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Managing performance: From silly to serious misconduct

Managing performance: From silly to serious misconduct

Employers must be prepared to handle a number of different types of behaviour when managing employee performance, from underperformance right through to serious misconduct. It is imperative that employers approach every situation with care and follow the correct steps no matter the context to avoid trouble later on.

CEO, Nigel Ward and Director - Workplace Sydney, Luis Izzo will provide you with the tips and processes to manage performance with example scenarios to understand how to tackle any performance issue. 

This webcast will cover:

  • scenarios from underperformance to serious misconduct;
  • preventative measures;
  • benefits of a positive workplace culture;
  • legal risks: unfair dismissals.

WEBCAST TRANSCRIPT

Nigel Ward:  Good afternoon, everybody. Luis, thanks for joining me.

Luis Izzo:  It's a pleasure to be here, Nigel.

Nigel Ward:  Look, we've got a really big audience today. It's over 1,000 people. We're very, very conscious that it traverses a very wide span of businesses. We've some child care centres. We've got some multinationals with us. So we're going to try and give you a little bit of an insight along the journey about managing performance.

Nigel Ward:  Elements of what we do today is going to be very much about the HR side. Then also, we're going to get into the technical side as well. So we'll press on.

Nigel Ward:  I just want to talk a little bit about the why's to begin with. Why invest time and money in this space. You've yielded to me, haven't you? I'm going to do some work on the foundations, and I'll explain why I want to do that early.

Nigel Ward:  I want to talk about different types of performance management. Litigating to the reinforcing performance management. The positive stuff. Then we'll talk about the remedial side, the negative stuff.

Nigel Ward:  Keen to cover the technical stuff as well. We've got a lot of people in the audience who really want to go through that technical side. Then we'll wrap up looking as the must-dos. The things you've really, really got to get right.

Nigel Ward:  I doubt given the size of the audience we have to explain this, but just to reinforce the issue. If you want a progressive workplace culture, if you want a high performing team, you've got to get the balance right between the positive management of performance, and then the negative management of poor performance. You've got to get that right.

Nigel Ward:  You really want to get the best out of your people. It cost a lot to employ them, to recruit them, to on-board them. So it's really about optimizing the individual’s performance, and it's about optimizing the team's performance.

Luis Izzo:  Nigel, the thing is that we know with a lot of our HR managers, as clients, often spend so much of their time on managing under-performances, focusing on the people they have to, because they're the ones causing potentially some damage in the business.

Luis Izzo:  But you then forget about the ones that are actually performing at a good level and trying to keep them there. That's where it's hard, and that's why you're reinforcing and able to balance. So hopefully there's some stuff you can help us with at the front end of that.

Nigel Ward:  Let me kick off. Normally when we do these things, I like to talk a lot about culture, and engagement. I think most people probably are on board with that.

Nigel Ward:   We've been doing a lot of work recently with frontline leaders, with some of their clients really trying to get this area right. A lot of those businesses are currently changing rapidly. They're reorganizing, doing transformation projects and the like.

Nigel Ward:   Every time I go out there at the moment, I see them getting things wrong before we even get to the conversation about performance management. I've called these things the foundations and I just want to have a quick discussion about those, if I can.

Nigel Ward:  The first one is job clarity. It's remarkable how often you find people in a business, and they don't quite know what their job entails. Particularly, if they've just gone through a business restructure, and their jobs actually morphed a little bit along the way. There's some key things you've got to get right. They've really got to understand what tasks they're performing.

Nigel Ward:  It's very, very important they understand what business systems they're actually going to be working with and operating with. Probably the one which I see failing more often than not these days, particularly in the last year is, they don't understand where their job fits into the broader organization. So they feel a little bit lost, a little bit isolated in their job. Before we even talk about the positive and the negative stuff, make sure you've got the answer to the question around job clarity. Do employees understand the job they're doing, what it entails? You've got to get that question answered in the positive.

Nigel Ward:  The second one I see a lot of failings with at the moment is delegation. I don't just mean senior executive delegation, but actually sitting down ... I sat down recently with some shift crews. I said to them, "Well, what are you allowed to do? What aren't you allowed to do?" They were kind of dumbfounded by the question. They didn't quite understand how to answer it. You got a lot of people saying to me, "Well, I think we're allowed to do so and so." Or, "I think if we want to do this, we going to have to talk to the shift supervisor."

Nigel Ward:  The next one is making sure people understand what the delegation authorities are. What decision-making authority people have got. That's number of my foundations.

Nigel Ward:  My third one is expectations. Do people actually understand the outcomes they much achieve. I normally phrase this very simply. I say to people if I'm out on a shop floor in particular, but I can do this for management as well. "What do you have to do for your job to be a success?" If they look at you and go, "Well, I think I need to do this," or, "I suspect I need to do that," you really haven't answered the question very, very well.

Nigel Ward:  I'm not just talking about here about setting KPIs and the really hard rigid stuff. Just about, do people understand what they need to achieve when they come to work every day. So that's foundation number three.

Nigel Ward:  My last one is ... bear with me, the last on is boundaries, and it's increasingly one that we come up against. That is, do people understand what the boundaries for their behaviour are? Now, if you've got corporate values, that's living the values, but it's also just day-to-day to help you. What language can I use? How can I dress in the workplace?

Nigel Ward:  I see, increasingly, some lack of clarity around of those four issues. Honestly, if you don't get those right to begin with, you're amplifying problems later on. My experience probably tells me it's really about how effectively your onboarding people. If you don't on-board them properly, they'll probably make up the answers to a lot of those things. They might be right, they might be wrong. Or they'll learn the answers from existing employees, and again, it might be right, or it might be wrong.

Nigel Ward:  The test you want to give yourself is, if you can't make sure that people have got this right in the first six weeks, you're probably going to have issues later on. That's my passionate plea to the audience today, is really you need to nail all those foundation. If you don't get those foundations right, trouble is probably going to be looming.

Nigel Ward:  So let's put Nigel's current philosophical views aside for a minute. Let's talk about two sides of performance management. There's the reinforcing the side, positive side. There's the remedial side. Let's not forget that these are both reactive and systemic. I think we'll start with the positive, because it's a good place to ... And it's one that never gets mentioned more often than not.

Luis Izzo:  That's right. With the positive performance management, as I said earlier, the reality is that often we see too much time being directed elsewhere within the business.

