Many managers handle performance issues informally, hoping that a friendly conversation will resolve matters without the discomfort of a formal process. In many cases, this approach comes from a positive place. Managers want to support their employees and avoid unnecessary conflict. However, it can also reflect a lack of confidence or training when it comes to having challenging workplace conversations.
Early informal discussions can be extremely effective in addressing concerns before they become entrenched. The key is recognising when an issue has not been resolved and ensuring that a formal process follows where necessary.
This is not simply a theoretical concern. A recent client of Keir HR was forced to settle an Employment Tribunal claim where a series of informal interventions had been used to address concerns, but there was insufficient documentation and evidence to demonstrate what had been discussed, agreed, or followed up. The case serves as a timely reminder that good intentions alone are rarely enough when an employer later needs to justify its actions.
When Informality Creates Risk
One of the biggest challenges with informal management is the lack of records. Notes are rarely taken during informal conversations, leaving managers and HR professionals with no clear evidence of what was discussed or what actions were agreed.
This becomes particularly problematic if matters later escalate. Memories fade, managers move on, and recollections can differ significantly between those involved. Without a written record, businesses can find themselves unable to demonstrate that reasonable steps were taken.
Informal approaches can also create inconsistency. One manager’s idea of an informal intervention may look very different from another’s. As a result, employees may experience different standards of management, which can understandably be perceived as unfair.
There is also a risk that performance issues are simply not addressed firmly enough. In an effort to avoid a formal process, managers may allow underperformance to continue for longer than it should. Employees, meanwhile, can be left unclear about expectations and unsure about the consequences of failing to improve.
The Tribunal Test
When an issue reaches a formal stage, or ultimately an Employment Tribunal, employers are expected to demonstrate that they have followed a reasonable and consistent process.
This is where reliance on informal handling can become particularly dangerous. Even if managers have genuinely attempted to address a problem, they may struggle to show what they did if nothing was documented. A tribunal will consider evidence, not intentions.
Many managers have a genuine fear of initiating formal procedures, often worrying that doing so may damage relationships or create unnecessary tension. However, allowing problems to drift unresolved can create far greater risks for both the employee and the organisation. Managers should be encouraged to seek support from HR rather than avoiding formal action when it is warranted.
Informal Doesn’t Mean Unstructured
None of this means that informal management is inherently wrong. In fact, informal conversations are often an essential first step in resolving workplace issues quickly and effectively.
The lesson is that even informal processes should be formal in substance. Managers should make contemporaneous notes, confirm expectations clearly, record agreed actions and diarise follow-up meetings. Most importantly, those follow-ups must actually take place.
By doing so, organisations can retain the flexibility and human approach of informal management while still creating the evidence and consistency needed should matters progress further.
A Familiar Problem Beyond HR
Interestingly, the same pattern can arise in a very different context: family businesses.
It is not uncommon for a spouse to become involved in a family business without any formal shareholding, service agreement, or clearly defined role. While this may work perfectly well while relationships are strong, the lack of documentation can create significant legal and commercial exposure if the marriage later breaks down.
Directors owe statutory and fiduciary duties to the company, while shareholders have rights under articles of association and shareholders’ agreements. During a divorce, these competing interests can quickly give rise to conflicts. Where a spouse is also involved in the business, disputes can consume substantial management time and legal resources. In some cases, unfair prejudice claims may follow where shareholdings are involved.
The Common Thread
Whether dealing with employee performance concerns or family members involved in a business, the underlying lesson is the same: informality without structure rarely delivers the protection organisations expect.
When disputes arise, businesses need records, consistency and clear evidence of what was agreed and why decisions were made. Without that foundation, even well-intentioned actions can become difficult to defend.
Formalising roles, responsibilities, and processes from the outset is not about creating bureaucracy. It is about protecting the organisation and the individuals within it when relationships, circumstances, or expectations change. As recent experiences continue to demonstrate, the cost of failing to do so can be significant.
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