How to Handle an Underperforming Employee: A Guide for Employers

Every employee has an off day. A missed deadline, occasional mistake, or difficult week does not necessarily indicate a serious performance problem. However, when poor performance becomes consistent, managers need to address it.

An underperforming employee can affect more than their own workload. Missed deadlines may create additional work for coworkers. Repeated mistakes can affect customers. Poor attendance can make scheduling more difficult. Over time, unresolved performance problems can also affect team morale.

Addressing the problem early gives both the employer and employee an opportunity to improve the situation. The process should focus on identifying the problem, communicating clear expectations, providing appropriate support, and monitoring what happens next.

What Does Employee Underperformance Look Like?

Employee underperformance occurs when someone consistently fails to meet the reasonable expectations of their position. Exactly what that looks like depends on the employee's job. A salesperson might consistently fall short of established sales goals. An administrative employee may repeatedly miss deadlines or make data-entry errors. A manager might struggle to complete required reports or communicate effectively with their team. Common signs of underperformance include:

• Consistently missing deadlines
• Failing to meet productivity goals
• Producing work that does not meet established quality standards
• Making the same mistakes repeatedly
• Frequent attendance or punctuality problems
• Failing to complete assigned responsibilities
• Poor communication or follow-through
• Falling short of clearly established performance goals

Managers should distinguish between an isolated problem and an ongoing pattern. One mistake may require a conversation or additional training. A repeated problem may require a more structured approach.

Identify the Cause of Poor Performance

Before deciding how to address an underperforming employee, try to understand what is contributing to the problem.

Poor performance does not always mean an employee is unwilling to do their job. Sometimes the employee does not understand what is expected. In other cases, the employee may need additional training, resources, or direction.

Unclear Job Expectations

Employees have a difficult time meeting expectations when those expectations have never been clearly defined. Review the employee's job description, responsibilities, goals, deadlines, and performance standards. Ask whether the employee understands what they are responsible for and how their performance is measured. This can also reveal situations where an employee's actual responsibilities have changed considerably since they were hired.

Lack of Training or Resources

Employees need the appropriate knowledge and tools to perform their jobs. For example, an employee may struggle after being assigned new software without adequate training. Someone promoted into a management position may need additional guidance on supervising employees. A new hire may simply need more time and training before they can work independently.

Before treating the problem as solely an employee performance issue, determine whether additional training, equipment, information, or support could help.

Workload and Time Management Problems

An employee may also struggle because they have too much work or do not know how to prioritize competing responsibilities. Managers should evaluate whether the workload is reasonable. If it is, the employee may need help with organization, prioritization, or time management.

Workplace or Management Issues

Sometimes the working environment contributes to poor performance. Conflicting instructions from managers, unclear procedures, frequent changes in priorities, communication problems, and inefficient workflows can all make it more difficult for employees to do their jobs. Identifying these issues does not eliminate employee accountability. It helps management understand what needs to change for performance to improve.

Personal Circumstances

Employees can experience personal situations that temporarily affect their work. Managers do not need to investigate an employee's personal life, and they should be careful about requesting information that may involve protected medical or other sensitive circumstances.

Instead, keep the discussion focused on workplace performance. Give the employee an opportunity to explain whether there is something affecting their ability to meet expectations, and involve HR when appropriate.

How to Address an Underperforming Employee

Once you recognize an ongoing performance problem, address it directly. Waiting several months usually makes the conversation more difficult and allows the problem to continue. Here are seven steps employers can consider.

1. Gather Specific Examples

Start with facts. Instead of telling an employee that they "need to do better," identify specific examples of where performance has fallen short. Depending on the position, that could include:

• Missed deadlines

• Customer complaints

• Attendance records

• Production numbers

• Sales results

• Quality-control problems

• Incomplete assignments

• Repeated errors

Measurable examples make the conversation clearer. They also help employees understand exactly what needs to change.

2. Schedule a Private Conversation

Performance conversations should generally take place privately. Explain the concerns clearly and professionally. Describe the gap between the employee's current performance and the expectations of the position. Then give the employee an opportunity to respond.

There may be information you were not aware of. Perhaps the employee misunderstood a procedure, received conflicting instructions, or needs additional training. Listening does not mean ignoring the performance issue. It gives you more information for determining the appropriate next step.

3. Clarify Performance Expectations

An employee cannot correct a problem if they do not know what successful performance looks like. Be specific about what needs to improve. Instead of saying, "You need to meet deadlines," you might explain which assignments must be completed, when they are due, and what the employee should do if they anticipate a delay.

Whenever possible, expectations should be measurable. Depending on the position, you could establish goals related to productivity, accuracy, attendance, sales, project completion, response times, or another relevant performance measure.