Luis Izzo:  The way I see positive performance management and perhaps the example is a little crass, but I'll run with it anyway. Is that you could almost take the analogy of a care tire in the sense that the usage over time, it starts to deflate a bit. It's still reliable. It's still runs, but just the bounce that was there initially might not be there. What you need to do every now and then is just pump those tires up a bit. You need to keep giving it a bit more energy. It's about reinflating. It's about giving the employee in this context that energy to keep going.

Luis Izzo:  Whilst, often you might have you might have rational drivers you can use, the pay raise, the promise of a promotion, those are things you unfortunately can't use that often. A business only has so much money to give. You, as an HR manager, a business owner might only have to much cash in the pool. So what can you do at a day-to-day level to keep people engaged? To keep them fronting up to work, and happily doing their job? Even though you might not be able to give them that big payoff, or that might be available somewhere else? What can we do?

Nigel Ward:  I think the audience would know, but all of the literature tells us that the most important element of performance is the immediate manager. If they look up and they see a manager who is inspiring, leads by example, that in and of itself is probably going to drive performance better than anything else.

Nigel Ward:  Which is why I always say, "If you're going to spend a dollar on development, do it on the immediate manager. Rather than necessarily sending the executive to Stanford." I know I get chastised for saying that sometimes by HR directors, but they're the key.

Nigel Ward:  Let's have some audience participation. I think the question we're gonna poll is, does giving ad-hoc feedback come naturally to you, or other managers? We'll open the lines now for the question, and we'll come back to it in a couple of minutes while we talk on.

Nigel Ward:  This is a bug bearer of mine, and it's been a bug bearer of mine for a long time. I have the sneaking suspicion that it's a culture issue in Australia. But we are very bad at giving ad-hoc positive feedback.

Nigel Ward:  There's four key elements to ad-hoc positive feedback. It's got to be specific, so don't please use clichés, because they just don't work with Australians in particular. It's got to be immediate. I use the phrase always, "You need to catch somebody doing something good." It's got to be personal. You've got to express ... you're expressing gratitude. You've got to express it in an emotive and personal way, and it's go to be spontaneous.

Nigel Ward:  One of the great things about giving ad-hoc positive feedback back is it can be simple, short. If you do catch somebody in the act of doing something well, it's a very nice way, as you put it, reinflating the tire. But it also immediately says, I'm being recognized, I'm being acknowledged in a way that most people are very, very comfortable with. It's not the grand hurrah moment of outing you in front of your colleagues, which Australians find very, very difficult to cope with.

Nigel Ward:  I find when I do front line leadership development work, this is the area where they really struggle. They aren't very good at this. The problem with that is that if you don't do things like this, performance management simply becomes a negative conversation. If you can't get this right, and you can't build this into a habit, you're going to struggle quite seriously.

Luis Izzo:  Well, I just wanted to pick up from two things there, Nigel. The first is I do want to reinforce this notion of the performance feedback being immediate.

Luis Izzo:  What you'll find is if someone has actually spent a considerable period of time on a piece of work, or they've really gone above and beyond, think about the impact if you don't acknowledge it, or you don't give the feedback. All of a sudden, they're sitting there thinking, "I went to all that effort, and my manager didn't notice."

Luis Izzo:  Now, if you're planning on giving that positive feedback in a month's time, or two months’ time, it's too late, because they're already deflated. They're already disengaged, because, "My boss didn't notice that at the time." So they're feeling a bit down on themselves for two or three weeks. Then when they've kind of gotten over it, that's when you give the feedback. Well, it hasn't really had any effect, and you've led to a disengagement, effectively, driver there. Instead of something that you were actually hoping to be reinforcing of engagement.

Luis Izzo:  So, it really is critical that in that week that it happens it's noticed and acknowledged. I think any later, and it's probably worthless, or in fact taking the wrong direction.

Nigel Ward:  The audience has proved me wrong, because I've got 70% of the people here say it comes naturally to them. Perhaps we've worked together in past lives, or something like that, but gee, I'm really pleased that, that's the number. That's an excellent outcome.

Nigel Ward:  The other thing as well, is just that you need to get experienced at doing this. In our business, I've worked with people who don't do it naturally, and it sounds quite stilted the first time, the second time, the third time. Eventually, you kind of get used to doing it. People after a while go, "Okay, that's just you giving me positive feedback, rather than actually doing something special."

Luis Izzo:  The other thing I wanted to raise, Nigel, is what are your views in relation to the utility, or the desire to use two different methods of feedback? One is the personal, one which we really talked about here, direct one-on-one, versus public acknowledgment. Now, you mentioned how that can sometimes be perceived. Is there ever a role for the public acknowledgment in terms of positive feedback?

Nigel Ward:   Well, I must say, culturally I get in trouble with this all time. It's unambiguous, the first one. The one-on-one, great stuff. I'm a big fan of, in a public forum, saying that somebody's done something well. But it's a strange cultural element in Australia that there'll be somebody in the audience ... If I say you've done well, there'll be somebody in the audience who'll say, "Well, that probably means I haven't." So it's just something cultural we've got in this country, I'm not sure why. If we were in America it wouldn't happen. If we were in England it wouldn't happen. But in Australia you have to be a little bit more sanguine about when you single individuals out.

Nigel Ward:  The other you've got as well, if you got 30 people in the room and I say, "Gee, I want to congratulate you on this, and great job," and I haven't noticed that Bob's done a great job, then Bob feels pretty bad as well. So all I would say is be more considerate about how you're doing it, that public stuff, and understand-

Luis Izzo:  Perhaps to be more sparing.

Nigel Ward:  A bit more sparing and understand whether or not there's any unintended consequences. But start with this one. This is the one to start with, no doubt about that.

Nigel Ward:  Now, more structured feedback, and we would probably take about six hours talking about structured performance management in terms of, should you have annual reviews, half yearly reviews. All of the literature today, at the moment, says the annual review's a dead thing. Surprisingly, probably more than about 70% of the companies we work with still have an annual review of some kind.

Nigel Ward:  What I will say though, is it needs to be timely. What I mean by that is different people, different businesses, timely means different things. So if I'm in call center, I'm probably actually wanting to give structured at least if not daily, on a weekly basis. If I'm in a different business, it might be quarterly. For what a business is, at least having some structured process on an annual basis is not a bad thing, as long as it's not the only process you've got.

