Firing employees as a tactic should be handled with care

As Lloyds plans to get rid of its bottom 5 per cent of staff, James Moore asks if threatening 'underperformers' with the sack could have an energising effect – or if it's a step too far

- By James Moore

Working for Lloyds Banking Group just got a whole lot more stressful. The bank has warned that employees deemed to be “underperforming” could lose their jobs, with 3,000 staffers judged to be among the bottom 5 per cent at risk. The company said this “performance management measure” is part of its plan to create a “high-performance culture” – one that could be used to select staff for dismissal. But this is not about reducing the 63,000-strong headcount – it’s pour encourager les autres.

At issue is employee churn, or rather the lack of it. The chancellor’s attempt to plug a hole in the public finances by taxing employment – she claims this is not a tax on “working people”, but clearly it is – has led to rising unemployment, and people sticking to their jobs like limpets.