Richard is the new head of an operations department, where a poor reputation has led senior management to focus increasingly on the area. He is renowned as being a demanding manager, some would say ruthless, and the department views his appointment with some trepidation.
On his first day, Richard calls the section heads into his office and tells them he is determined to improve the performance of the department, which means the elimination of the unacceptable number of errors that occur. He tells the section heads that they have a key role in driving the performance of their teams and thus his department, adding that he is aware of his reputation, which he admits is not undeserved.
After a week in his new role, Richard again summons the section heads into his office and draws their attention to the weekly errors report, which, far from showing an improving trend, shows more mistakes than ever before. He then reads out the text of a letter that he intends to send to all staff in the department, informing them that if all work is not checked, and the failure results in unacceptable errors, “it is highly likely that the individual… may face disciplinary action, which could result in dismissal.” The new regime will be enforced immediately.
The impact of the letter is a sepulchral hush in the office and the working of longer hours by many of the staff, especially the section heads.
Snap auditA week later, unprompted by Richard’s ultimatum, the internal audit team carries out a snap audit of the department, as a result of which it identifies a number of errors, most of which are historic. However, Richard’s attention is drawn to one specific item, which relates to an issue which is still current and includes entries made two days previously.This item concerns automated dividend payments into a client’s account, where the original instruction has been wrongly set up, resulting in a series of duplicated dividend payments being made to the client.
Richard demands that disciplinary action be taken to follow through on his warningAlthough none of the amounts is more than £25 and the total payments amount to about £200 being wrongly paid to the customer over a period, it is the apparent failure of his letter to make any difference which really upsets Richard.
Exasperated that this should have occurred so recently, Richard asks who should have checked the entries and is told that it is Nadia, a longer-serving section head. Nadia has been in her position for a number of years, and has a mixed track record.
With a copy of his letter and the internal audit findings in his hand, Richard storms into the office of his Divisional Head. He demands that disciplinary action be taken to follow through on his warning, saying that he expects the Divisional Head’s support, as this will be crucial in achieving the joint objective of an effective department.
The Divisional Head has a meeting scheduled imminently and so tells Richard that he will meet later in the day. Before doing so, he runs through in his mind a number of key issues that need to be addressed before making a decision.
Foremost is a need for any action that is contemplated to be fair and scrupulously to follow the firm’s procedures but, bearing that in mind:
- Whats sort of culture does the firm want?
- When is it appropriate for zero tolerance to mean zero tolerance?
- Does the operational failure meet this criterion?
- Do you want people to own up when they have erred?
- If so, how do you incentivise and encourage them to do so?
- Do you want to reward appropriate behaviour? How can you do so in this case?
- How might Richard feel if his Divisional Head does not support him?
- Should you weigh the materiality of Nadia’s failure against the potential impact on the authority of your new manager?
- If he thinks disciplinary action is warranted, which might lead to dismissal, what would Nadia need to have done to avoid being dismissed? Where would he draw the line and what message does this send to other colleagues?
Having considered these questions, the Divisional Head determines that he has a number of potential courses of action, all of which have some merit, and wonders which one to choose.
- Support Richard in his proposed course of action, to the maximum extent that it is permitted within the firm’s employment policies, because he was selected to do a job and failure to support him at this stage will fatally undermine his authority?
- Support Richard in taking action, but ensure that it is proportionate to the actual incident, irrespective of the warning that he had sent out?
- Suggest that no action should be taken without involving HR in the decision, even if that results in losing the ‘shock and awe’ impact for which Richard clearly hopes.
- Suggest that no action should be contemplated that might have unintended consequences? Consideration must be given as to whether a hard line now will make matters worse or better.
What would you advise the Divisional Head to do?