No-fault dismissals are not the solution to underperformance

Cary Cooper, professor of organisational psychology and health at Lancaster University, considers the Beecroft Report’s recommendations on addressing employee underperformance.

There are people who underperform in every walk of life and the recommendations of the Beecroft Report on compensated no-fault dismissals has created a storm about how best to deal with them.

Rather than whipping up a culture of fear and insecurity, businesses need to focus on how best to improve the productivity of their employees. The introduction of no-fault dismissals is not the answer.

It is well known that increasing job insecurity will encourage employees to engage in unproductive behaviour, with health and performance directly affected. There are also increasing examples of presenteeism in the current economic climate that are counterproductive to what businesses want to achieve.

Rather, we need to help businesses create a culture in which employees can thrive and give them the chance to do great work. In my role on the Business in the Community Workwell Leadership Group, we have been working with leading FTSE100 companies to develop an approach that focuses on the dignity and engagement of employees, involving them in decision-making, enabling greater flexibility, and creating balance at work.

Increased productivity

Professor Gary Cooper

Cary Cooper, professor of organisational psychology and health at Lancaster University.

The result of this model is increased productivity. FTSE100 companies with robust arrangements for reporting on employee health and wellbeing outperform the rest of the FTSE100 by 10%. There are many examples of savings in the millions of pounds as a result of reduced attrition rates, lower sickness absence and greater flexibility.

At Workwell’s centre is the recognition that line managers are the most important factor in creating a good environment in the workplace; those who are incompetent create a less constructive workplace. This is critical because part of the job of a manager is to help underperformers and get them to perform better. There is a huge problem with many line managers lacking the skills to achieve this. Employees should not be blamed for poor managerial performance.

If, at the end of the day, a manager has tried to manage poor performance and had no results then an “exit vehicle” does need to be found. Beecroft is right in identifying that the current process is too long but his solutions are wrong. We need to find a way that enables bad performers to exit without damaging the vast majority of people who are working well.

Big businesses and their investors rightly recognise the critical importance of employees as a means of determining company performance. Those that manage their employees in a secure and balanced way are those that will succeed. There is no place for a more punitive environment in our modern and global society.

Cary Cooper is professor of organisational psychology and health at Lancaster University.

Further information on the Beecroft report and compensated no-fault dismissals is available here.

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