Luis Izzo:  That's the danger of this structure, is that people think that's the only time we talk about how someone's going. If that's your approach, that's a disaster.

Nigel Ward:  Now, the one thing I will say is I meet a lot of businesses, particularly small businesses, start-ups, who say, "Well, we'll do this when we want to." They often, straightaway tie performance feedback to salary review. They to, "Well, that's all very discretionary." So somebody might actually go two years without any structured conversation. You've really got to avoid that type of behaviour. So it's got to be timely, and my proposition, it's got to be recurring.

Nigel Ward:  So if you are only going to do it annually, please do it every year, and make sure you're giving feedback. Remember, feedback is not just a conversation about performance and behaviours. It's about aspirations. It's about development opportunity and the like. The one thing I will ... please, please, please, please, please, please make sure it's face-to-face.

Nigel Ward:  Look, Luis is chuckling, because we had a client the other day who rang us up, and said, "I've got some amazing new performance management computer system." I said, "Ah, that's brilliant, Phil. What does it do for you?" Phil said, "Look," he said, "you don't actually have to meet up with the person you're talking to anymore. They fill-in their bit, and you fill-in your bit. Then you have this online chat." He says, "Brilliant. We don't actually have to meet face-to-face." So I quietly looked at this HR director, I said, "Isn't that defeating the purpose of performance management?"

Nigel Ward:  Look, what I would say is technology aside, if you're not in a situation where I can sit down and look Luis in the eyes, and say, "Look, Luis, I want to talk about the good and the bad. I want to talk about the good, the areas for development." However you want to ... What language you use, whatever it is, you've got to be doing that face-to-face.

Luis Izzo:   If I can just raise a technical tip at this point, and we're going to talk about technical stuff much later. But, I have noticed that a lot of clients more and more are now putting in contracts of employment and things like that, commitments to certain performance processes. Particularly, in probationary periods, we will review this point and that. Just unnecessary.

Luis Izzo:    I mean this should be something about your culture that you develop organically, and that you use. There's no need to be committing to any rigid or structured process in your contractual documents. Contractual documents at most might say something about, "We may review this annually," or whatever. But, you want to be very careful about making all these commitments upfront. Because then if you don't ... Because we all know we start off with great ambitions, and then time gets the better of us.

Luis Izzo:   You then have this scenario where you might be moving to terminate someone either in probation or outside. Saying, "Well, we've got a right to terminate, four weeks’ notice, whatever it is, poor performance. I would say, "Yeah, well you've got that right to terminate. The person might not have unfair dismal access, but you've got all these contractual representations that you would do A, B, C, D, and E. You didn't do any of it. That's contributed to the employee being in the situation they are.

Luis Izzo:   So, can you please be careful about putting those types of things in your contractual documents. Keep it out. Do it by policy. Do it organically.

Nigel Ward:  Yeah, because these are things which as the years go by they're going to change. They're going to be refined. Situations, circumstances are going to change as well. So the current knowledge and ideas about what's best practice is going to change as well. So you want to allow these things to evolve on review. Don't hard wire these processes into your employment contracts, please don't. Yeah, if you want some help with that, give Luis a call, and he'll make sure you're okay.

Nigel Ward:  Look, that's the positive side. That's the positive side as we said. Please make sure that you spend as much time focusing on the positive side as you do the negative side. In fact, I'd prefer to see people spend a lot more time focusing on the positive side than the negative side. There's nothing worse than sitting in a work team, and you sit there and you go, "Gee, I'm doing a really good job, but Bob over there, who's a bit of a dick, he seems to be getting all the attention. Why don't I get some attention?" That's the positive side of the equation.

Nigel Ward:  Let's talk about the remedial. I've used the word remedial, you could say negative, we could say poor performance, but I prefer the word remedial these days, because you really want to remember that you're trying very, very hard to take one of your people, who's not quite doing what you want, and to actually get them back on the path. Rather than, how do I sack somebody as quickly as possible? Because you've made an investment in the individual.

Nigel Ward:  You and I have had this conversation many, many times. I always like to say, to please, please, please remember why people don't perform. There are a lot of reasons. I think on the slide, there's the proposition of the bad egg theory. You've probably adopted this theory in your lives at some stage. "Luis was born bad. He grew up bad. He started work bad. He'll always be bad. The sooner we get rid of him out of our business, the better we'll be."

Nigel Ward:  I'll be honest, after 30 years of doing this, that's a pretty rare person. I've met them. I have met them. I could probably still name, after 30 years, who they are. But for the most part, if people stop performing, or they start to behave in a way that you're not comfortable with, there's normally a very, very good reason of it. We've put some up on the slide, which are the common one's that we come in contact with.

Luis Izzo:   The way I like to sometimes refer to this is ... I mean it's very rare, isn't it, for your employee to wake up this morning ... for any employee to wake up and think, "You know what? I really want to go into work today and under-perform. That's what I'd like to do. And next week I reckon I'm going to do that too, because that just looks like a good thing to do." No one goes out to set about to doing things that way. They actually want to achieve good outcomes in the business for themselves, for their family, for their self-worth. So that's what ... I tend to agree with Nigel.

Luis Izzo:   You need to be looking for the root cause. A lot of them will be in the workplace, I think, generally. It will be within the workplace. There's where we talk about matching of the skills to the job. Are they appropriately trained? Are expectations appropriately communicated? That goes back to some of Nigel's foundational points. Do we have the right type of work for this person that matches their skillset? All those types of things.

Luis Izzo:   But, you do need to be conscious that on occasion the cause may well be outside of work. If the cause is outside of work, what you need to think about is, well, how do I need to approach that? Is this something where I know so and so's going through a difficult time right now, to do with one of their children, or their personal relationship. It might be that they just need five, six weeks of just a bit of air, a bit of room breathing space, and then they'll get back to it.

Luis Izzo:   So you don't actually need to ride them hard, or anything like that. It's more about giving them room to move, and just that extra space they may need.

Luis Izzo:  It may be something more serious. It may be a mental health issue outside the workplace to do with, again, personal circumstances. You might be looking at more structured accommodations, whether it's to do with their working arrangements, the types of things they're doing in their job. But, just bear in mind that every now and then, the cause might be outside of work. Again, you need to grapple with that.

