What to do when hiring goes wrong

Olivia* did all the usual interviews, reference checks and other due diligence when she made a new hire in her startup. And once the person was onboard, Olivia knew, as with all new staff, that they’d need time to get up to speed.

But as the weeks, then months marched on, the new staffer failed to hit their groove, struggling to keep on top of core responsibilities – at times not completing tasks at all, even when their workload was lightened as other members of the team picked up the slack. 

It also became clear the recent addition wasn’t seeing how their role fit into the small team, failing to pass on crucial information to colleagues and customers – and at times lying about it.

Then the staffer revealed they were dealing with mental health issues.

“That made a lot of sense as to why they were struggling. And, you know, we felt very empathetic towards them,” recalls Olivia. 

With support from an external HR provider, Olivia’s company put the staff member on a performance management plan to help them get on top of their issues at work – albeit rolled out slowly to allow them to deal with the mental health issues they were also experiencing.

Then, after several months of minimal progress on the plan, and a final few weeks with the employee undertaking virtually no work at all, the staffer resigned. 

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The question of when to address poor performance

From start to finish, Olivia estimates the situation rolled on for almost a year, and had impacts beyond consuming time. 

“I thought they were a good fit for the business, so that weighed quite heavily on me in terms of starting to doubt my own judgement. I also felt bad for this person's direct manager, for whom it was a considerable stress,” says Olivia.

“And also it was the manager's role to make sure that the work still got done. So they either had to pick it up themselves, which is mostly what happened, or get another person to help out. So it was really draining.”

“And we're still from time to time discovering ‘oh, that didn't get done’; there were communications with customers that didn't happen, so we will have lost customers who were unsatisfied with our level of service.”

Given the circumstances, Olivia feels her startup handled the situation pretty well, but that she could have perhaps acted on her concerns with the employee sooner. 

“I guess that's part of the challenge … at what stage can you assess someone's performance?”

“I want to treat people well. I want to operate in an ethical manner, but I know, because we did kind of delay dealing with this situation, [that] it wasn't good for the team member who wasn't a good fit. They were under considerable stress, so I actually wasn't doing them any favours by not dealing with it. And I really regret the stress that the manager was under as well.”

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Create clear policies and processes around non-performance

Dealing with a hire who turns out to not be a fit for your startup can be one of a founder’s biggest challenges.

Paul O’Neil, head of legal, consultancy and general counsel at the Employers and Manufacturers Association (EMA), says bad hires generally fall into two categories: non-performers and those who commit misconduct. 

“The misconduct piece is a little harder to predict and also sometimes a little more straightforward to deal with because you've got a specific issue and you can nip it in the bud,” says O’Neil. “If someone has engaged in misconduct, particularly if it's serious misconduct, then there's a disciplinary process you can follow.”

“What's probably harder to deal with is the non-performer – the person who you've hired, who you thought would be good at the job and just isn't for a variety of reasons.”

It’s an issue that O’Neil says has been exacerbated in recent years by skills shortages in certain sectors, where some employers haven’t been as rigorous in their hiring processes, and more hesitant to deal firmly with poor performers for fear of not being able to find a replacement.  

“That's the easy decision to make in the short term, but in the medium to long term it has a massive impact because it'll impact your culture if people are turning up and the rest of the staff are saying ‘that person is not pulling their weight and they're not being held to account’.”

And from a legal perspective, employers who shift their performance expectations when the market changes, and good staff become more accessible, leave themselves exposed.

“If you haven't raised those [performance] issues previously it's quite hard to raise them now. So when you set low expectations and low performance levels within the workplace, culturally it’s bad, but also, legally, it’s tough to try and insist upon it [higher performance levels] later.”

O’Neil says founders need to invest early to create clarity around how their company will deal with poor performance.

“Prevention is better than cure, so invest a little bit of time and money upfront in getting policies in place that are really clear around how you're going to manage non-performance, and have your contracts clear about what you require, and have your policies and processes clear about what you'll do to respond to that, because that way everyone's on the same page.” 

Following process is key, he says, when dealing with underperformance or non-performance.

"You're going to have to go through a process whereby you're trying to work with your staff member to improve their performance. You have to give them an opportunity to get better, and you have to work with them to try and get them better, and you have to give them the tools so that it's at least a realistic prospect – and you have to set milestones."

