However, in the real world, employment issues arise between people and the two key issues to focus on are:
- the psychology of the situation; and
- how the business can achieve the outcome it wants within its risk parameters.
Psychology
Every individual and every business (and each manager in that business) is different. This means that simply looking at what legislation and case law prescribes for a certain scenario and ignoring the views and the feelings of the individuals involved will rarely result in the best outcome.
In virtually every situation where issues arise in the employment relationship, the employee and the business will have a different perception of what is happening, what the cause is and where fault lies. This difference is the “perception gap” and the larger that gap is, the greater the likelihood of the situation becoming a dispute.
Therefore, to achieve its desired outcome as smoothly as possible, the business should consider how the relevant employees perceive what is happening and take this into account when considering how best to implement their proposals/position to minimise the perception gap. This may sound ‘soft’ and a form of ‘pandering’ to difficult employees, but in fact it is a key tool in achieving outcomes as quickly and effectively as possible. This is especially the case where the business wants to maintain the relationship with the employee(s).
Let’s take the example of an employee, James, who the business feels is underperforming. James is unlikely to perceive himself as performing poorly. However irrational or impossible to support that view might be, the business still needs to appreciate James’ perception when considering how to approach the conversation with him in order to alter his perception. By communicating in an empathetic way, providing clear examples of where James has been falling short and allowing James the time to take in what is being communicated, the business will significantly increase the likelihood that:
- James will behave in a less defensive way;
- James’ initial view can be altered so that he accepts that there have been issues with his performance; and
- James will disclose any underlying issues for his declining performance, such as personal issues or relationship problems with his manager or colleagues.
If that type of conversation can be achieved, a lasting long-term outcome can be achieved. If the business simply dives in with a list of what James has being doing wrong and the performance management process that will be implemented, there is every chance that James will be defensive and become entrenched in his view that he has done nothing wrong and that his manager ‘has it in for him’ (the reason for which will not have been communicated). This is likely to lead to a grievance and, often, an irretrievable breakdown of the employment relationship.
Another scenario where psychology is critical is litigation. If a business faces a claim from an employee or former employee, it cannot simply focus on the legal aspects of the claims the individual has brought and how best to defend them.
Litigation is essentially like poker – a business needs to think about the overall hand it holds compared to the claimant. It is essential for the business to puts itself in the individual’s shoes and considers the practical issues that will impact on how the individual is viewing the litigation. For example:
- if the individual perceives that the business always settles claims, he/she will expect a decent settlement payment;
- if the individual is in a relatively weak financial situation, he/she may well be very concerned about the costs of the litigation and be willing to settle for a relatively small amount;
- if the individual is not normally a confrontational person, he/she will probably prefer to settle than go through with the litigation and, therefore, a settlement at a relatively low amount may be possible;
- if the individual feels strongly that he/she has been treated unfairly, some form of acknowledgement by the business or specific people within the business may be more important than a large cash settlement.
These types of issues need to be considered at the outset of litigation so that the appropriate tactics are decided on.
In summary, everyone is different. Ignoring the psychological aspects of any situation will increase the risk of a dispute arising or it taking longer and/or more money to achieve the desired outcome.
Risk Management
However some lawyers may view themselves, lawyers are just risk managers. The role of a lawyer is to help a business achieve its desired outcomes in the simplest, cheapest and most effective way possible, within risk parameters that are acceptable to that particular business. The risk to be managed is not simply financial cost, but also damage to employee morale, the business’ culture and its reputation.
In any employment situation there are many different options, all of which will sit in a different place on the risk spectrum. The key is to select the right option that achieves the business objective as closely as possible within that business’ risk limit.
Let’s take the example of James, the underperforming employee. There are various ways to deal with James:
- Do nothing and hope that, at some point, James will resign.
- The business could implement an in-depth performance management process which focuses on the underlying causes of James’ performance, the ways in which he needs to improve and how his performance will be measured. This process will last for a number of months and include regular review meetings.
- The business could inform James of the problems with his performance and allow him a period of time to improve, but not take the time to really discuss the cases for the poor performance or have review meetings with James. If the performance does not improve, dismiss James.
- Simply inform James that his performance is not up to scratch and dismiss him straight away with a small settlement payment.
Let’s assume that James’ employer is a charity that has limited cash reserves and a strong culture of supporting its employees through difficulties. Option 1 will not fit with its culture and may also cause other employees to either resent the fact that they are having to ‘carry’ James or that the charity is not supporting him. This creates a cultural risk for the charity which could very well lead to other employees becoming disengaged and performance dropping across the board. Option 3 will also not fit with the culture and will create a real risk of an unfair dismissal claim that the charity will not have the resources to afford. Option 4 will definitely be an unfair dismissal and is also a cultural mis-fit. Therefore, option 2 is likely to be the best option.
However, the situation will be different if James works for a relatively small business that cannot ‘carry’ poor performers (a fact which is made clear to all employees) and which does not have the resources or inclination to carry out a long term performance management process. Simply keeping employing James in the hope that he will resign soon will not work. This will damage productivity and is also likely to cause other employees to resent the fact that they are having to ‘carry’ James. Therefore, the choice for this employer is between options 3 and 4.
At first glance, option 3 may seem like the lower risk option, especially from a legal perspective, but this may well not be the case. An employment tribunal may well view a short-form performance management process as insufficient and decide that the dismissal is unfair. That will leave the business with costs of fighting the claim and the potential unfair dismissal award or the costs of a settlement and these costs will be on top of the costs of continuing to employ James during the performance management process, his notice monies and the management time involved with the performance process.
In contrast, option 4 will crystallise the liability and it may well be possible to reach a settlement with James that, overall, will cost less than continuing to employ him during a performance management process. This is especially the case if, coming back to the importance of psychology, James is likely to prefer a quick settlement to litigation.
Conclusion
The examples in this article are fairly straightforward ones, but the principles apply to all situations. Before deciding how to proceed with issues with employees, a business needs to consider its culture and view of the situation and how the affected employee(s) will perceive what is happening. Taking that into account, the business then needs to move forward in the way that will achieve its desired outcome as effectively as possible within the risk parameters that it can accept. The role of a lawyer is to take the time to understand these factors for each particular situation to facilitate this.