Failure to meet rock-solid sales targets is non-performance – or is it?

By December 12, 2022 No Comments
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Failure to meet rock-solid sales targets is non-performance – or is it?

The judge ruled that it was not.

Employee joined X Systems AB on 1 September 2019. Employee’s position is that of senior vice president Sales EMEA. According to his job description, in that position he is responsible for leading, managing and expanding the direct sales team in Europe, the Middle East and Africa, as well as generating new business revenues through acquisition that meet X’s ambitious international expansion targets.

Sounds very familiar.

Employee was told in December 2021 and on 17 January 2022 that he was not performing well and that he had created a negative atmosphere or culture of fear within the company. Employee received a performance improvement plan on 20 April. On 12 July 2022, employer informed the employee that it wished to terminate his employment contract and made a proposal to him to that effect. The parties did not reach an agreement on the matter and the employer requested the court to dissolve the employment contract.

You might think that the circumstances of clear underperformance, disrupted working relationship and a performance improvement plan would be sufficient for dismissal.

The subdistrict court ruled as follows. The employer has failed to properly substantiate that the employee is unfit to perform the stipulated work. Merely stating and substantiating hat an employee did not meet his targets or other objectives is insufficient to assume dysfunction.

Employer must also substantiate that targets are reasonable and that a realistic term has been set for them.

Also, regarding the disrupted working relationship, the subdistrict court was crystal clear:
Mutual trust is an important condition for good job performance. In this case he sees no reason to assume that the employment relationship has deteriorated to such an extent that employer cannot reasonably be required to continue the employment contract.  The court ruled that the parties should first try to improve the relationship between the employee and his supervisor. The request for dissolution was rejected.

It is the time of year again when sales targets are set.

Make sure these are realistic, not only for your company and investors but also for employees. After all, not meeting the targets will not help you say goodbye to a sales rep – and it is also frustrating for the sales rep himself.

So rather pay extra bonus on good performance!