How to Deal with an Underperforming Employee in 8 Steps

Boss in a bad mood because of bad results, telling his employees mindof / Deposit Photos

As a business owner or manager, one of the most challenging tasks you will encounter is in deciding how to handle employees who are not performing to the requisite standard.

This aspect of your role is especially tricky because there could be numerous reasons for a worker's poor performance. There could be personal issues at home, for instance, or your employee could be burning out, experiencing self-confidence issues, or undergoing a loss of trust and respect for the company itself. It's a sensitive area that requires tact and diplomacy on your part, as well as a willingness to escalate things if the situation doesn't improve.

Dealing With an Underperforming Employee

Indeed, whatever the reason behind your employee's slump, it's your duty as a leader to help them get back into their stride. No matter what the issue is, if an employee feels supported as an individual and as a member of staff, then the problem is far more likely to get resolved positively; after all, an employee who feels appreciated is always more likely to work harder and be more productive.

To help ensure that everybody is working towards the same goal, here are the eight steps you need to follow in order to successfully manage such a situation:

1. Look to Yourself First

Before you start scrutinising your employee, it's a good idea first to see what you as a company may be doing wrong. For example, have they been given a job title and description that reflects their worth? Is training being offered to them? Are they being asked to do more than their job description dictates?

If you firmly believe that they are being treated fairly and are being asked to perform the tasks that they were hired for, then you need to find out what is going wrong. If not, maybe look at what you, as a company, can do to improve the situation first.

2. Find the Root Cause

Managers should never presume to know why an employee is performing poorly. As mentioned, there could be any number of things going on in that person's personal life, for instance, and it should be your job to find that out before you take any further action.

Of course, you'll need to demonstrate a level of emotional intelligence here; your staff are under no obligation to talk about their private lives. Explain, though, that if something is affecting their performance, then you are there to help them. Once you know the root cause of the issue, you can address it, whether that means giving the employee some time off, hiring an extra employee, or committing more resources.

3. Don't Let It Linger

As soon as you notice that you have an underperforming employee within your staff, address it. The longer things go on, the harder it will be to confront the employee, while your team will not be operating at maximum productivity.

The earlier you discuss things, the less time there will be for resentment or bitterness to develop, too. Make it clear that you are there to find solutions, and that you are willing to listen to suggestions.

4. Offer Coaching, Counselling and Training

In many cases, an underperforming employee may feel as though they are not growing with the company, both on a personal and professional level; if this is the case, then coaching is something you may want to offer. Provide training and guidance on how the employee can achieve set goals, either individually or as part of wider company policy, and give them a purpose and a target to reach.

If the problem goes beyond professional boundaries, then it could be a good idea to arrange a counselling session with a trained professional. By allowing your employee to discuss their concerns in a protected environment, and giving them the tools needed to move forward, you can get to the core of why they are not performing and make changes as necessary. Your employees will also appreciate your sincerity, creating a more loyal environment.

5. Challenge Your Staff

In job interviews, you will often hear people say they want to leave their current role because they do not feel challenged. Whether this is due to a company not holding up their end of the bargain, or the employee simply outgrowing the role, it's a surefire way to lose a good worker.

Poor performance is commonly associated with a lack of motivation, so talk with your employee about how they believe they could be challenged. Consult with your HR department (if you have one) and identify where else in the company they could play a role. The employee will feel they have gained your trust and that they are an important asset within the company, resulting in increased motivation and performance.

6. Offer Incentives

If, after discussion with your employee, you still can't understand why their performance is dropping, you might offer incentives - known as the "carrot" approach. For instance, you could offer a bonus for when specific goals are achieved, or reward strong team performances with a company outing.

You could even ask employees to come up with ideas for how the company can grow and provide rewards. Offer gym memberships so that your staff can blow off some steam, afternoons off if tasks are completed ahead of time, or company lunches when numbers are up. All of these steps will be a motivating factor and help to increase morale and performance.

7. Get Tough

Of course, you can only give so much without expecting to get something back. If you have tried all of the above approaches, and you still see no positive response or reaction, then it may be time to drop the carrot and adopt the stick.

Taking a stricter approach may be slightly unpleasant but, ultimately, it's the success and wellbeing of your business that is at stake, and if somebody is jeopardising that, then it's not acceptable. Document any incidents or figures that suggest the employee in question is slipping, and then arrange a formal meeting (if you have an HR department they should be present). Depending on the severity of the drop, you can dispense an official warning, followed by a review period in which it is explicitly stated that performance is expected to improve.

8. If All Else Fails, Get Rid

If you have tried everything, including giving the employee every chance to improve and providing fair warning, then the only real option you have left is to let them go.

The termination itself should be given in writing (again, if you have an HR department, they should be involved), although it is common courtesy to meet with the employee face to face and discuss why they are being terminated. At all times, make sure you are adhering strictly to your countries' employment law and company policy, and remain professional, even if your employee doesn't.


Getting rid of an underperforming employee is, unfortunately, a reality that most business owners have to face at some point. However, it should never be your first course of action, especially if the employee in question was a previously solid performer.

It's essential to be emotionally intelligent and understand what motivates and drives your employees, as well as be able to identify when something isn't right. This comes from developing positive relationships with your staff from the get-go and knowing that they will work best when they are treated as people first, and employees second.

How do you deal with underperforming employees? Let us know in the comments below.