4. Create an Improvement Plan

For more significant or ongoing performance problems, it may be appropriate to establish a formal improvement plan. The plan should explain:

• What needs to improve

• What acceptable performance looks like

• How improvement will be measured

• What support the employer will provide

• When progress will be reviewed

• What may happen if sufficient improvement does not occur

The goal is to remove ambiguity. Both the employee and manager should understand what is expected and what happens next.

5. Document the Conversation

Good documentation is an important part of employee management. Record when performance discussions occur, what issues were discussed, what examples were provided, what expectations were established, and what follow-up steps were agreed upon.

Documentation can also help managers track improvement over time. If several managers supervise the same employee, written records can provide greater consistency between conversations. Employers should follow their established HR policies and applicable employment laws when documenting performance and disciplinary matters.

6. Provide Support and Resources

Once expectations are clear, determine what the employee needs to reach them. That could include additional training, more frequent feedback, updated equipment, written procedures, mentoring, clearer priorities, or additional meetings with a supervisor. Managers should avoid assuming that one conversation will solve the problem. Some employees need ongoing feedback while developing new skills or correcting established habits.

7. Monitor Progress

Follow up regularly. If you establish a 30-, 60-, or 90-day improvement period, for example, do not wait until the final day to discuss performance again. Schedule check-ins throughout the process.

Review the goals that were established and discuss where progress has or has not occurred. When performance improves, acknowledge it. If problems continue, document them and determine the appropriate next step.

What Is a Performance Improvement Plan?

A performance improvement plan, commonly called a PIP, is a structured document that identifies performance problems and establishes specific expectations for improvement. A PIP may be appropriate when informal coaching has not resolved a problem or when an employer wants to establish a more formal process for addressing significant performance concerns.

A typical performance improvement plan may include:

• Specific performance deficiencies

• Expected performance standards

• Measurable goals

• A timeline for improvement

• Training or resources provided by the employer

• Scheduled progress meetings

• A process for documenting progress

• Potential consequences if expectations are not met

A PIP should be specific enough that the employee understands how their progress will be evaluated. Employers should also follow their existing policies consistently. HR professionals or employment counsel can provide guidance when an employer is unsure how to handle a particular situation.

Common Mistakes When Managing Poor Performance

Handling an underperforming employee can be uncomfortable, particularly for managers who have limited experience with performance conversations. Avoiding a few common mistakes can make the process more productive.

Waiting Too Long to Address the Problem

Managers sometimes hope a performance problem will correct itself. Meanwhile, deadlines continue to be missed, mistakes continue to occur, and other employees may start compensating for the underperforming employee. Address problems when a pattern becomes apparent. Earlier conversations are often easier because there is less history to work through.

Giving Vague Feedback

"Work harder."

"Improve your attitude."

"Be more productive."

Statements like these provide little direction. Effective feedback explains the specific behavior or result that needs to change. When possible, connect the feedback to measurable expectations.

Focusing on Personality Instead of Performance

Keep performance conversations focused on work. Comments about an employee's personality can make discussions unnecessarily personal and may not provide useful direction. Focus instead on observable behavior, results, responsibilities, and established expectations.

Failing to Document Performance Issues

Managers may have several conversations with an employee without creating any written record of what was discussed. Months later, it can be difficult to remember exactly when conversations occurred or what expectations were established. Consistent documentation creates a clearer record for employees, managers, and HR.

Applying Standards Inconsistently

Similar performance issues should generally be handled consistently under the employer's policies. If one employee receives repeated warnings for a particular issue while another immediately faces disciplinary action for comparable conduct, the inconsistency can create confusion and potential risk. Managers should understand company policies and coordinate with HR when appropriate.

When an Employee's Performance Doesn't Improve

Some employees respond well to coaching and additional support. Others may continue to fall short of expectations despite repeated efforts to improve their performance. At that point, management may need to consider additional corrective action.

Review the employee's performance history, documentation, improvement plan, company policies, and previous disciplinary actions. Depending on the circumstances, the next step could involve additional coaching, reassignment when appropriate, formal discipline, or termination.

Employment decisions can involve federal, state, and local requirements, particularly when circumstances involve medical conditions, disabilities, protected leave, discrimination concerns, retaliation, employment agreements, or other legal considerations. Employers should consult qualified HR professionals or employment counsel when they have questions about their obligations or the appropriate course of action.

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If managing employee performance is exposing gaps in your company's HR processes, it may be time to take a closer look at how those processes are managed. Contact Horizon Payroll Solutions to learn more about HR support and workforce management solutions for your business.

Horizon Payroll Solutions provides payroll and HR solutions designed to help businesses manage these responsibilities more efficiently. Horizon's HR support services can provide access to experienced HR professionals along with assistance related to HR documents, employee handbooks, job descriptions, workplace policies, and other HR needs.

This content is for general information purposes and does not constitute tax or legal advice, nor does it address federal, state, or local law.  Employers should consult qualified legal and tax counsel regarding their specific obligations.