Nigel Ward:  It's a good observation in the sense of, if I look at you and I say, "Look, he's not behaving the way normally would do." I want to get to the root cause. I want to be sensitive about it. I've going to be careful about inviting your private life. So there's a very sensitive approach that's required in that.

Nigel Ward:  Obviously, if you want to open up to me, then it's a question of how far I might go from a corporate perspective, values perspective, general approach perspective, in terms of trying to support you. But, I think the bottom is just that please just don't assume that somebody was good one day, and then gone bad the next.

Nigel Ward:  I'll be frank, one of the things I see increasingly at the moment is, particularly since the GFC, I've seen a lot of people downsize, downsize, downsize, downsize. A lot of people in work at the moment sometimes get tired. It's not that they're under-performing in the sense of they've gone bad, they're just wary.

Nigel Ward:  I'm actually seeing a lot of managers at the moment, who's job seem over the last 10 years have got bigger in terms of their scope. So just proposition number one is, just try and understand first of all what the root cause of the under-performance is.

Nigel Ward:  Now, we're going to ask a polling question. Do you find managing poor performance easy now? Now, please answer this honestly, because I'm still sceptical about the first one. Please answer this honestly, because if I'm right from experience, then most people will say they don't find managing poor performance easier. But we'll find out very, very quickly as we just press on.

Nigel Ward:  One of the things I say a lot of the time is just that people fail to stay objective when they're managing poor performance. There's something in what's happened that's kind of pressed their buttons. They're a little bit off balance in terms of how they approach it. Particularly, sometimes where it's, "Oh look, I've had my eye on Luis for a while." It's really, really important to stay objective. It's really, really important to understand whether or not your imbalanced as you approach dealing with the issue.

Nigel Ward:  Really to be honest with yourself about whether or not you've gone off a little balance here. It really happens when you feel criticized. If your personal values are compromised. Particularly, in terms of somebody's behaviour. The one which I always see come home to rest a lot of times is, "Oh, I've been involved in this before." Straightaway you get preconceptions as to what may or may not have happened. You make assumptions about the individual before you even look into the matter.

Nigel Ward:  One of the things I really do want to hone in on as we get into this is, you really do need to stay objective. There's some really important ... Oh, look, we've got some answers. Ah, look, everybody's been terribly honest.

Luis Izzo:  They all find it difficult.

Nigel Ward:   88% said, no. It says it's not an easy thing to do. Do you know what? I tell you this, that's about right. That's about right. When I think about my experience over the years, that is about ... Can I also say this, that should be right as well. I get a bit daunted by people. Occasionally, I meet managers who go, "I really enjoy doing this." Or, "I really enjoy sacking people." I'm not entirely convinced that that's the right value set to take into it. It shouldn't really be easy in way. Particularly, if you get to terminate somebody's employment. It probably should actually make you stay up the night before a little bit and think about it. So I'm not surprised by that answer, but actually in some ways might be the right answer.

Nigel Ward:  If it's a competency issue, just afterwards give us a call, and we'll come and work with you, happily.

Luis Izzo:  Now, before you dig into this, Nigel, I think the other thing that I wanted to really set as an important issue up front is that when we talk about managing performance, we will get ... I know often people want to talk about the termination part of it. That's going to happen later on, but that's the last part of a performance management process. That the key that of this remedial part of performance management is to get your employee performing back at that level that you wanted.

Luis Izzo:  The only way you're going to achieve that is by starting early. Starting early, and starting softly, and then progressively having a measured approach from there on in. So if you are starting with a performance improvement plan, you're cooked to begin with. It's not going to go very well. You need to be able to jump onto these very promptly.

Luis Izzo:  You should be starting with very informal discussions early on that says, "Look, just wanted to have a chat with you about X, Y, and Z. Maybe next time we can do it slightly a bit differently. Do you see how maybe then that way the clients ... it'll pop to the client a bit more, whatever you're working on."

Luis Izzo:  The way I see it is, you almost have a person floating along an imaginary line. The under-performer has dipped below this imaginary line, and you're using the performance management process to push them back up to the imaginary line. You're trying to use quite soft mechanisms, that we're going to talk about, to try and coax them back up to where you want them.

Luis Izzo:  If that doesn't work, then they drop a bit lower. Then you're going to want to push them back up again. Then if that doesn't work, we get into more formal discussions. We're talking about warnings, and performance improvement plans. Again, you're still trying to get them back up to the line, but your prospects of success as you get to each stage diminish. You know that eventually, as we go down this particular track - You're going to end somewhere. But, if you don't start early and promptly with that softer stuff, then you're always going to end up at termination. We don't necessarily want that to be the case. There are a lot of costs in turnover. There's emotional cost involved as well. If you can start early, you're prospects of success are pretty good.

Luis Izzo:  So please start early, start softly with some of the more informal stuff, as Nigel is going to talk about now. Then as, yes, we go down that continuum a bit further we'll make sure you're armed with the skills to ensure you don't end up with a successful unfair dismissal claim against you. But start early and softly is my message.

Nigel Ward:  In doing that, I've identified four skills here, and certainly HR people should have those skills. But, really if you're a line manager, to some level, and you're dealing with individual employees and their performance, you need some of these skills. They're critical skills when you're actually dealing with negative, but also a positive performance management.

Nigel Ward:  Number one, obviously, is listen. Most people will understand what I mean by active listening. It's about body language, tone, as well as the actual words. I think when you go into these processes, if you're able to be empathetic, that is you're able to put yourself a little bit in their shoes, the language you use becomes more supportive, rather than antagonistic. That's a really positive thing, as you say, early on.

Nigel Ward:  The one area where I see a lot of frontline supervisors fail is, they struggle to be assertive. They don't like doing the, "This makes me feel," or, "I think." You need to be assertive when you're dealing with issues, so you have absolute clarity, and that ability to deescalate.

Nigel Ward:  We'll talk a little bit about that as we go through, because de-escalation on occasions is a really important thing. Not just to deescalate conflict, but also to give you breathing space sometimes to make a more considered decision. So these are the skills you need. I would say if you think you don't have these skills, this is an area where you would want to think about development.

