An underperforming employee can quietly drain productivity, morale, and even profits. But with the right approach, you can transform that same person into a standout contributor. These eight ironclad strategies will help you lead with clarity, empathy, and results.
What Is an Underperforming Employee?
Before we jump straight in, let’s define the underperformance and the critical impact it has on business operations. An underperforming employee is someone who consistently fails to meet the expectations of their role, whether in terms of productivity, quality, attitude, or engagement. This isn’t about occasional mistakes or learning curves. It’s about a persistent gap between what’s needed and what’s delivered. Making an accurate distinction between both is imperative.
Common Signs of Employee Performance Issues:
- Missed deadlines or incomplete tasks
- Low output compared to peers
- Poor attention to detail or frequent errors
- Lack of initiative or engagement
- Resistance to feedback or collaboration
- Negative impact on team morale
Pain Points Small Businesses Face From Low-Performing Employees
Unlike large corporations, small businesses feel the ripple effects of employee performance issues more acutely. Discerning these pain points is viable in understanding why it matters and how to correct them. Let’s take a look at some common pain points:
Limited Bandwidth—
Every team member counts. When one person underperforms, others often have to pick up the slack. This indirectly and directly leads to burnout, resentment, and inefficiency.
Tighter Budgets—
Small businesses can’t afford to carry dead weight. Low performance can drain resources without delivering ROI, especially in roles tied directly to revenue or customer service.
Brand Reputation Risks—
Reputation is everything. In small communities, just one disengaged employee can damage customer relationships, online reviews, and word-of-mouth referrals. We all know the effects of a damaged reputation can crush any business to the point of no return.
Team Morale & Culture—
A single low performer can disrupt team dynamics and lower morale. Top performers begin to feel undervalued and dissatisfied. If not addressed head-on, it will lead to toxic work environments.
Lost Growth Opportunities—
Business owners or managers spending excessive time addressing a low-performing employee most likely miss out on opportunities. Because this is time not spent on innovation, marketing, or scaling. Small businesses need every ounce of momentum to grow.
Why Defining Performance Issues Matters
Accurately defining these issues helps you to:
- Avoid bias or emotional decision-making
- Protect your business legally and ethically
- Communicate transparently with employees
- Set clear and fair expectations
- Create measurable improvement plans
1. Identify Why Your Underperforming Employee Is Struggling
Before you can fix employee performance issues, you need to understand them. Is the employee unclear on expectations? Do they lack necessary skills, or are they disengaged? The best action is to use direct conversations, implement clear performance systems, and precisely analyze the data to uncover the root cause.
2. Set Clear Goals for Underperformance
Vague expectations lead to vague results. Define what success looks like in their role using SMART goals. When your employee knows exactly what’s expected, or what the issues are and how to correct them, they’re more likely to rise to the challenge.
3. Build a Customized Improvement Plan
Employee coaching is great, but in these cases, you need to go beyond this approach by creating an effective and practical improvement plan. Your plan should include:
- Specific performance gaps
- Training resources
- Weekly or regular check-ins
- Milestones and timelines
This also shows you’re invested and value the employee’s growth as much as or more than their output.
4. Focus on Strengths, Not Just Weaknesses
Don’t just fix what’s broken. In management, sometimes we all fall into the habit of focusing on weaknesses. Amplifying what is working is often a better approach. Identify your employee’s natural strengths and find ways to integrate them into their role. This doesn’t suggest ignoring the weak spots, but building confidence rather than disparagement creates momentum, which in turn drives performance.
5. Pair Your Underperforming Employee With a Mentor
Support from a teammate is more likely to be effective than coaching and constant feedback. We highly recommend that all businesses adopt this model. It’s a solid and inexpensive employee engagement method, which leads to better retention rates. Additionally, the “buddy system” or “mentorship program,” whichever you choose to refer to it as, builds trust among teams and promotes accountability and shared learning.
6. Recognize Progress Early and Often
Celebrate small wins. There’s no rule that says you can only commemorate big achievements. Recognition reinforces effort and helps your underperforming employee feel valued, even if they’re still climbing the hill. Public praise, private encouragement, and tangible rewards all go a long way.
7. Address Behavioral Issues Directly
A huge mistake is to tiptoe around issues such as attitude, lateness, negativity, or resistance. Keep conversations constructed and focused by using clear, respectful feedback models like SBI (Situation-Behavior-Impact).
8. Know When It’s Time to Pivot or Let Go
As mentioned earlier in this post, excessive time addressing a low-performing employee impacts overall business operations. Unfortunately, not every employee has the ability to change or has the desire to change. It isn’t common, especially if you’ve exhausted all the tools and methods available, but it does happen. At this point, it’s time to plan for reassignment, a restructure, or parting ways indefinitely. The ultimate goal is transformation, not blind tolerance.
The Conclusion
Helping an underperforming employee become a top performer isn’t about perfection. It’s about progress for your business and employee. Through clarity, strategy, and implementing the right tools and methods, you can unlock hidden potential.
Need help with employee relations? Contact Cress HR