The energy sector is subject to its own unique stress points - including health and safety issues - and these will remain for the foreseeable future. However, risks can be reduced. One way of achieving that, and it is happening in the industry, is by measuring and managing employee performance, including aligning staff to goals and upskilling employees where deficits in skills are revealed. In business in general, goals are typically about meeting performance, business and financial targets, and are often driven by CFOs, or indeed CEOs/managing directors insmaller companies. In the energy sector, goals include compliance/quality control and other targets, such as ensuring staff perform to a uniform standard across geographical boundaries, including continents.
So how does it work? Measurement, and the management of it, is generally carried out online by a dedicated manager or managers. The system complements or replaces annual or more regular appraisals and is also used to identify skill gaps and measure competencies. It can be used at set intervals; these can be monthly, weekly or daily depending on whether urgent action needs to be taken to close gaps in performance, skills and compliance, and even attitude, behaviour, and brand values.Brand damage
On that latter subject, we have by now all seen what can happen to even the strongest of companies and brand names in the energy sector when disaster strikes or wrong decisions are made. Reputations are damaged overnight because companies and/or individuals are judged, rightly or wrongly, to have made avoidable mistakes.
Our modern online world has rapidly changed the way that business, including investors, governments, pressure groups and the public view, read and use news. It has also changed the speed at which news, as well as comment and agitation, is disseminated and shared. Corporations need to be able to respond, sometimes equally quickly, for a variety of reasons, including legal ones.
‘Online’, however, can work to this industry’s advantage, allowing both pro- and reactive steps to be taken to improve performance and/or ameliorate the effects of human error or less than adequate judgment.
Audit trails are a useful way of proving that all staff, from the CEO down, are acquainted with compliance, quality control issues, legislation etc – i.e. that verifiable action has been taken to minimise and manage risk. Online systems are ideal for this purpose.Upswing in activity - and challenges posed by new retirement age legislation
With an upswing in exploration activity in the shale gas sector, and increasingly in deepwater and arctic environments, the industry can expect to remain under intense public, governmental, non governmental organisation and, at times, legislative scrutiny.
This upswing coincides with impending UK legislation over retirement age that presents the industry with fresh challenges. From April 6th 2011, employers will no longer be able to use the default retirement age to compulsorily retire employees. Employers who fail to embrace this new legislation may face claims of unfair dismissal and discrimination.
The increase in retirement age means that many companies will have situations where age/experience/ capability may be a challenge and where the companies will require evidence leading up to and beyond the legislation change to justify why people should retire from a role or even why they should stay.
The increase effectively adds a layer of complexity to HR and other aspects of the business (performance, training/coaching and productivity), and in some cases, employment law.Management of staff online
However, all the processes that support these aspects can be managed from within an online performance management tool. The manager in charge can track an individual’s performance over a period of time and share the view he or she has of it with that individual and/or with another manager, such as the individual’s line manager.
Some employees may have the opinion that the system puts them under pressure, but the overall picture is one of subjectivity - e.g. personal opinion of an employee by a manager - being removed from the appraisal process, which is welcomed by many employees.
There is also the erroneous belief in some quarters that employees don’t like change, whereas finding after finding demonstrates that if the CEO and board get behind change initiatives, staff are happy to learn and advance in order to help the business and themselves.Key points
Guiding principles associated with the retirement age change
are provided by ACAS. Below are key points to consider and to take action on:
- Until April 6th, the law sets a Default Retirement Age (DRA) of 65 years. Provided an employer properly follows the prescribed statutory retirement procedure, the firm can fairly dismiss an employee on the ground of retirement at or above the age of 65.
- Removal of the DRA begins on 6th April 2011, with transitional arrangements covering compulsory retirements until 1 October 2011.
- The DRA change means that to retire an employee, a company will need to demonstrate just cause and follow due procedure. At the moment, retirement is listed in the Employment Rights Act as one of the potentially fair reasons for an employer to dismiss an employee.
- Just cause and due procedure will be easy to prove with a system that: (i)Aligns every employee's objectives to those of the business (ii)Provides the means to set development plans, track and record progress (iii)Provides a record of capability for all employees, thereby supporting a common and consistent set of guidelines and principles that apply across all employee ages of the business (iv)Allows an employer to demonstrate just cause and follow due procedure
There may be a variety of factors that could determine at what stage an employee should step down. All these can be tracked, recorded and analysed. The DRA has long been a valued stake in the ground for employers, as it has been a focus for performance issues and succession planning. It has allowed poorly performing employees to retire gracefully and enabled open discussion for succession planning in an orderly fashion. That’s about to change.
However, that ‘stake in the ground’ does beg the question of why or how does an organisation not take action about poorly performing employees (and the risks posed to health and safety by them) before they retire. Succession planning may have been months or even years in the making to ensure a smooth transition and the engagement of a more productive employee – but that does not excuse the inaction.A positive opportunity for employers?
The reasons why unproductive employees are tolerated are not in the scope of this article, but the subject does lead us to the crucial question: “is the change in retirement age actually an opportunity for employers?” Is it an opportunity to re-tune the business in an era of higher development costs, demands from investors to optimise performance, and strict health and safety requirements? We think so.
The combination of legislation change and an online tool should be grasped as an opportunity to carry out that re-tuning - particularly as another piece of legislation, introduced on February 1st this year, will impact on business. The maximum limits on statutory unfair dismissal compensation, redundancy payments and other awards were increased on that date. The new ruling was little publicised at the time but will lead to employers facing higher costs associated with making employees redundant.
Employee performance management tools are especially useful in employment law, not to mention health and safety issues, because they can provide audit trails of performance, behaviour, attitude and the ability of individuals to meet set objectives. Yes, even behaviour and attitude can be logged against the levels that have been set for employees to reach.
The results can be discussed face-to-face and training or coaching provided if the individual is underperforming in these areas. Attitude to work and fellow staff can bemonitored, as can attitude to health and safety issues. If individuals do not respond appropriately, the business may have grounds for dismissal or taking other action.
Senior management should participate where appropriate, particularly where legislation demands extra vigilance and duty of care. The industry is undergoing change - and expansion - sometimes in politically unstable areas and in regions where it will be under intense public scrutiny as it seeks and taps into new energy supplies. Employee performance management should be a touchstone to consider in these challenging times.Dinamiks
Shirley Barnes is client services director at Dinamiks Ltd, the author of Dinamiks, a state-of-the-art online performance and talent management appraisal solution that is powerful and flexible, yet simple to use.
For further information please visit: www.ikdevelopments.com