go away, says Tony Skelton, managing director and CEO of ACE Training.
"A lot of employers will pay them off simply because they do not want the stress and the strain and the problem of having to administer an issue under this Act," he says.
Skelton believes the Employment Relations Act of 2000 is so tipped against employers that it's easier for them to avoid the legal hurdles and cut right to the chase.
"The process is such a minefield that what we all do is pull the chequebook out and pay them off. It's just too difficult for small- to medium-size businesses to enact the process," he says.
This means smaller employers are paying employees from one to three months' salary just to get rid of them.
For employers who choose to go through the process outlined under the Act, Skelton says there is little room for error.
"If we as business owners don't follow the process correctly, irrespective of the reasons and the legitimacy of a disciplinary action, we are in default of the Act and we are going to get done for it," he says.
"From a small businesses owner's point of view, the business has absolutely no protection whatsoever.
"It's a completely lopsided, unbalanced piece of legislation. It takes three months to go through the process and, if you slip up on one point, the Employment Court says you've stuffed up."
One point employers can easily get wrong is the way they discuss performance issues with their employees.
"The more you challenge them on performance, the more you're running the risk of being accused of a constructive dismissal," Skelton says.
The Act requires the employer to protect the privacy of the employee. But Skelton says you would be naive to think you were going to conduct secret meetings without everyone else in a small office knowing what was going on.
"If you have an office with 20 people in it and you're trying to discipline one of those people, do you think everybody else doesn't know about it?
"Everybody knows something is going on but you're not allowed to tell them the reasons why. They don't know whether the boss is lining people up to fire them or whatever."
The strain on co-workers is also significant and affects managers and owners too. Skelton avoids it at all cost.
"The only practical way to do it is to go through the process to the point where you can at least reach an agreement with that employee that things aren't working out and make an offer to pay them off."
He admits it hurts.
"From an employers' point of view, it's very galling and it's offensive to an employer to do that but you're left with no alternative."
But how do you know when to pull out the chequebook? Skelton says it is not hard to see when it is time for someone to go.
"You can't pay people just to turn up to work. They have to do their job.
"It becomes clear that they're either not capable of it or no longer interested, or they're simply just not performing."
Underperforming employees also drag down morale.
Skelton said it would be great not to reach this problem in the first place.#But despite going through all the pre-employment screening available, you can't always get it right.
"You don't know how good that employee is going to be until you actually start to work with them and you really test their intellectual capacities, their abilities and their skill level."
Simon Mundell, director of coaching firm The Results Group, says getting rid of an underperforming employee is challenging, cumbersome and slow-moving but it's also absolutely essential if you're going to run a successful business.
"If you've got an issue, you can't bury your head in the sand and hope it will go away because it won't. You need to address the issue," Mundell says.
He calls it "freeing up their future" and says it can also be in the employee's best interest to be moved along.
"When I say 'free up their future', that's just as much a benefit to the employee. Just because they're not good in your company, does not mean they're not good in someone else's company."
Performance issues needed to be tackled head-on.
"If you don't have a great team or if you have someone on your team that is affecting the ability to have a great team, then that is of dire consequence to your company."
Two different ways can be used to measure an employee's performance - skill and attitude. If either one of these is lacking, then you should address the issue.
Mundell says your success depends on having the right people working for you.
"Great teams are what define a great company. People fail to go through good enough due diligence on prospective employees and employ too readily on their gut." Aptitude, psychometric profiling and personality testing were all useful in finding the right candidate.
The goal for handling staffing issues should be to employ the best people, pay them more and have fewer employees overall.
This amounts to a lower overall wage cost and higher productivity.
But business leaders need to be prepared to do what it takes to build and maintain this type of team. "One great person is worth three good people in a business. If you operated in that situation, all the great people from your competitor would want to come and work for you," Mundell says.
Even with the skills shortage, there was no shortage of committed people out there that would like to work for an equally committed company.
"As long as you employ someone that's got half a desire to do something with their life, then it really comes down to fit within their values and their skills," Mundell says.
"I believe that everyone can make an absolutely valuable contribution in the environment that they fit in well with."
