How to Identify Employee Underperformance and Improve Performance Management

The people within an organisation are the most valuable resource that it possesses. However, there may come a time when their performance begins to slip, and it is up to the leaders and managers within the organisation to identify this and rectify it through effective performance management.

Firstly, managers need to know how to recognise underperformance, then know how to approach the employee and discuss their concerns in a constructive way. This can be a daunting process especially if the manager lacks experience in dealing with conflict. Nevertheless, performance management is a key aspect of a manager’s role and therefore addressing issues concerning underperformance will most likely be something every manager has to do at some time.

Identifying Employee Underperformance

Underperformance is the inability to meet the standards expected within the organisation. At this point it’s important to note that the employee should be clear about what is expected of them in terms of their performance, through personal or company objectives, personal development plans, codes of conduct or any other performance measurement tool. It is important to make the distinction between poor performance and misconduct. Misconduct can be categorised as ‘non-compliance with rules and procedures or unacceptable behaviour’. This is very different to that of underperformance. Below is a list of issues that may indicate that an employee is underperforming:

  • Increased number of complaints from either customers or other colleagues
  • Targets or objectives not met
  • Poor quality in the work completed
  • Missing deadlines

As a manager you should be able to identify any changes with the employee. It maybe that you notice something about them that could indicate there are issues with their performance. Such as:

  • Absenteeism or persistently being late
  • Low motivation or unengaged
  • Higher stress levels than normal
  • Their standard of work drops

Reasons for Poor Employee Performance

After identifying that an employee is underperforming, and to begin the process of performance management the manager must understand what the causes could be for underperforming:

  • Are the expectations on the employee clear? As mentioned before, clarity of objectives is vital and a common reason for underperforming is that the employee is unaware of what their goals or standards are – or indeed what are the consequences of not meeting them are.
  • The employee may not have the required capabilities to carry out their functions. The employee may struggle with knowledge or skills expected of them in their role.
  • There is no feedback for the employee to understand how their performance is viewed by their manager.
  • There is a lack of motivation.
  • There are problems with other members of staff.
  • The employee has issues outside of work that they are dealing with, such as family issues or health problems.

Performance Management

Once the underperformance issue has been approached and the reasons identified, the manager can concentrate on performance management.

Many employees are often not aware that their performance is not up to the required standards and therefore they will be unable to correct it without being informed. That is why it is so important for managers to have regular feedback meetings so that they can performance manage at every opportunity. If these issues are not addressed in a timely manner they have the potential to become more serious if they are allowed to develop. By not performance managing an individual it could have knock on effects on the whole organisation and start to affect productivity.

The way to effectively performance manage an employee comes in three steps.

  1. Create an informal performance action plan that they can work on.
  2. A formal performance action plan is drawn up. Sometimes managers go straight to a formal action plan, this is just down to personal choice. Some managers like to have everything recorded and therefore the formal action plan suits their style better.
  3. If there is still no improvement it is time to look at disciplinary action.

3 steps of performance management in more detail

Informal Performance Action Plan

The informal action plan takes in a feedback meeting in a one to one setting. Within this meeting the manager will explain to them what is needed of them in their role, they will give feedback on where they are doing well and the areas that need to be addressed. It is at this point that the employee is clear about where their current performance is at compared to where it needs to be. After this, both the manager and employee should have an agreed plan to outline where improvements need to be made and when they must see improvement. Within this meeting the manager must be able to offer suggestions as to where they can help them and how other members of staff can also help them improve. There must also be clear consequences if they fail to improve. All the above must be kept in a record so that the manager can look back on what was agreed in this meeting. Then they will be able to assess if the employee has been taking required steps to increase their performance.

Formal Performance Action Plan

When there is a need for a formal performance action plan it shows that the employee needs extra help and support in attaining the level of performance required of them. If this is the case the manager needs to come to the meeting with an action plan that focuses on SMART objectives. SMART stands for Specific, Measurable, Attainable, Realistic and Time Bound. This means that the action plan will be able to show the employee the specific areas in which they need to improve on and by when. By having SMART objectives, it enables both parties to be on exactly the page when it comes to what needs to be improved and by when. By coming to the meeting with these objectives the manager can go through them with the employee this way they can discuss if they are attainable and realistic for the employee to achieve. The manager should also put forward any extra resources that could help the employee improve such as coaching, training or extra time. It should be stressed at this point that a formal performance action plan is not a disciplinary procedure the manager is simply trying to help the employee achieve the best they can. However, the employee should be told that if their performance has not met the required level in the time they were given further disciplinary action could be taken.

Disciplinary Action

There are only a few options left for a manager that has seen no improvement in performance from an employee even after they have tried to help them with performance management. The last option for them would be to start disciplinary action. Disciplinary action and dismissal would usually follow the following steps:

  • Inform the employee in writing that they are required to attend a formal disciplinary meeting and what the meeting will be regarding, giving them acceptable notice.
  • The employee has the right to be accompanied.
  • Once the meeting has begun inform them again why they have been called to this disciplinary meeting.
  • Give the employee the opportunity to explain their version of events and their feedback to the situation.
  • Use your records to give information regarding the previous informal and formal performance action plans, put forward the evidence of how and when you have given help improve the situation.
  • Explain what action you are going to take and why.
  • Give the employee 5 days to appeal the outcomes.

