There is performance issue with an employee.
His performance is not satisfactory and have been informed and warned several times, still the results are not improving.
Company feels employees is not worth his CTC, so either to pay less or fire the person.
What is a better practice in this case?
Please advise, its urgent

From India, Calcutta
Manager Hr
Director Of Company
Bramch Head Idbifederal

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Dear Avantika,

This is a very common issue that organizations face now a days.

There is a way out. Doing things verbal will not suffice your issue.

You can introduce PIP (Performance Improvement Plan) in your organization. the process will be as follows:-

this can be a 3 months plan.

as soon as you get to know that there is a case of non-performance you can put him/her in PIP

1. on first day give a formal letter of non performance with the points noticed of non performance and ask to improvement within a span of next 2 months. in that letter only please mention that if performance is not improved then at the end of 3rd month he will be fired.

2. ask the immediate manager to thoroughly notice his performance

3. at the end of 2nd month lets meet - employee, immediate manager and HR and jointly discuss the performance. if performance is improved then give a letter to improve bit more and close the case, but if not improved then give another letter mentioning that if it is not improved within next month then he will be terminated.

4. at then end of 3rd month, if the performance remains same, then terminate.

From India, Delhi

Thanks Nipuna
We have taken the above steps since last 6 months still there is no improvement. management thinks the employee can be worth for a lower CTC but paying the current amount is just an extra cost for the company. So can a proposal of lower CTC be offered to employee?
Is it a good practice?

From India, Calcutta

When you demote somebody with reduced CTC, please expect the following
1. Low morale & motivation
2. Not show much interest in goals or shared goals
3. Start searching jobs, elsewhere
Why should company pay for somebody just be in the payroll and entertain job search at the cost of company? If the performance is not at all up to the expectation and attempted to help improve the performance, give notice period for 1 month and find a replacement with in that period.

From India, Bangalore

Suggest you read the article "managing-non-performers" on the 'EmpXtrack' website, which will introduce you to many other options.
From India, Delhi

Dear Avantika

Introducing a salary cut for a non performing employee has shown results in my organisation. But there should be a clause to repay him/her back, the deducted amount and to go back to the same ctc . I have found it worked with 60%o of the employees well and became good performers and back fired with 40 percent employees who resigned and only few came back and joined for a lower CTC.

The concept should be explained politely to the employees and has to tell them "you are very important to us but your performance has to improve to the mandated level". Other wise some of the employees will have the value conflict and may exit from the organisation. Also it can lead to confrontation.

Employees should be made to understand the survival performance norms to get the salary.Leagaly company has the right to reduce the salary. But also please understand all the things wont work with every body. If salary cut is introduced you will have to give to all employees other wise it will be further negative.

People join with leaders and leaves the boss when the quit, not the company. There should be proper review mechanism to analyse and help the employee perform better. It shouldnt be a criticism session. Where as the reviewer should be able to add vlues and guiding him to success and should undersatand why the employee is not performing. He may be facing some problems at his finacial or personal levels. A caring approach may work. If the employee becomes a back bench student help to bring him to the limelight of performance by paying attention to him, and boosting his morale. Coaching, mentoring and empowerment may help in many cases. But some people understand only the language of salary cut. That should be the last resort.If perfornance is less than 30 to 40 percent than the expected level Termination is the better one I feel. who is on 60 above can be tried with salary restructuring. Proper documentation on performance improvement discussion is very essential to add the serious ness and for legal purposes.


From India, Mumbai

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