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Improving a struggling employee’s performance is a two-way street

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It’s easy to get frustrated when an employee is failing to produce the volume or quality of work you’re looking for. A business owner or department manager may even give in to the temptation to play the blame game, pointing a finger at the struggling worker and only exacerbating the situation.

In truth, performance improvement must be a two-way street. There’s no doubt that the individual in question must step up and do better. But, as an employer, you’ve got to provide information, tools and support to help his or her improvement efforts.

Map the route

To get started, before saying one word to the person, fully investigate the issue. This means first defining the nature and degree of the underperformance and then determining whether you’ve done the best job possible in helping the employee to be successful.

For example, when and how well was the employee trained? Someone hired years ago may have been taught to do a job differently than it now needs to be done. Also, is the employee aware that you consider his or her work subpar? Has anyone discussed the problem with the employee or put it in writing?

Staff members who aren’t sure whether they’re on the right track often wait for feedback, rather than proactively seeking guidance. That means you may need to act at the first sign an employee isn’t meeting expectations, rather than hoping the situation will remedy itself.

Embark on the journey

Once you’ve established what’s wrong, meet with the employee. Clearly and specifically state your performance concerns and let him or her know that your objective is to work together to find a solution.

After naming the specific performance issues, ask how you can help the employee turn around the situation, including some predetermined suggestions. There may be issues you aren’t aware of, such as tools that are in disrepair or missing, or poor lighting in the employee’s workspace. So be open to his or her input.

If the employee attributes the subpar performance to lack of clarity about expectations, the remedy might be as simple as weekly meetings with his or her manager to go over what needs to be accomplished. If the employee reports feeling overwhelmed and unable to prioritize tasks, you may need to provide additional training on organizational skills or better use of technology.

Work with the employee to create a performance improvement plan that includes specific goals and a timeline for achieving them. Then follow up regularly. If the goals and timeline are met, you’ll enjoy the benefits of having a more productive team member. If they aren’t met, then you need to consider what further action to take.

Take the trip

Employee retention isn’t about only strong compensation packages and companywide recognition. It’s also about making the effort to help struggling employees find success. When the person in question is, underneath it all, a good worker, it’s a trip well worth taking. Our firm can provide further information and ideas.

Remind soon-to-be retirees about RMDs

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Do you have employees in their late 60s? If so, are they aware of the required minimum distribution (RMD) obligations beginning at age 70½ for their IRAs and possibly their 401(k) plans? It’s essential that they know what to expect when they reach that age so they can avoid a potentially whopping penalty. As their employer, you can stand to benefit from helping them out with a friendly reminder.

IRAs vs. 401(k)s

In most instances, IRA account holders must take RMDs on reaching age 70½. However, the first payment can be delayed until April 1 of the year following the year in which the individual turns 70½. (For inherited IRAs, RMDs are often required earlier.)

401(k) accounts are a different story. Account holders don’t have to begin taking distributions from their 401(k)s if they’re still working for the employer sponsoring the plan. Although the regulations don’t state how many hours employees need to work to postpone 401(k) RMDs, they must be doing legitimate work and receiving wages reported on a W-2 form.

There’s a notable exception, however: Workers who own at least 5% of the company must begin taking RMDs from the 401(k) starting at 70½, regardless of their work status.

If someone has multiple IRAs, it doesn’t matter which one he or she takes RMDs from so long as the total amount reflects their aggregate IRA assets. In contrast, RMDs based on 401(k) plan assets must be explicitly taken from the 401(k) plan account.

Other pertinent facts

Here are some additional RMD facts you can share with employees approaching retirement:

Calculation of RMD. The IRS determines how RMD amounts change as the account holder ages, using a formula and life expectancy tables. For example, at age 72, the IRS “distribution period” is 26.5, meaning that the IRS assumes that the individual will live another 26½ years. Thus, he or she must withdraw the percentage of the IRA or 401(k) account that is 1 divided by 26.5 (3.77%).

Beneficiary spouses. Account holders who have a beneficiary spouse at least ten years younger are subject to a different RMD formula that allows them to take out smaller amounts to preserve retirement assets for the younger spouse.

Tax penalty. The penalty for withdrawing less than the RMD amount is 50% of the portion that should have been withdrawn but wasn’t.

Form of distribution. RMDs can be in cash or be taken in stock shares whose value is the same as the RMD amount. Although this can be administratively burdensome for you as the employer, it allows your employees to defer incurring brokerage commissions on securities they don’t want to sell.

Informed employees

Remember, informed employees are happy employees. Educating your older employees about their RMD obligations can help maintain healthy morale among these employees and demonstrate to your entire workforce (and job candidates) that you care about retirement planning. Let us know how we can help with this critical effort.