It is deeply regrettable that the action taken by an organisation would be dismissal of their employee and this should always be the last resort. However, in some cases it is the only option left. U.K employment law appreciates that SMEs are not able to sustain an underperformer within their organisation for a long period and therefore an employee that has less than two years of continuous employment with your organisation is unable to bring unfair dismissal again you in court, unless there is breach of contract or discrimination.

Reflecting on manager performance

At the end of the performance management process regardless of the outcomes it is always a good opportunity for a manager to look back on their own managerial style. They are given the opportunity to reflect on where they think they could have improved their own performance so that they are better able to help future employees in need of performance management.

Nurturing Leadership Qualities

When you’re looking to grow your business and enable it to achieve its potential, it’s vital that you have a strong leadership team.

Promoting from within can foster a meritocratic culture where employees understand that with the right qualities and behaviours they can rise up the ladder within your company. It can be more beneficial to recruit internally rather than externally because of the smooth transition between roles and increased employee engagement and retention.

A great leader can engage your staff and encourage increased productivity. Spotting employees with leadership potential and helping them to develop their skills and behaviours will reap big rewards for both the individual and your organisation.

There is an argument that great leaders are born rather than taught, however many people do recognise that leadership is indeed a skill you can learn. Leicester City Manager Claudio Ranieri is a prime example of how leadership skills can be developed and perfected over time, with the help of personal knowledge and experience.

Writing in an article in The Psychologist, with Professor Alex Haslam of the University of Queensland, the psychologists explained: “Ultimately, Claudio Ranieri’s redemption follows a trajectory from ‘I’ to ‘we’. From his first day as Leicester manager he was keen to make it clear that it was not he who was special, but the team and league that he had come to serve.” Professor Haslam added: ‘Ranieri’s failures and successes teach us critical lessons about how to be a good leader – and also how to be a bad leader. Indeed, there is a long history of leaders in sport – but also in politics and business, moving in precisely the opposite direction to Ranieri.

Leadership may be a skill, but it is understood that many leaders share similar traits, and it’s these traits that you can identify in your employees. In an article for the Guardian, Senior management coach, Steve Nicholls, was quoted as saying: “There is something built into leaders about the kind of personality traits which enable them to be effective. A strong self belief is very important. Natural qualities are fundamental to leadership. You can learn the techniques of leadership, but in terms of personality I don’t think you can.”

Once you’ve identified leadership qualities in individuals it’s your job as an employer to encourage and assist them to reach their full potential.

How to nurture?

The first step is to talk to the person, let them know how well they’re doing and find out if they’re interesting in stepping up into a leadership role within the company. This is your opportunity to discuss development areas and see which path the individual would like their career to take. Once you know that the potential leader wants to progress, you can help them to reach the required level to step into the role when a vacancy appears.

Give increased responsibility

Providing opportunities to take on additional responsibility will show your employee how much you trust them. How you do this depends on the person’s role and your organisation but there are usually ways to offer small leadership roles, such as a place on a committee or chairing a team meeting.

Other ways to increase an individual’s responsibility include delegating challenging assignments and tasking them with special projects. Give those you’re nurturing the autonomy and freedom to solve problems for your organisation. Managing director of INSPIRING John Telfer says that it’s important to make sure that managers aren’t using all of their time on reporting and line management duties however. “This can hinder their own progress by making them focus on what has been, instead of what could be achieved if they are allowed to develop their own inspiring leadership skills,” he explains.

Mentoring programme

Offering a mentor programme can help to support those in whom you spot potential. Pairing them with a senior leader will give your junior staff the opportunity to benefit from the senior member’s experience and they can be inspired to push forward and achieve their goals. Providing mentors can also assist your future leaders in growing their leadership skills. The mentors could suggest books to read, TED talks to watch, and so on.

Provide training in areas of development

In their current role it might not be possible for your future leaders to be exposed to areas that they need to develop, for example commercial knowledge. Offering training that fills these knowledge gaps is a good way to help your staff develop. This could be done formally through an external training provider or informally through work-shadowing or internal coaching on specific skills and leadership competencies.

Recognise achievements and show your appreciation

One of the traits of a good leader is commitment and dedication to the organisation. Your leadership team needs to be fully invested in your company, aiming to be able to encourage and engage junior employees. Thanking your staff and giving honest recognition for their work achievements can help them to feel appreciated and enhance their job satisfaction. As Bart Cleveland wrote for Ad Age, “Sure, it is an employee’s job to do their best. But ask yourself, would you give even more if you knew you were appreciated?”


If you’re looking for a formal way to identify development areas and provide leadership qualifications for your future leaders, our INSPIRING Leadership programme could be ideal for your organisation. This three-phase approach gives your employees a personalised development programme, helps you to retain talent and aligns with your business needs, directly benefiting your bottom line. Find out more about INSPIRING Leadership here.