What is Performance Management?

Performance management is the ongoing process of setting expectations, monitoring progress, giving feedback, and supporting employees to succeed in their roles. It’s not just about dealing with underperformance, it’s about developing people, aligning them with business goals, and building a high-performance culture.

This includes regular conversations, formal reviews, goal setting, and when necessary, structured plans for improvement. Crucially, it's a two-way process that supports both the employee and the organisation.

Capability, Dismissals and Employment Law

When an employee isn’t performing as expected, the first step is understanding whether it's a capability issue (eg., skill, knowledge, or health) or a conduct issue (e.g., unwillingness or behavioural problem). For capability concerns, the law expects a fair and reasonable process before any dismissal is considered.

This means:

• Setting clear expectations and objectives
• Offering support such as training or mentoring
• Giving the employee a chance to improve (typically with a Performance Improvement Plan)
• Holding review meetings and documenting everything
• Following your internal disciplinary or capability procedures

Under the Employment Rights Act 1996, dismissals related to performance are potentially fair but only if you’ve followed the correct process. You must also consider the Equality Act 2010, particularly if health or disability is a factor.

How Performance Management Drives Results

Performance management isn’t just about fixing problems, it’s a strategic tool for growth. By taking a proactive, structured approach, managers can:

• Align team performance with business goals
• Identify and develop top talent
• Improve employee engagement and retention
• Reduce costly mistakes or delays
• Build a culture of accountability and improvement

Frequent one-to-ones, coaching conversations, and clear, measurable goals keep performance visible and manageable. Annual appraisals should be just one part of a wider, ongoing performance cycle.

Common Pitfalls—and How to Avoid Them

Even well-meaning managers can run into trouble. Here are common mistakes to watch out for:

• Vague expectations: Be clear about what good performance looks like.
• Inconsistent standards: Apply policies fairly across your team.
• Avoiding difficult conversations: Don’t delay when issues arise.
• Jumping to formal action: Start with informal support before escalating.
• Lack of documentation: Keep a written record of discussions and actions taken.
• Ignoring the legal context: Always consider employment law and internal policies.

Performance management is not a “tick box” exercise, it’s a core leadership skill that drives employee success, supports business growth, and protects you legally. With the right mindset, process, and legal awareness, you can build a strong, capable team that helps your business thrive.

Need help ensuring your capability processes are spot on? Don’t leave it to chance. Contact us today for expert guidance on getting your policies and practices on track. Protect your business, your team, and your reputation.

Click “GET IN TOUCH!” for expert advice and let’s build a people strategy that truly supports your business goals.