Dismissal targets: morale booster or sapper?

Low-performance, low-potential employees make up one-tenth of most businesses’ workforces, a statistic that, naturally, has grave implications for UK businesses. Shedding staff, even underperforming staff, in a climate where law firms are desperate to find talent seems, at best, counter-intuitive. Nevertheless, retaining for the sake of retaining damages both the long-term health of the firm and the career progression of the individual and will not help solve the skills shortage.

This poses a difficult question: is there an optimum percentage of the workforce that employers should deliberately release each year? In a market short on talent, showing any employees the door is unusual. After all, is it not ‘better the devil you know’?New research by Hudson examining the business taboo of ‘culling’ underperformers highlights the fact that that the majority of UK bosses do see the financial benefits of dismissing underperforming employees and they believe that the advantages of such a dismissal policy can outweigh the disadvantages. The majority (77 per cent) of senior executives pollled believe that a fixed quota for annual staff dismissal would boost their firms’ financial performances and productivity.

However, legitimate concerns remain about both the implications for morale of a dismissal target and the extent to which simply having hands on deck, regardless of the ability of those hands, is better than having insufficient resources. In today’s legal world, where an acute shortage of talent is continually highlighted by the media, staff retention is the mantra by which firms are assumed to be operating.

The advantages of having a dismissal target perceived by UK business leaders included ensuring that strong team members do not carry weaker ones, allowing underperforming staff to pursue a fresh challenge more suited to their abilities and bottom-line improvement. But the risks inherent to this strategy were also highlighted by the majority (75 per cent), who cited ‘introducing a culture of fear’ as a deterrent to a dismissal quota.

Despite the perceived dangers of pursuing a dismissal quota, the problems associated with inaction are sufficiently significant to warrant a serious debate. The current employment climate causes almost one in four (22 per cent) of bosses to admit that they would rather retain average or even below-average performers.

Putting an exact figure on the optimum percentage of staff to release is extremely difficult and opinions vary. However, it is important to emphasise a firm’s commitment to its part of the bargain: those employees who strive to maintain standards will be rewarded with fair pay and benefits, excellent training and development provisions, good career progression, a sensible work-life balance and a challenging and enjoyable environment in which to work.

A fair system must be put in place to provide underperforming employees with the time and opportunity to improve their performances. A ‘one strike and you’re out’ system would only serve to demoralise all staff and, ultimately, harm morale and productivity.

Far from being cruel, freeing underperforming staff to pursue a fresh start can be as good for employees as it is for the firm. Effective career management and mentoring can help develop future stars and simultaneously manage the disappointment of frustrated employees. Firms need to know how to assess the cultural fit, as well as the technical capability, of a recruit, and have an understanding as to what training is required. The outcome or right direction for individuals at all levels in an organisation is not always onwards and upwards. Sometimes the best career direction for an employee is out of the firm.

One thing is certain – this is a topic with genuine relevance to today’s law firms. It is challenging and emotive, but that should not stop us from opening the debate. Identifying best practice for your firm, whether large or small, is critical to ensuring you have the right workforce to compete.