Nigel Ward:  Now, as I said at the beginning, let's be objective. A few years ago somebody said to us, "Well, is there one piece of paper I can put on my wall which deals with how I do this." We ended up saying, "Yep, we'll give you one piece of paper." This is our famous one piece of paper. Look, at the end of the day, no matter what it is, it could be a horrible violent assault in the workplace. Or it could be somebody's just late for work on a recurring basis, the same process applies.

Nigel Ward:  The first proposition is very simple. That is please establish the facts. In our experience, with some sadness, we find that this is probably one of the areas where most people fail very, very early. I'll give you a very quick example of how things can go wrong very, very quickly. A small one and a big one.

Nigel Ward:  We recently had a case where somebody had an employee who was late for work. The employer made certain assumptions about how late they were for work based on what somebody had told him. Later on, when he actually went back and looked at the records, he found out that what he was told this is what happened were miles apart, and here he'd already started down the path.

Nigel Ward:  We had another recently on a much broader scale, where we had a client who had a safety issue. A very serious issue, which potentially could've led to ... subject to everything being done properly, dismissal of some employees. 14 people involved actually in the incident. After talking to eight, generally there was a consistent theme coming out. They didn't bother talking to the other six.

Nigel Ward:   We got involved and said, "Jed, it wouldn't be a bad idea asking the other six." After they spoke to the other six, they came back and said, "Well, it would appear that things are completely different from what we thought." So just establishing the facts is critical before you actually get into the process.

Luis Izzo:   What that means is really interviewing the relevant people, so you need to identify who has relevant knowledge about the incident. Let's interview them. If there's other information that's relevant, whether they be policies that apply, CCTV footage, any other material that's relevant, you need to review it, and have an understanding of it.

Luis Izzo:  If there's a scene that needs to be inspected, inspect the scene. But you need to gather whatever ... Depending on the severity of the issue at hand will depend the level of rigor involved. But you need to gather all relevant information about the issue, including interviewing relevant witnesses before you then go to the next step.

Nigel Ward:  Besides that, if it's just a general performance issue it might be as simple as, "Well, what are your performance indicators? How have you been performing over the last three months." To, "We've had a fight and we need to interview 13 people that were in the crib shed when the fight happened."

Luis Izzo:   With performance, there may be, depending on the nature of the interviews, there may be two out of the three people that just have to speak to. To find out what is it that was wrong with the quality of the service on this occasion? Why is it that we're saying that so and so always delivers this report late? It might be there's something else contributing. You need to build that picture, so that's the first thing.

Nigel Ward:  Once you've done that, all we want you to do is to actually put those and the position to the employee concerned. Again, if it's Jane, "Look, for the last three days you've been late for work by half an hour. I just want to get your response to that." So we just want to put it to people.

Nigel Ward:  Now, as Luis said, if it's a serious altercation, or whatever, that might be done with a much higher level of formality. But, establish the facts. Put the position to the employee, then allow them to respond. Now, in the Jane example, it's probably going to be a very straightforward conversation or discussion about, "Well, let me explain why I was late. I'm sorry," whatever.

Nigel Ward:  In the fight situation it might be, "Well, I'm responding now, but I might have to come back and think some more," whatever. But, facts, put position, allow respond-

Luis Izzo:  The only thing I'd add to that is the opportunity to respond has to be a genuine opportunity. Another way you could ... I don't really like this term, but it could be a fair opportunity to respond. What that means is, again, it'll depend. For Jane, "We'll speak to her about it on the morning, if she can respond straightaway." For the serious allegation, to be fair to them, they might need five days to consider the allegations. Have the allegations and events, consider, get advice, respond.

Luis Izzo:   What a genuine opportunity to respond will depend on the circumstance of the case. The more serious, that's when you're going to be building in extra time to respond. I don't think anyone usually needs more than a week. So I think for the more serious allegation, which has a level of complexity about it, that might be how much you need. It would only be something extraordinarily complex, or where there's some other factor preventing the employee responding, that you'd need to go beyond that.

Nigel Ward:  That's why we've stuck in the far right hand corner, situation and context. The situation and context plays its way through this. You're right. In the smaller case, it would be, "Can we just have a chat about what happened last week?" In the bigger case, it might three people that are saying, "This is what we think happened. We're putting you on notice, and can we have a conversation about it?"

Nigel Ward:  Then consider the response, and explain what your position is about the response. In the simpler example, you could probably consider it on the spot and explain how you feel. In the more serious example, it might very well be, "You're gonna go away for a few days, and think long and hard about it." You might need to go and talk to some other people about it. Bounce your ideas off. Then, come back and explain your actions that you're going to take.

Nigel Ward:  Now, believe it or not, if you apply that process, subject to situation and context, every time you have a negative performance management process, you will have afforded the person that fairness thing, which we call procedural fairness. More often than not, as Luis will explain shortly, that's the undoing, is the procedural fairness side.

Nigel Ward:  So if you have this schematic on your wall,  you'll be doing okay.

Nigel Ward:  Now, we've got a few little odds and sods on the screen. We might just go through them, because ... I'm going to start with the one on the right hand side, if I can. I am a passion advocate for what's called the Performance Improvement Plan. What that normally is ... and we've got one if people want to borrow as, they can borrow as.

Nigel Ward:  Let's say I've sat down with somebody, they're work's just fallen off of late. It's not a serious issue in the sense so that I want to issue warnings or anything. But what I want to do now, is I want to tell them what I expect them to be doing over the next couple of months. I'm going to track it with them, and assist them in terms of any help they need, or charting whatever it is to get there.

Nigel Ward:  Now, I should document that. We should document in something called the Performance Improvement Plan. Most companies should have them. But it does for me is, if you think about Luis's example, it gives the person a very great clarity about what I expect. It tells them what the review period is, and off we go. If they start to fail with that, I really do have a nice back up and process started before I move into more serious things.

Nigel Ward:  So I'm an advocate for the Performance Improvement Plan. It's stuns me how many times I go into the large companies, and they go, "We don't use them." So please start making that a habit.

Nigel Ward:  We've got a couple of other ideas on the slide, which is really important. We'll just quickly go through them. We have to get this question of ... I argue about the phrase all the time. "Well, Bob and John, had a fight in the crib shed. Can we stand them down while we investigate?" We won't get into the details of whether or not stand downs the right phrase. But you're entitled while you investigate to ask people to stay home on pay.

Luis Izzo:  Yep, provided you pay them.

