To manage underperforming employees, act early: find out why the work is slipping, describe the gap in one calm private conversation, agree a short written plan with clear measures and a date, check in every week, and decide at the end based on what actually changed. Most performance problems are fixed at the conversation stage, as long as it happens in week two and not month six.
In a small business, one person falling behind is felt by everyone. This guide gives you a six step process, words you can use in the hard conversation, a simple improvement plan template, and the records worth keeping so the outcome is fair whichever way it goes.
Step 1: Confirm it is a real performance gap
A performance gap is a measurable difference between what the role needs and what the person delivers, seen more than once. Before you say anything, write down three to five specific examples with dates: missed deadlines, error rates, customer complaints, targets missed. "Not a team player" is an opinion; "missed the Friday client report three weeks in a row" is a fact you can discuss.
Then check the expectation itself. Was it ever written down? If the job description, targets or quality standard were never shared, the first fix is clarity, not correction.
Step 2: Find the cause before you judge
The cause decides the fix, so ask before you assume. Underperformance usually comes from one of five places:
| Cause | What you might notice | Likely fix |
|---|---|---|
| Unclear expectations | Work done, but not what you wanted | Write the standard down with an example |
| Skill gap | Effort is there, quality is not | Training, pairing, a smaller first task |
| Workload or tools | Everything is late, not just one thing | Reprioritise, remove work, fix the tool |
| Personal circumstances | Sudden change in a good performer | Time, flexibility, support resources |
| Fit or motivation | Repeated gaps after support | Role change or a formal process |
Notice how many of these are partly the manager's or the company's problem. That is not blame; it is where the quickest wins usually are.
Step 3: Have the conversation early and in private
The first conversation should be short, private and specific: what you have seen, why it matters, and a question about what is going on. Keep it to 20 or 30 minutes and do not stack ten issues into it.
A script you can adapt:
"I want to talk about the weekly client reports. The last three went out on Monday instead of Friday, and two clients have asked about it. That matters because they plan their week around them. What is getting in the way?"
Then listen. Follow with:
"What would help you hit Friday consistently? Here is what I can do from my side."
Things to avoid: "why" questions that sound like accusations, comparisons with colleagues, surprise lists of old complaints, and promises you cannot keep. End by agreeing what happens next and when you will meet again.
Step 4: Agree a short written improvement plan
If a quick fix does not work, put a short plan in writing. A performance improvement plan (PIP) does not need to be a legal document; for most small teams one page is enough, and it should read as a genuine chance to succeed, not a dismissal in waiting.
| Plan section | Example |
|---|---|
| The gap | Client reports late 3 of the last 4 weeks |
| The standard | Every report sent by 4 pm Friday, checked against the template |
| Support | Template walkthrough on Monday; Thursday reminder; Friday morning protected from meetings |
| Measure | Reports on time for 6 of the next 6 weeks |
| Check ins | 15 minutes every Wednesday |
| Timeframe | 30 to 60 days, with a review date |
| Outcome | What happens if the standard is met, and if it is not |
Pick one or two priorities only. A plan with eight goals is a plan nobody can pass.
Step 5: Check in every week and give honest feedback
Weekly check ins keep the plan alive. Each one answers three questions: what went well, what slipped, and what support is needed for next week. Say clearly when progress is real. People who are improving need to hear it, and people who are not need to hear that too, with dates.
Write two or three lines after every check in. A short dated note today is worth more than a long reconstructed memo later.
Step 6: Decide fairly at the end
At the review date there are three fair outcomes: the standard is met and the plan closes, progress is real but incomplete and the plan is extended once, or the gap remains and you move to a role change or ending employment. Make the decision on the measures you agreed, not on new criteria.
In the United States most employment is at will, but that does not make every dismissal safe. Treat similar cases the same way, keep the reasons tied to documented performance, and remember that federal law forbids treating people differently because of protected characteristics such as race, sex, religion, age or disability. The EEOC's guide to prohibited employment practices is a good plain language starting point. In Canada, employment standards are set by each province, so check the rules where the person works, and take legal advice before ending employment if you are unsure.
Records to keep when managing underperforming employees
Good records protect the employee and the business. Keep, with dates:
- the examples that started the process;
- notes from the first conversation and every check in;
- the written plan, signed or acknowledged;
- training or support you provided;
- the final decision and the reasons for it.
Keep these in the employee's HR record, not in a manager's inbox where they disappear when the manager leaves.
How an HR system helps without taking over
No software fixes performance; conversations do. A system just makes the process consistent and the records hard to lose. In ExecCortex the HRM app has Reviews, One to Ones and Feedback pages under Growth, plus HR Cases for formal matters, all on the same employee record as job history and leave. Every job change is a dated record that is never overwritten, so a role change or termination keeps the full history behind it.
If you are comparing tools, our page on employee management software covers what to look for, and the guide to employee leave tracking for small businesses helps when absence is part of the picture.
Start with one honest conversation this week. Most of the time, that is the step that turns things around.
FAQ
How long should a performance improvement plan last?
Most plans run 30 to 60 days. That is long enough to show a pattern of improvement and short enough to keep focus. For work measured monthly, such as sales targets, 90 days can be fairer.
Should HR be in the first conversation?
Usually not. The first conversation works best between the employee and their manager. Bring HR in when you move to a written plan, if the issue involves conduct, or if the manager is part of the problem.
What if the employee says the problem is personal?
Listen and ask what support would help: a temporary change in hours, time off or adjusted priorities. You can still keep a clear standard and a review date while showing flexibility.
Can I fire an underperforming employee without a plan?
In many US states at will employment allows it, but skipping a fair process raises the risk of a discrimination claim and hurts team trust. A short documented plan is the safer and fairer default.