"And that timeline can't be a prejudged timeline of 'I'd like to sack you now, but this contract says I have to wait six months'; it has to be a realistic performance improvement programme where you are actually working with them to try and get them to the level that you say you need them at. And if you don't work through that process, don't give them the tools to try and get better, or it looks like you've prejudged it and said, 'I'm always going to sack this person. I'll just go through the motions', then if they challenge it in the Employment Relations Authority, they'll probably be successful."

When dealing with poor performance, employers also walk a fine line between protecting the privacy of the staff member in question, while communicating to the wider team that the issue is being addressed, he says. 

“You can't just air all that dirty laundry and say, ‘I've had six meetings with Bob, and Bob isn't up to scratch. And if he doesn't pull his socks up, I'm going to sack him next week.’ You might like to say that to send the right message, but you just can't.”

“The best way to do it is to have clearly communicated standards that apply across the board, and to follow those processes and to keep talking about those standards, talking about those expectations and in a positive way.”

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Seek support at a stressful time

Kalyn Ponti (KP) and Charlotte Bates of employee experience and HR consultancy Humankind agree failure to get on the same page about expectations with a poor performer early doesn’t help anyone. If critical work in a startup goes undone, says Ponti, who is Humankind’s CEO, it lowers the bar of the company’s culture and reduces trust in leadership. 

“The other thing I would say is that not dealing with things in the moment or as and when issues may arise … can lead to much more significant problems,” says Bates, Humankind’s director of employment relations. 

“Not dealing with it can result in significantly more time spent by founders having to resolve it – whether that be through a disciplinary process, or whether it's through having to manage key stakeholders or potential purchasers of products because that one individual's conduct or poor performance has caused significantly greater problems further down the track.”

“Often I see it in my role when things have come to a head and there may have been several months of not addressing it.”

Getting help is key, they say. Firms that don’t have inhouse HR and legal capability should look for external support. Employees are entitled to have a support person with them at formal meetings, says Bates, and some also request this for informal meetings too.

“Similarly for founders, [I] absolutely recommend you get that support, and have someone basically in your corner to help you through the process because it can be an incredibly stressful time.”

“It's not just, say, legal advice or people and culture advice; it's having good mentors, good business support. Do you have a board? Is there someone among one of the directors that you can tap into as a sounding board – someone to share the load?”

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There are options

Founders can feel there are no options other than parting ways with someone who’s not a fit, but there are others, says Ponti. 

One is to bring in someone over the top of the employee to act as a mentor who can guide their performance improvement; another could be to shift the person into another role. A key question to ask, she says, is ‘are they a strong addition to the organisation but just not in the right role?’.

Maria Mughal, a Queenstown-based marketer with a tech sector background, responded to Caffeine’s call on LinkedIn for readers to share their experiences of dealing with bad hires.

Mughal cited some examples from working in past teams that illustrate some varied approaches. One company she worked in started conversations early with a poor performer about both parties’ expectations of the role, so when the firm ultimately made the call to put the employee on a performance management plan, it wasn’t a surprise, and the employee made the call to resign before embarking on the process.

In another situation a junior employee consistently tried to step into the territory of more senior staffers, ignoring some of their own assigned tasks in the process. About halfway into working through a plan to manage the employee’s performance, another role became available in the company that was identified as a better fit for their aspirations, which they happily moved into. 

“It wasn't that they were a bad person, it's just that what they thought the role was going to be was just not it… So then when they actually did it, they just were not engaged and didn't enjoy it.” 

“I think it [changing roles] took the pressure off them as well, because they felt like they were in their element again.” 

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Ponti and Bates of Humankind share hiring tips to stop ‘bad hires’ in their tracks

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1. Set expectations from the start: During the recruitment process, set out your expectations for the role and talk about your culture – particularly what it’s like to work in a startup. 

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2. Be clear about how you work: Startup roles generally aren’t 9am–5pm, so be clear not just about the tasks required in the role, but when and how they’ll need to be delivered.

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3. Emphasise the information during onboarding: Take this opportunity to reiterate what is expected in the role, how they will need to represent the company and brand, and what is expected in your culture.

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4. Provide training: In a startup, this could involve them shadowing someone in the role, so they can see in action what they’ll need to deliver, how work is undertaken, and how the company’s culture is expressed.

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5. Be transparent: If issues with a new hire arise that aren't in line with expectations for the role or the company’s culture, call them out as and when they happen so the employee has a chance to turn things around. 

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*The founder’s name has been changed to protect their identity and that of their company.

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Employee experience is at the heart of Best Places to Work – a programme Caffeine is supporting as its media partner for the startup community. The Best Places to Work employee engagement survey is now open.

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