Nigel Ward:  Provided you pay them. Please don't think you can get away not paying them. Really, you need to test that. My test normally is, is it easier for me to investigate with them while their at home? That is they're not going to pollute or pervert the investigation.

Nigel Ward:  The question about, I've got a performance issue. I'm going to ask the employee to come in. Are they entitled to a support person?

Luis Izzo:  Well, the short answer is, it depends really. In the sense that what I say, is when you get to a serious level discussion, we're talking about something that might result in warnings, perhaps an improvement plan, or certainly termination. That's when you're going to be saying, "You know what? It's really preferable to give them the opportunity to have a support person present. Because if we don't, then that's where we will find that there might be some procedural criticism later on."

Luis Izzo:  Certainly, if you're in dismissal context, and you don't offer the support person, that is something that will be considered as a procedural defect in any unfair dismissal proceedings. But I would say that also applies at the earlier stages, such as final warning, such as a Performance Improvement Plan. Those, once you get into something quite substantive, I don't see why you wouldn't offer it. As many of our clients now know, this poor person is not an advocate that can act as the representative of the employee. They're there to provide emotional support. They might ask for a break to help the employee regather their thoughts, something like that. That's fine.

Luis Izzo:  But the one thing that I would say about support people and the way in which they're treated, because HR managers in businesses have become quite clued on as to what the boundaries are in respect to support people, I find they're often eager to ram down everyone's throat, the role of the support person.

Luis Izzo:  "You're role is not to speak. You're role is to sit there, shut up, and basically you're nothing, and you will know you're nothing. That's it. Now, I'm going to talk to this person." Such an aggressive way to start a meeting. The way I would prefer is you give them the opportunity to have a support person. In 7 out of 10 cases, the support person will sit there quietly, amiably, not be a problem.

Luis Izzo:  In the eighth case, they might say a little bit, but it's no big deal. And then in 2 out of 10 cases, they might be a little bit obstructionist. If they are, that's when you say to them, "Well, look, you're role here is not an advocate. You're not a representative. You're here to provide support and that's all we're going to let you do."

Nigel Ward:  I tend to do it the other way as well, I must say, every now and again, very large clients say, "Look, can you come and help us with this one?" If that happens, I would normally say to the support person, "Look, I really do appreciate that you want to help, John, but I actually need to hear it from John, okay? I understand that you came to do it, but John, can I please hear the answer from you?" I tend to try and do it that way, rather than necessarily just put the person back in their box.

Luis Izzo:  The reason why that's so important, is because there have been a number of instances that I've personally witnessed where you end up in an unfair dismissal case where ... What happens is the employee later starts to try and detach themselves from what was said on their behalf. Particularly, if there's any suggestive dishonesty, or even owning errors in a performance issue, or a serious performance process. The employee said, "Well, no, no, I didn't accept that." "Well, no that was said in the meeting." "Well, no, no, they said that." The supportive person said, "I didn't say that."

Luis Izzo:   You need to ensure that what's being said is actually genuinely being owned by the employee. Otherwise, it's more difficult to rely on it later. So that's why we're particularly passionate about that.

Luis Izzo:   There's one other thing that I want to raise about this whole process. Which I think if there's one thing you take away from today, if you've got that slide imprinted in your brain, that's a win for us. But, the other thing to remember is, again, a question about degree. When we come to documenting these things.

Luis Izzo:  So, yes, if you've a Performance Improvement Plan of warning or a final warning, that's where you're going to be offering these support people. You're going to be documenting what you do, and give the employee a warning. But remember, we're applying this process earlier on as well.

Luis Izzo:  So when you have that off-the-cuff discussion early on, you need to very conscious about how you document things. You don't want to be writing, necessarily, in your very first chat with the employee. "Well, I just want you to know that we're documenting all of this, and we're issuing you with this." Because that's going to overly formalize things, and scare the employee away, and have a counterproductive effect.

Luis Izzo:   So you will have this discussion. You'll go through this process, but you're not going to be overly formal about it. You may even go away to your desk or to your office, and you might make a personal note, or send yourself an email about what happened. That's very important, because that is about keeping a contemporaneous record. A lot of the managers we deal with will keep just an A4 diary that of each day has a page and they can write down what happened that day.

Luis Izzo:  It's not that you don't keep a record, but for that early stuff you might just keep your own record. Then as it gets a little bit more serious you might say to the employee, "Well, look, I'm just going to shoot you an email confirming what it is we talked about." That's the only thing you do. Then gradually it steps up in formality. Again, this is all about keeping in mind that continuum of performance that we deal with. It's softly first up, but let's make sure we have some contemporaneous proof.

Luis Izzo:  Then later on, we have a bit more formal documentation.

Nigel Ward:  More formal. And with under-performance, I'd probably say to most people, "Look, if it's just under-performance, fireside chat first, diary note. Move to a Performance Improvement Plan, probably a second in performance. If that's not working we're getting into the serious stuff."

Nigel Ward:  Now, we always get asked about warnings, so I thought we'd just quickly touch on it. We won't take too long in it. But, there's no actual golden rule about how many warnings you need. At the end of the day, it's about did you actually put everything to the person? Have I been given reasonable opportunity to improve, respond, and the like?

Nigel Ward:  But, to be fair, a lot of employers out there will probably say, "Well, if I'm get formal, I'll probably give a verbal warning. I'll give a first warning, by then get into a second or a final warning. Then there's this show cause and dismissal process. The bottom line is this, if you are going to adopt this matter of general policy and approach, a warning process, then you just need to understand that you're talking about a graduated process.

Nigel Ward:  The exclusion, of course, the exception to that is a serious misconduct, serious and wilful misconduct. Which, obviously, jumps you straightaway to, "Well, should you, Luis, after punching John, stay in your job?" We have to get asked, is there a law that says you have to have a warning hierarchy? The answer is no.

Luis Izzo:  The only two things I'd say there. In the performance context, at the very least, what is more important is make sure at some point though they've been put on notice that they're employment may be terminated if it doesn't improve. And they've been given a reasonable opportunity to improve. What's reasonable very significant across the industry.

Luis Izzo:  If you're in a call centre that has very clear call volumes, it might be a couple of weeks. Which is sufficient to say, "Whenever I was doing X load, and everyone else ... this employees doing Y, and we need to see that lift. If it doesn't lift ..." You might have very clear objective metrics.

