When you have an employee who is literally your latest problem, there are number of ways to approach the situation. It sounds like you may have tried coaching and discipline, but this is more than just a trying situation.
On the one hand, if this employee is consistently late and is disrupting the flow of work, and there is no way to reasonably accommodate her tardiness, you need to advise her of the problem, document the situation, and take the necessary disciplinary action. When a company has a tardiness policy that is basically ignored, it sends a message that tardiness is acceptable, along with a related message that policies in general do not need to be followed.
At the same time, it may be useful to step back and see if there may be a larger need to implement a flextime arrangement in the company. Depending upon job content and interdependency, some flexibility on arrival and departure times can be quite motivational.
Increasing numbers of companies today are designing jobs around their employees, particularly in terms of building jobs around their skills, interests, abilities, and even their availability. Many companies are finding that it makes more sense to flex their time rather than flex their muscles.
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