How to Manage for Best Performance

Last month Fonterra announced that Theo Spierings will be vacating his position as CEO and that the process to replace him is underway.  The Board described the departure as normal succession planning and denied that Mr Spierings’ decision to leave was related to Fonterra’s recent $405 million writedown of its investment in Chinese infant formula company Beingmate or its $183 million settlement with French company Danone.

Whether or not Mr Spierings’ departure is related to his performance, it has been smoothly managed by both Mr Spierings and the Board.

For most employers – and farmers are no exception – smoothly dealing with an underperforming employee is the hardest part of managing staff. Whether you are a small employer or an industry giant, good processes and communication always deliver the best results.

The first step to managing an underperforming employee is to raise your concerns clearly and directly with the employee. 

During these conversations you should explain the problem, make your expectations clear, and explain the consequences of failing to meet those expectations.  

You should remember that the employee is not the problem, the problem is the employee’s performance.  You should work with the employee to help them improve.

You should think about whether the employee has the tools and training they need to meet your expectations.  You should also stop to consider whether your expectations are reasonable. 

You have an obligation to raise concerns as they arise. ‘Saving up’ concerns and presenting a massive list of problems to your employee is a breach of the statutory duty of good faith.

The next step, if training, coaching and informal discussions about performance don’t result in the required improvement, is formal performance management.  This will involve putting a performance improvement plan in place.  The plan should set out the improvement that you are requiring, how that improvement will be measured, and when you expect the employee to achieve that improvement.

You will need to meet with the employee and consider their feedback about the plan before it is implemented.  The employee is entitled to a support person or representative at that meeting.

Once the plan is in place, you will need to monitor the employee’s performance over the review period and regularly meet with the employee to discuss their progress.  

In most cases the employee will either shape up and the performance issues will be resolved, or they will decide it’s too hard and ship out.  Otherwise, if the required improvement is not achieved by the end of the review period, and you’ve followed a fair and reasonable process, disciplinary action may be appropriate.  Depending on the circumstances, this could include terminating the employee’s employment.

My colleague Diana Koorts will be writing about terminating employment next week.