Luis Izzo:  In most circumstances, it'll probably be longer. In most circumstances, you might be looking at four weeks, eight weeks, you might even be looking at three months, to give a person a sufficient period of time to take on-board the feedback they've been given to try and improve. You might have some training that feeds into that. So it's very normal for the commission to perhaps expect that you take up to 12 weeks even to try and help someone address the issue.

Luis Izzo:  That's going to then put you in a better position to move to the ultimate sanction of termination or exit.

Nigel Ward:  Just a few prompts on formal counselling, written warnings. You see a lot of these written badly. We won't go through all of these, but can I just make one really important insight. I stopped mentioning the name of the person who did this now, because I once got in trouble at a party when I ran into them afterwards.

Nigel Ward:   If you're giving somebody a warning, you're giving them a warning in their employment. You're not giving them a warning for issue A, issue B, issue C, issue D. We once had a extraordinary situation where somebody was on 16 final warnings. Each one of the final warnings was for a different thing. The work boots, the ear muffs, the whatever, because how they were written.

Nigel Ward:  So just be very mindful that if you are ultimately cautioning people in their employment in the formal sense, you're warning them in their employment, not for a specific issue. The specific issue is just part of the facts. But those are the sorts of things you really need to take into account when you're looking at actually constructing your warnings.

Nigel Ward:  This is your favourite area, you'll get passionate now about all of this. But okay, things haven't gone quite right, we're going make a decision to terminate, off you go.

Luis Izzo:  You made me sound like the one who likes to pull the trigger. Look, it's unfortunately, but ultimately in any case, or any employment context, eventually inHR managers are going to face this. Two questions always arise. Is there a valid reason?

Luis Izzo:   That's about substantive fairness. Is there actually a genuinely ... a legitimate basis that you can no longer have the employee? If there is a valid reason, we also need to consider, in terms of substantive fairness, are there mitigating factors that also need to be taken into account?

Luis Izzo:   A valid reason's either going to be about conduct, so the misbehaviour so serious we can't have this person here anymore? Or capacity, can they no longer do the job? If we take capacity in the context of a performance discussion, you're going to have to have had sufficient discussions. Opportunities to improve that performance that you ultimately form the view that they are not able to do the role anymore.

Luis Izzo:  It's not just, "Oh, well, we warned them and they didn't improve so we can terminate." That's not a valid reason. Your process has to have gotten you to the point mentally that you're satisfied and the commission, an independent observer or empire, is satisfied that they are not able to do the role.

Luis Izzo:  When you think about what that entails, I mean you're naturally going to need to have done a fair bit of process in terms of skilling them up understanding what their role is. The role in training, et cetera.

Nigel Ward:   We get back to the foundations.

Luis Izzo:   Now, mitigating circumstances is an interesting one, because almost anything can be taken into consideration there. You could be looking at their age, their length of service, their previous record. You could be looking at their financial circumstances, personally. What impact will the dismissal have on the person? The more drastic the impact, the more likely the commissions going to take a more sympathetic view.

Luis Izzo:  The very big one, I think it's probably the most important mitigating circumstance, is length of service. I don't know why, but all the ones that seem to come into our firm, they've got 30 years, plus. I know why that happens-

Nigel Ward:  They wouldn't send us an easy one.

Luis Izzo:  No, that's right. When you're in that range, it's high risk. So you really do need to be satisfied they've had a significant opportunity to improve.

Nigel Ward:  Yeah. If you're a member of the commission and somebody comes before you and they're 55 years of age, they've worked for you for 30 years, and you open the record up. And up until this moment, doesn't seem to have been a problem as an employee. That commission member's sitting there going, "The chance of this person getting another job, pretty low." So you've got to be conscious that those mitigating circumstances will come in.

Nigel Ward:  Now, what I would will say though, and I'm really strong about this is, please, please don't start double guessing that. At the end of the day, if you've got a particular standard and a view about a conduct performance behaviour, and that person breaks that standard, goes against that standard, subject to you following the process we've talked about, you make your decision that, that person's not suitable to be in your business, move them out.

Nigel Ward:  Come and see us about the problem if they want to run an unfair dismissal case, but move them out. Because if you keep leaving those sorts of people in your business, you're just going to bring into question your values, bring into question your standards and progressively you'll damage your culture. So you're better off saying, "No, this person doesn't belong here. We're moving them out." And dealing with the mopping up later.

Luis Izzo:  Now, the next element, which, well, really is very important when you come down for dismissals, which I'll touch on briefly, is to ensure your process is procedurally fair. When we talk about procedural fairness, particularly in form of this context, there's two things. One, is to ensure that they are aware of the issue that you've raised that's going to give rise to the dismissal. They're squarely put on notice about it. They've been given that opportunity to respond, and that response is taken into account.

Luis Izzo:  What does all that mean? It means the golden arrow that we had just a few slides earlier, the one that you've already put the tattoo in your eyelid, you've already contracted the local parlour to get that happening, that's the one that you need to follow.

Luis Izzo:  In a performance context though, it's also that prior notice to the employee that, "Hey, these things aren't working well. Can you ensure that you start working on this a bit better? That you meet these milestones?" And you've given them a fair and reasonable length of time to improve that performance. So that feeds into the substantive fairness.

Nigel Ward:  Let's say that, that's all been done, that the employees filed an unfair dismissal claim. The first thing I'm going to say, there's about 14,000 of these filed a year. So even if you've done it all really, really well, there's a very strong chance it might get filed.

Nigel Ward:  Most of our viewers probably know who can make such a claim. There's probably two areas which we get asked questions about a lot. You'll notice in the top part of the screen, the non-award, non-agreement salary cap is now at $145,000. It's actually quite a high cap.

Nigel Ward:  We're surprised how often people don't realize the extent of that cap. And particularly around say, supervisors and the like, front line managers. They'll often be a little bit more brazen about how they go about performance managing and terminating them, only to find later on that they're actually under that cap, and they have a right to claim unfair dismissal. So that's one I would say definitely be mindful of.

Nigel Ward:  The other one we get asked questions about a lot is the 21 day period. You've got 21 days to file an unfair dismissal claim. It's pretty much a rigid rule now of 21 days. The likelihood of exceptions is very, very limited. But, just be very conscious that even if you do everything right, there's a very strong chance that a claim might be filed, and we see that quite a bit.

