Managing underperformance is one of the most common and often most avoided challenges for employers.
Handled well, it can lead to improvement and stronger team performance. Handled poorly, it can create legal risk, impact team morale, and in some cases lead to unfair dismissal claims.
Effectively managing underperformance requires a clear, fair and consistent approach, supported by proper documentation.
What is Underperformance in the Workplace?
Underperformance occurs when an employee is not meeting the expectations of their role. This may relate to:
- Quality of work.
- Productivity.
- Performance related behaviour or conduct issues.
- Failure to follow reasonable and lawful directions.
How Should Employers Manage Underperformance Initially?
Not every situation requires a formal process. In many cases, underperformance can be addressed through informal management. This may include:
- A direct conversation and providing meaning feedback.
- Clarifying expectations.
- Providing additional training or support.
This approach should be:
- Clear.
- Constructive.
- Focused on improvement.
Early intervention is often enough to resolve performance concerns without escalation while preventing a more serious issue from occurring.
When Should You Move to a Formal Performance Management Process?
If performance does not improve, or the issue is more serious, a structured process is required. A formal performance management process typically includes:
- Clearly outlining the concerns.
- Providing specific examples.
- Setting and documenting expectations for improvement.
- Allowing a reasonable timeframe.
- Offering support where appropriate.
This is often documented in a performance improvement plan (PIP).
What is Procedural Fairness in Performance Management?
Procedural fairness is a critical requirement when managing underperformance. To reduce risk, employers should ensure the employee:
- Is aware of the concerns.
- Has an opportunity to respond.
- Is given a reasonable chance to improve.
- Is treated consistently with other employees.
Failing to follow a fair process can increase the risk of an unfair dismissal claim.
Why is Documentation Important When Managing Underperformance?
If performance concerns are not documented, it can be difficult to demonstrate what has occurred. Employers should keep records of:
- Conversations and meetings.
- Performance concerns raised and the employee’s response.
- Support or training provided.
- Agreed actions and timeframes.
Accurate records protect the business and provides clarity for the employee.
What Happens if Underperformance Does Not Improve?
If, after a reasonable and fair process, there is no improvement, a disciplinary process may be commenced. This may ultimately lead to termination of employment, provided:
- A fair process has been followed.
- The employee has had an opportunity to improve.
- All relevant factors have been considered.
You can learn more about this process in our article on How to Handle Employee Discipline the Right Way.
What are the Most Common Mistakes Employers Make?
Some of the most common issues include:
- Avoiding the conversation altogether.
- Letting issues continue without action.
- Moving straight to termination without a fair process.
- Inconsistent treatment between employees.
- Lack of documentation.
These mistakes can significantly increase risk if the situation escalates.
What is the Best Approach to Managing Underperformance?
Managing underperformance does not need to be overly complicated. A practical approach is to:
- Address issues early.
- Be clear about expectations.
- Follow a consistent process.
- Document key steps.
- Seek advice if you are unsure.
Taking a structured approach helps protect your business while giving employees a fair opportunity to improve.
Underperformance is a normal part of managing people, but how it is handled makes all the difference. Getting the process right reduces legal risk and supports better outcomes for both your team and your business.
How ProcessWorx Can Help
If you are dealing with underperformance or unsure how to approach a situation, it’s important seek advice early.
Our team can help you:
- Structure performance conversations.
- Develop PIPs.
- Manage formal disciplinary processes.
- Ensure correct documentation .
If you need guidance, contact our team on (08) 9316 9896 or get in touch here.
We cover performance management on our Let’s Chat HR & Safety podcast – listen to Let’s Chat Employee Performance Management.
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