Is It Fair to Withhold Salaries for Missing Targets? Navigating Ethical Dilemmas in Performance Management

Dear Seniors,

Please review the situation described that one of my friends recently experienced. A manager verbally assigned a specific sales target to the subordinate and his team, requiring them to achieve a certain amount of business. On the 26th, he informed HR that the subordinate and his team have not generated any business so far, and he requested that their salaries be withheld until the target is met (within the next 4 days). Per HR procedures, salaries can only be stopped in the event of separation. The manager's intention is for them to remain in the system only if they reach the target, using this as a teaching moment for team members who make false commitments.

What actions should be taken in this scenario? If the employees are unable to meet expectations and choose to resign, is it appropriate and ethical for the manager to indicate in their resignation letters that the resignation was accepted due to performance issues?

Swati

Greetings from Group HR!

A common problem in BFSI sales is apparent. One thing is for sure, if you are issuing letters of non-performance, you are not only providing your employees with a sure-shot recipe for disaster but also laying the groundwork for negative word-of-mouth about the company among potential hires.

If the employees are deemed to be beyond improvement, you can simply suggest that they resign and take the necessary steps.

Regarding withholding salary, it is crucial to remember that salary is not directly tied to targets (incentives, if applicable, can always be withheld); rather, it is linked to fulfilling duties or KRAs. The decision to withhold salary is within the purview of HR, and sales personnel have no authority in this matter.

The best approach would be:
1. Do not withhold the salary.
2. Inform the junior sales staff that this is their final opportunity to improve and they need to elevate their performance.
3. If all else fails, advise them to resign.

I hope this guidance proves helpful.

Regards

Can not stop salary. Legally and ethically, it is not correct.

And is he talking about stopping the salary of all people, including his?? As a boss, he is also responsible for nonperformance.

In such circumstances, I will stop salary for a day or two, including his!!! Then he will get back, and he will never advise this in the future.

Siva

Blocking salary is not a good sign, as this can lead to a negative image for your potential hires as well as your current employees. They might start feeling insecure.

The best thing you can do is issue them a notification letter and also assess if there are any requirements for training and development. If they do not perform, you can then ask them to resign.

Regards,
Sujeet

Wouldn't it be more sensible to dismiss them for non-performance? This doesn't create the nasty taste that the proposed action does and also promotes the seriousness of targets in the remaining team.

Whatever, if you don't tackle under-performing teams and individuals quickly, you are leaving the way open to bigger problems.

Hi,

We have to find out the reason for non-performance and train individuals in their areas of weakness. It is not fair to withhold their salary or dismiss them. We must provide training and then offer them a chance to improve before taking any further action.

Savithri