HRM of Underperforming Workers

In order to win a game of soccer, the 11 players working together is more important than the efforts of one star player. Even though the team is made up the best players, neither teamwork nor victory can happen if one or two players continually fail to work hard. The same holds true in business.

Companies have outstanding individuals, but they also have underperforming individuals at the same time. Some employees are even a burden to a company. What are the best HRM methods for handling those who underperform?

‘Underperforming worker’ is not a legal term, but usually refers to ‘an employee with poor performance,’ or ‘an organizational misfit.’ Although it is difficult to give an exact number, the bottom 10% of employees are called ‘C-players’, and a similar proportion of a company’s workforce leaves every year.

How long this underperformance should continue before it is considered a problem especially when there is no standard for determining whether a worker is ‘underperforming’ or not? Defining poor performance is a complicated matter, but judicial precedent indicates those who ‘receive the lowest marks in employee evaluations for 4 consecutive years,’ and those who ‘receive the lowest marks among employees in the same position for 3 consecutive years’ may be considered underperforming workers.

Most of the times, underperforming workers are considered misfits. Layoffs through such means as forced resignation come easily to mind, but layoffs are not simple. Dismissals for poor performance are likely to result in legal action for ‘unfair dismissal,’ as can be implied in the scenario above. These legal issues arise due to the strict criteria for dismissal according to Korean labor law. Thus, dismissals for poor performance should be handled with care, and consideration of the following procedures is required.

Forced resignation or dismissal for poor performance is not always unfair. Dismissals are possible when proper procedures are followed and from a basis which anybody can understand, if an employee does not show any improvement in his or her performance.

What should be considered first for dismissal of underperforming workers to be legally permitted? There are many requirements, but we will look at the two main ones.

First, judging someone as ‘underperforming’ shall be based on fair evaluation and according to fair procedures. Logical and objective measures should be reflected in evaluation criteria, not just a simple result that places the employee at the bottom. Fairness in evaluation can be achieved by including peer reviews from a supervisor or associates in the evaluation criteria, or giving the employee a chance to object to the results of the evaluation if necessary.

Second, education and opportunities to improve underperforming workers shall be provided. It is generally thought that the procedures to dismiss can be undertaken right after the company decides to dismiss an employee. However, taking such action without giving an employee the chance to improve his/her performance can result in legal action and a negative impact on organizational management.

The company should give the employee another chance and help him or her develop the necessary skills. This can be done by separating the employees from their duties such as by making them wait to be assigned to other duties. Note that the employees should be continuously motivated and informed of the consequences of not improving. A company can be misunderstood if it does not give employees any chances to improve when it requires a higher standard of work than the employee is giving, or does not provide a minimum of support for employees to carry out their duties (such as by providing computers etc).

Forced resignation can be justified when employees do not improve despite help from the company through various means, such as setting easier objectives.

Lastly, it is important to prepare additional programs and systems to manage underperforming workers. Companies can begin procedures for dismissal, forced resignation, or voluntary retirement of underperforming workers after they have set specific criteria for such action as well as programs to improve work attitude, abilities, or performance.

If an employee is in a period of waiting to be assigned to a new task or demoted, the company can use the time to improve the employee’s skills or assign them to a new task. This will encourage both the company and employee to understand the results of evaluation, and reduce the possibility a dismissal will be regarded as unfair.

Companies may also consider other measures, such as giving the employee different work tasks, rather than dismissing him or her.