Every organization deals with performance challenges at some point. Missed deadlines, disengaged employees, declining output—these issues don’t always signal a bad hire. More often, they reflect unclear expectations, overloaded managers, or systems that no longer support people effectively.
For business leaders, managing poor performance is not about quick fixes or disciplinary shortcuts. It’s about protecting standards while also supporting people to do their best work. When handled well, performance conversations can improve results, retain talent, and strengthen trust across teams.
This guide outlines a clear, practical approach to managing poor performance in five steps, designed for leaders who want consistency, fairness, and long-term improvement.
Why Poor Performance Should Be Addressed Early
Performance issues rarely appear overnight. Small gaps often go unnoticed until they become patterns. When leaders delay action, frustration builds on both sides. Teams lose momentum, and high performers often carry extra load without acknowledgment.
Strong employee performance management starts with early recognition. According to Gartner, managers who address performance concerns within the first 30 days are 60% more likely to see improvement compared to those who wait until annual reviews.
Ignoring issues also affects wellbeing. Prolonged stress, unclear expectations, and lack of feedback can contribute to disengagement and burnout—especially when leaders aren’t equipped for consistent coaching.
Step 1: Identify the Real Performance Problem
The first step in managing poor performance is separating symptoms from causes. Missed targets could stem from unclear priorities, outdated tools, or skill gaps—not a lack of effort.
Before taking action, gather facts. Review output, timelines, and expectations. Look for patterns across time rather than isolated incidents. This approach helps managers avoid assumptions, especially when working with underperforming employees who may be struggling silently.
In many cases, performance drops coincide with workload spikes or role changes. Leaders who understand context are better positioned to respond fairly and effectively.
Step 2: Have a Clear, Respectful Conversation
Once the issue is clear, schedule a direct conversation. Avoid hallway feedback or reactive comments. A structured discussion sets the tone for improvement.
Effective feedback at work focuses on observable behavior, not personality. Use specific examples and explain impact on the team or business. Keep the conversation balanced—listening matters as much as speaking.
This step often reveals underlying challenges such as stress, unclear processes, or personal strain. In some cases, poor output is linked to managing burnout at work, especially in fast-paced or understaffed teams.
“Most performance problems worsen when people don’t feel heard.”
Step 3: Agree on Expectations and Support
After discussing the issue, clarify what “good performance” looks like. Vague goals create confusion and frustration. Clear expectations create confidence.
This is where many managers struggle—not because they lack intent, but because they haven’t been trained in manager coaching skills. Coaching is about guiding progress, not issuing instructions.
Use this stage to align on resources, timelines, and check-ins. Support might include training, workload adjustments, or peer mentoring. When leaders invest time here, performance conversations feel constructive rather than corrective.
Step 4: Use Performance Improvement Plans Thoughtfully
When informal support isn’t enough, structured plans help. Performance improvement plans (PIPs) are often misunderstood. Used poorly, they feel punitive. Used well, they provide clarity and accountability.
A strong PIP outlines goals, timelines, and review points in plain language. It focuses on achievable outcomes and shared responsibility—not just employee compliance.
Leaders who combine PIPs with AI coaching for managers often gain better visibility into progress, emotional load, and communication gaps—especially across distributed teams.
Step 5: Monitor Progress and Decide Next Steps
Improvement doesn’t happen in isolation. Regular check-ins keep momentum going and signal commitment from leadership.
Track progress against agreed benchmarks. Celebrate small wins. If performance improves, acknowledge it openly. If it doesn’t, be prepared to make fair decisions that protect team standards and morale.
In high-pressure roles, especially in service environments, unresolved workplace performance issues can spread quickly. This is common in roles affected by emotional labor, such as stress in customer support teams, where output and wellbeing are tightly linked.
A Simple Framework Leaders Can Use
To keep performance conversations consistent, many leaders rely on a simple structure:
- Define the gap between expectations and reality
- Identify obstacles and needed support
- Agree on next actions and review dates
This approach reinforces accountability while maintaining trust—an essential balance in modern leadership.
Performance Management and Mental Health
Performance and wellbeing are deeply connected. When employees feel unsupported, performance often drops before mental health concerns surface.
Organizations that integrate employee mental health support into performance processes see better outcomes. According to the World Health Organization, workplaces that invest in mental health initiatives see a 4x return through improved productivity and reduced absenteeism.
Leaders who recognize this connection address root causes instead of cycling through repeated performance warnings.
The Role of Leadership Capability
Poor performance is not always an individual issue. It can reflect leadership gaps, unclear strategy, or weak systems.
Leaders with strong leadership mental fitness handle performance conversations with calm, clarity, and consistency. They don’t avoid hard discussions, but they also don’t escalate prematurely.
This capability becomes even more important during periods of change, restructuring, or rapid growth.
When Letting Go Is the Right Decision
Not every performance issue can be fixed. When expectations are clear, support has been provided, and progress doesn’t happen, leaders must act.
Handled respectfully, exits protect team morale and business outcomes. Transparent processes reinforce trust, even in difficult moments.
Organizations that align performance management with workplace wellbeing solutions tend to navigate these decisions with less conflict and long-term damage.
Final Thoughts for Business Leaders
Managing poor performance is one of the most challenging leadership responsibilities—but also one of the most impactful.
When leaders approach performance with structure, empathy, and consistency, they don’t just fix problems. They build stronger teams, reduce turnover, and create environments where people know what’s expected and feel supported in meeting those expectations.
The goal isn’t perfection. It’s progress, accountability, and sustainable performance—for individuals and the organization as a
