Probationary Periods and Performance Management Programs
By Laura Marshall, Senior HR Consultant
Hiring new employees is an exciting time for any expanding business. But in the rush to ensure you get the candidate with the best skills, you need to make sure you’ve protected your organization in the event the hire isn’t all you’d hoped for. This starts by having the right paperwork and programs in place before you make the hire, so you can take any necessary corrective action with a minimum of risk.
It is particularly critical for an employer that operates in multiple countries to protect itself against the possibility of hiring a worker who doesn’t suit the organization. Worker protections vary widely by country, but generally speaking terminating an employee is time-consuming and costly.
This post outlines some general hiring best practices — in particular those related to probationary periods and performance management — but it’s critical for multinationals to understand the employment laws of each of their countries of operation before hiring in order to properly mitigate risk.
Let’s start by looking at employment contracts. One critical (and sometimes overlooked) way to achieve a measure of protection is to include a locally compliant probationary period in employment contracts. In many countries, probationary periods (sometimes called notice periods) typically last between three to six months. This period gives the employer time to assess the new employee to determine if he or she is right for the role and for the business.
The benefit of terminating an employee during their probationary period is that the ensuing process is relatively rapid and less costly than when terminating an employee after the probationary period. In short, the worker typically has significantly fewer legal and collective bargaining protections during the probationary period.
We recommend you understand the longest probationary period allowed under local law in each of your countries of operation and include the respective periods in your employment contracts for each country. This illustrates the wider point that a “one-size-fits-all” employment contract — or a single employment-contract template for use in all countries — is rarely a good strategy. You should moreover monitor the labor laws and applicable collective bargaining agreements (CBAs) of all your countries of operation and adjust your contractual probationary periods in the event of a related legislative change.
It’s worth emphasizing that you need to ensure your probationary clause complies with the related jurisdiction’s legal requirements. You should understand any nuances in local laws that may benefit your organization. In France, for example, an employer has the option to extend the probationary period, but it can do so only if the option is included in the employment contract’s probationary clause. You should also understand that the length of a probationary clause may be dictated by a CBA, which will override general legislation.
In order to take full advantage of the probationary period, you should schedule regular feedback meetings with your new employee. In these meetings you should review your employee’s strengths and potential areas of improvement, provide feedback and give specific examples from work. You should follow up each meeting by writing down the key points you would like the employee to focus on, and then emailing the points to the employee. Keep the emails in the employee’s personnel file, as they may be important later if a termination route is chosen.
When the probationary period comes to an end, the employer will typically have the following three options (these may vary depending on local law and any related CBAs):
- Confirm that the employee has successfully passed the probationary period.
- Extend the probationary period. This is advisable if the employer believes the employee still must improve in certain areas of the job. Once the extension has been confirmed, the employer should implement a plan highlighting what steps are required and how they can be achieved. The plan should be confirmed in writing by the employee.
- Terminate the employment relationship in line with country requirements.
Good performance management during and after the probationary period is critical for the employee’s success. Ongoing management will ensure the employee knows what precisely is expected of him or her and how to achieve those expectations.
A performance management program should be both continuous and flexible, and should involve constructive two-way feedback related to the employee’s performance, objectives and areas for development. We recommend that organizations hold one-to-one employee-supervisor meetings on a monthly basis, perhaps even weekly during the probationary period, depending on the role. When problems arise, they should be addressed promptly to avoid escalation.
There are many benefits to this continuous approach, both for the organization and its employees. The approach ensures the employee clearly understands employer expectations. The clarity often positively affects employee motivation, engagement and loyalty, reducing turnover and ultimately saving the employer money on recruitment and training.
Problems frequently arise when performance-management reviews are not held regularly, and the employee isn’t exposed to continuous feedback. Quite often employees are not even aware they are falling short of expectations until they are called into a termination meeting. This kind of quick, unsupported termination is not only a shock to the employee, it’s often illegal. And an employer that unfairly dismisses an employee under local law may be subject to fines, lawsuits and reputational damage.
If you’re interested in implementing or improving your own performance management system to protect your organization and get the most out of your employees, here are some key steps:
- Identify your organizational goals (every performance management system should be aligned with organizational goals).
- Evaluate your existing performance-appraisal process if you have one, identifying what is working and what isn’t.
- Set performance expectations in the form of objectives.
- Monitor employee performance and provide feedback continuously throughout the year, preferably meeting with each employee on a monthly basis.
- Evaluate and document employee performance.
- Set new performance expectations annually.