How should I manage an underperforming employee?

How should I manage an underperforming employee?

Most businesses will experience a difficult, uncooperative or underperforming employee at some stage. You have to deal with them, but how?

As an employer, you need to handle the issue of an unsatisfactory employee in a structured and well-balanced way. Sensible management dictates that you deal with matters relating to an employee’s performance or conduct in a prompt, structured and consistent manner.

What many employers find most confronting is conducting a performance management meeting.

In a memorable case several years ago, one employer thought it was acceptable to have the meeting in the middle of the office, so other employees were witness to the conversation dominated by the employer using strong expletive language. Clearly, this type of performance management approach is strongly discouraged!

Here’s a guide to help you conduct a balanced and less confrontational performance management meeting with a problem employee.


Be prepared

Preparation for the meeting is important. Take the time to ensure you’re ready for what is often a stressful discussion for both employer and employee.

Gather your evidence (such as sales figures, mistakes made, complaints etc) and make comprehensive notes in advance to ensure that you cover everything that is of concern.


Arrange a private meeting space

Ensuring privacy allows the meeting to be conducted in a confidential manner.

Performance management meetings should be held in a meeting room or, where there is no such space available within the office, at another location.

These meetings can be emotional. Have tissues discreetly available and a glass of water for all in attendance. If the employee does get upset, give them a moment and ask whether they’re ready to continue.


Give written notice in advance

Invite the employee in writing to the meeting and provide an outline of the matters of concern that will be discussed. Extend the opportunity to the employee to bring a support person along with them.

Although you’re inviting the employee to attend, ensure they understand that attendance is mandatory.


Starting the meeting

 Start by explaining the purpose of the meeting and the roles of each of the participants. For example, if you have a person assisting you with the meeting, explain that they are there only to take notes of what’s discussed and record any outcomes.

If the employee has a support person, explain that they are there for support only. They are not there to defend the employee or respond on their behalf.


During the meeting

Walk the employee through each of the performance issues and give them the chance to respond.

Where appropriate, provide evidence related to the performance or conduct and explain why you deem it to be unsatisfactory. For example, if the matter concerns an underperforming salesperson, it should be relatively straightforward to present the relevant figures for their comment, discussion and review.

In consultation with the employee, consider ways that may assist them to improve their performance. Consider all suggestions or requests made by the employee, and then confirm what is possible and reasonable. Suggest other options to assist with the improvement if possible and appropriate.


Ending the meeting

Explain and confirm the employee’s understanding of the required level of performance or conduct, as well as time frames for the required level to be reached. Be sure to ask the employee if they have anything further to add.


After the meeting

Write minutes of the meeting and record outcomes and next steps.

If, as a result of the meeting, you intend issuing the employee with a written or verbal warning, ensure you confirm in writing your findings concerning their performance or conduct, what they need to do to address the issues, and the likely consequences (including possible termination) should there be no improvement over an agreed time frame.

The employee should be given a copy of the minutes and, ideally, should sign a copy acknowledging receipt. If the employee is unwilling to do this, make a note of it (in case the minutes are needed in evidence later).

Where a warning is issued, ensure a copy is provided to the employee and another is recorded in the employee’s personnel file.


Final word

All employers should create and implement a performance management policy. It should be consistent with the process you intend following in the event of a performance or behavioural problem.



Common mistakes


Ignoring the problem. Hoping things will improve and counting on peer pressure to correct sub-standard performance rarely works. Other employees will also grumble about the ineffective way the issue is being managed.

Having a group meeting. Instead of dealing directly with the problem employee, many employers bring the entire team together to reinforce standards of performance. The hope is that the problem employee will get the hint, but they rarely do and it’s a waste of time for your top performers.

Transferring the employee. Moving them somewhere else in the business or demoting them is like shuffling the deck chairs on the Titanic. The outgoing area might heave a sigh of relief, but the new area will just sigh.



Download template

You can download a copy of REEF’s Performance Management Checklist from the People Management System. Click on the ‘Employee Management’ tab.


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About REEF

The Real Estate Employers' Federation is the real estate industry’s leading not-for-profit employer and workplace relations advisory association. It has more than 1600 members and subscribers across Australia.

Each year, REEF receives more than 20,000 calls from real estate employers needing help and guidance on matters affecting the employment relationship.

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