How HR Should Handle Underperforming Employees

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In every organisation, a diverse range of talents and capabilities contribute to success. We often talk about employees being a company’s biggest asset. And that is generally true. No business could exist or succeed without the hard work of its people. But there are times when certain individuals are not assets; they’re not working hard, they’re not pulling in the same direction as their colleagues, and they’re not successful. In these situations, these individuals can feel like liabilities, causing tension within teams, slowing down progress, and not delivering what is expected of them.

Yes, today, we’re talking about underperformance – an unpleasant situation that requires unpleasant conversations. At times, underperformance can present challenges that need to be addressed thoughtfully and effectively.

Handling underperforming employees is an essential aspect of leadership and management, requiring a delicate balance of empathy, communication, and actionable strategies. In this article, we delve into practical approaches for addressing underperformance while fostering growth and improvement.

What is Employee Underperformance?

Employee underperformance refers to a situation in which an employee consistently fails to meet the expected standards of performance, productivity, or job requirements in their role within an organisation. It involves a significant gap between the employee’s actual output and the standards set for their position. Underperformance can manifest in various ways, including a lack of quality work, missed deadlines, failure to achieve goals, decreased productivity, or a general decline in job performance.

Underperformance is not necessarily a short-term lapse in performance; it typically refers to a consistent pattern over time. It can be caused by various factors, such as a lack of skills or training, unclear expectations, personal challenges, disengagement, health issues, or a mismatch between the employee’s skills and the demands of the role.

Addressing employee underperformance is essential to maintain a productive and cohesive work environment. Employers and managers need to identify the underlying causes and implement strategies to support employees in improving their performance or taking appropriate actions if performance doesn’t meet the required standards.

What Causes Employee Underperformance?

Employee underperformance can stem from a variety of factors, both personal and structural. Understanding the underlying causes is essential for addressing the issue effectively. Here are some common factors that can contribute to employee underperformance:

Lack of Clarity:

Unclear job roles, responsibilities, and performance expectations can lead to confusion and underperformance. People need to know exactly what is expected of them to perform well.

Inadequate Skills or Training:

Employees may lack the necessary skills and have also not received the appropriate training to excel in their roles. Insufficient training or changes in job requirements without proper support can lead to these kinds of problems.

Poor Work Environment:

A toxic or unsupportive work environment can demotivate employees and hinder their performance. Factors such as excessive workload, lack of resources, and unresolved conflicts can all contribute to underperformance. This can also stem from a culture that places unreasonable demands on people, such as expectations to work additional hours outside of their contracted time without any additional pay, or the idea that people should continue to work when they are ill.

Lack of Recognition:

Speaking of which, employees who feel their efforts are not acknowledged or appreciated may become demotivated and, subsequently, underperform. Not having a process or a scheme in place to recognise peoples’ achievements can lead to poor employee experience, and a decline in engagement and performance.

Personal Issues:

Personal challenges such as health problems, family issues, or financial stress can impact an employee’s ability to perform effectively. These external factors can lead to distractions and reduced focus on work..

Lack of Feedback:

Without regular feedback and communication from supervisors, employees may not have a clear understanding of how they are performing and what areas they need to improve. Regular performance reviews are so important to set standards and expectations, as well as to set goals and understand gaps that will require training or more support.


Overworked employees can experience burnout, which can manifest as reduced productivity, exhaustion, and eventually underperformance. Make sure the mental health of an underperforming employee is always considered.

Poor Management:

Ineffective leadership and management practices can create an environment where employees underperform. Micromanagement, lack of support, or unclear directions from supervisors can impact employees’ ability to perform well. For example, setting overly ambitious or unattainable goals can lead to feelings of frustration and failure, causing underperformance. A healthy work life balance is essential for good performance in any organisation.

Health Issues:

Physical or mental health problems can directly impact an employee’s ability to perform their job effectively, leading to performance issues. It’s important to note that mental health issues can also sometimes be difficult to spot or difficult for the person suffering to speak about.

Mismatched Skills:

Employees might be assigned tasks that don’t align with their strengths or skills, leading to subpar performance.

Addressing employee underperformance involves identifying the specific causes and implementing strategies to address them. It requires open communication, supportive management, training opportunities, and creating a positive work environment that fosters engagement and productivity.

Not addressing this problem – or not addressing it soon enough – can be very costly. Let’s look at why.

What is the Cost of not Dealing with Underperforming Employees?