Nigel Ward:  Remedies for unfair dismissal, so we go and run the case ... Now, we should also, by the way, that about 84% or 85% of all unfair dismissal cases get settled in conciliation. Our firm's quite competitive about how little you settle on unfair dismissal cases for. But, look, probably ... I should be careful saying this, because we probably are fairly low on the scale. But, most of them settle for somewhere around eight weeks. Would you agree with that?

Luis Izzo:  Yeah. For some, depending on the circumstance, you could say four to six weeks.

Nigel Ward:  Four to six weeks paid. A lot of them actually just end up, "Let me resign, and I'll go on my merry way." But, just understand, most of them do settle in conciliation. If they don't?

Luis Izzo:  If they don't, then the matter will proceed to arbitration. The commission really has two things at its main core. The first is an ability to reinstate the employee to their employment position. Or potentially, much more rarely, we see this, re-employ them in an alternate position."

Luis Izzo:  Reinstatement is known as the primary remedy that's available to the Fair Work Commission, in a sense that, that's the number one option they have. But you have to bear in mind, it is very rare to see reinstatement as a remedy that's actually awarded.

Nigel Ward:  I think it's about 2% of all of the applications end up in a reinstatement. I think last year there were 36 people who actually got their job back.

Luis Izzo:  Which is very low when you consider that the tens of thousands, or the 14,000, or the 15,000, that have filed to begin with. So the reality is that generally it won't be practicable to reinstate. There will be reasons why the commissions satisfied that's not the right call. So let's not operate in fear of a world of reinstatement.

Luis Izzo:  But, in the most serious cases, the long period of service, the most appalling circumstances-

Nigel Ward:  You really got it wrong. There's no valid reason, or your process is appalling.

Luis Izzo:   It's a possibility. Otherwise, compensation's kept at 26 weeks pay. The commission has quite a mathematical formula now, about how it goes about working on what that compensation is. They'll take into account the extent to which the employees contributed to the dismissal. A whole range of different factors, their loss.

Luis Izzo:  What the commission can't take into account is any general hurt, suffering distress, but they will certainly look at the employees financial loss. Where an employee hasn't got another job, and it's been a significant period of time that's elapsed, that's when you might see a higher range of compensation awarded. But, often where employees have gotten other jobs, the amount might be significantly lower than 26 weeks.

Nigel Ward:  Yeah, 14, 16's not uncommon.

Luis Izzo:   So there are the main remedies. There's a note there about cost. Look, the general rule is you can't get your cost back. So this applies to almost all employment litigation. If the employee sues you for unfair dismissal, again, about for the most extraordinary of circumstances, you're going to be out for the legal fees.

Nigel Ward:  Look, we tend to see two sorts of situations arise with unfair dismissal claims. We'll see the case, which is described as a case of principle. Often the case with say a safety issue, we'll have a client say, "Look, I need to make the point. I'm going to run the case no matter what." More often than not though, this is a commercial decision, just to say, "I could settle it for X amount of dollars. Or, Luis, I could pay ABLA X to run it."

Nigel Ward:  Well, gee, I'd rather settle it and buy the result, and let's move on, and get on with life. So there's the principle matter, and then there's the pragmatic commercial decision.

Nigel Ward:  The only one that's perhaps a bit different from that is you sometimes see some trade unions, when they're the person who's really the applicant for the individual, they might believe it's a principle matter for them. If a client sacks a union delegate for example, the union might feel compelled to have to run their case not matter what, because it's the union delegate. But those are the norms.

Nigel Ward:  I think Luis's point's really the important one. Please don't let the fact that these are the remedies stop you making the right business decision for your team, for your workplace culture. Don't do that.

Luis Izzo:   We went through procedural fairness and personal circumstances. So I think that's all what we've discussed before. That's what gets taken into account. I think that's broadly what we've already covered.

Nigel Ward:  That brings us to the must dos, and we might wrap up on them. One, think about those foundations that I said at the beginning. If they're not set right, you're not really giving yourself the best shot at people performing to their optimum. So please make sure you set the foundations right.

Nigel Ward:  You've got to make that ad-hoc positive feedback a habit. It's fun when you do. You do get good at it. I've put up there as well, ensure boundary alignment. One of the things that I find interesting, we talked earlier on about making sure you understand what the boundaries are. Make sure each manager is aligned in what behaviours accept, or not acceptable.

Nigel Ward:   We often see a lot of situations where we'll have somebody who ends up being terminated in one part of the business, and the union come along and say, "Yeah, but in the other part of the business they do that all the time." So you've really got to sit down ... I often get teams to sit down and actually talk about, "Well, if this happened, how would we all respond, and are we aligned?" It's a good exercise.

Nigel Ward:   Follow that process, the arrowed diagram, as Luis said. Please make sure that using a Performance Improvement Plan becomes a habit. Frankly, if you're going to invest in anything in your business, invest in frontline performance management capability. You will get more bang for your buck there than probably anywhere else in our experience.

Nigel Ward:   I think that brings us to the end of today. I hope you found it useful. I hope there was at least a few insights, a few takeaways.

Luis Izzo:   No. Thank you for having me, Nigel. The other thing that I want to tell everyone is that we've actually got a survey that we're running it at the end of this. To the extent that you fill it out, we very much encourage you to do so. Because then we'll be able to send out to you one of our very own performance and misconduct policy templates that you might want to use in your business.

Luis Izzo:  One of the things that I'd say about the template is ... Because this is a bit of a bug, bear in mind, as well. Is we often see employers introduce incredibly rigid and prescriptive performance management policies and things like that in their business, that then act as the rod on their back in any dismissal process, or claim. We certainly don't think that's the right way to be managing your business.

Luis Izzo:  We think that a policy should actually be covering off on a few key things about what it is you're going to endeavour to do. You should be able to commit to a basic procedurally fair process. But other than that, you're going to want a bit of discretion about how you go about these things. That's what our policy template seeks to achieve. So, that's certainly available to you.

Luis Izzo:  As Nigel said, feel free to reach out in terms of frontline leadership training courses, or any other advice you might need in relation to your policies or your performance measurement process.

Nigel Ward:  I'm just looking at the data. For the thousands of people who hung with us all the way through that, thanks very much. I hope you have a great week. We'll see you next time we do a webcast. Take care. Thank you.
 

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