The underperforming employee must deal with the consequences of their poor performance. It causes poor team morale and reduces productivity of all members. Underperforming staff will be detrimental to customer satisfaction as they will be unwelcome or not helpful. Depending on how you treat employees, you may have a claim against you in your favor that costs you thousands or even millions.

Not dealing with underperforming employees can have significant negative consequences for both the individual and the organisation. Here are some of the costs associated with not addressing underperformance:

Negative Customer Experience:

If an underperforming employee is responsible for customer interactions, it can lead to a decline in customer satisfaction. Unsatisfied customers might take their business elsewhere.

Increased Workload for Others:

Colleagues will need to pick up the slack caused by underperforming employees, leading to increased stress and workload for high-performing team members. This will likely trigger a little voice in the minds of those who are performing well, one that asks ‘do you really want to keep doing this?’ – and that’s not a good situation, because that will lead to:

Loss of Top Talent:

When that little voice gets loud enough, those high-performing employees, who have seen a lack of action against underperformance, will become disenchanted and consider leaving the organisation. A costly problem, because you’ll need to replace them and still have to deal with the underperforming person who you still employ.

Missed Organisational Goals:

If an underperforming employee is not held accountable, their lack of contribution can hinder the achievement of organisational goals and objectives. Resources such as time, money, and energy might be wasted on redoing tasks or fixing mistakes caused by an underperforming employee. who is not meeting their performance goals

Legal Consequences:

In some cases, not addressing underperformance can lead to legal challenges, especially if favoritism or discrimination is perceived in the handling of underperforming employees.

Overall, the cost of not dealing with underperforming employees goes beyond immediate productivity losses. It affects team dynamics, employee satisfaction, customer relationships, and the organization’s reputation. Addressing underperformance promptly and effectively is crucial to maintaining a healthy work environment and achieving sustained success.

How to Deal with an Underperforming Employee

Finally, dealing with employee underperformance is a delicate process that requires a thoughtful and strategic approach. Here’s how you can address this issue:

Clearly Communicate Expectations

Open communication is crucial. Start by initiating a private and respectful conversation with the underperforming employee. Create a safe space where they can express their concerns, challenges, and any factors affecting their performance. This dialogue not only helps you understand their perspective but also demonstrates your commitment to their growth and improvement.

During that conversation, work together to identify the underlying factors contributing to their underperformance. Is it a lack of skills, unclear expectations, personal challenges, or something else? Pinpointing the root causes will guide your approach to finding solutions.

At this point, its also important to set the right expectations. Clearly communicate the expectations for their role, performance standards, and the desired outcomes. Ensure that the employee understands their responsibilities and the impact of their work on the team and the organisation.

If the underperformance persists, consider creating a Performance Improvement Plan (PIP). A PIP outlines specific, measurable goals and a timeline for improvement. It also includes the support and resources you’ll provide to help the employee meet these goals.

Offer Support and Training:

Depending on the identified challenges, offer training, mentorship, or resources to help the employee enhance their skills and capabilities. Providing the necessary tools demonstrates your commitment to their success and growth.

Schedule regular check-in meetings to provide ongoing feedback and monitor progress. Celebrate even small improvements, and address any setbacks constructively. This consistent communication fosters a sense of accountability and support.

As time passes, and if the individual in question tries their best to get back on track, acknowledge the employee’s efforts to improve. Positive reinforcement can motivate them to continue working toward better performance.

If appropriate, it might also be worth exploring whether the employee might perform better in a different role that aligns more closely with their strengths and skills. This approach can be mutually beneficial and demonstrate your willingness to invest in their success.

The Consequences of Not Improving Poor Performance

While the focus should be on improvement, it’s important to outline the potential consequences of not meeting performance expectations. This communicates the seriousness of the situation and the need for change.

Maintain detailed records of conversations, feedback, and any agreed-upon actions. This documentation is crucial for transparency and can serve as a reference if further action is required.

You also need to be prepared in case the individual does not improve. Despite your best efforts, if the employee’s performance does not get better, you will be required to make a tough decision. This might involve reassignment, demotion, or even termination. Prioritise the needs of the team and the organisation while treating the employee fairly and respectfully.

Even after the underperformance is addressed, continue to provide support and feedback. This ongoing approach ensures that the employee remains engaged and committed to maintaining their improved performance.

Dealing with employee underperformance requires patience, empathy, and a commitment to fostering growth and improvement. By offering guidance, resources, and clear expectations, you create an environment where employees are empowered to overcome challenges and contribute positively to the organisation’s success.