You’ve Known About the Underperformer for Months. So Has Everyone Else.

How long have you known?

Properly known, I mean. The way you know the lease is up in March. You have noticed the deadlines that slide, the work you quietly redo on a Sunday night, the way the rest of the team has stopped handing them anything that matters. You have not said anything yet, because they are a decent person, and they have been here a while, and things might settle down after the busy period.

Things almost never settle down after the busy period. There is always another busy period.

You Are Already Paying For It

Robert Half once asked CFOs how much time their managers spent dealing with underperforming staff. The average answer was 26 per cent of working hours. More than ten hours a week, a quarter of a manager’s job, spent absorbing one problem instead of building anything.

In a small business the manager is usually you. That is ten hours of owner time a week going into maintenance. Checking work that should not need checking. Rewriting emails before they go out. Explaining the same process for the fourth time and telling yourself it counts as coaching.

The same survey asked how hiring mistakes affect team morale. Forty-four per cent said greatly and another 47 per cent said somewhat. Nine per cent said not at all. I would love to meet the nine per cent.

Your Best People Noticed First

The team knows. They usually knew before you did, because they sit next to it every day. They see the handover that did not happen and the client email that went unanswered, and they fix it, because they care about the work.

For a while they do it willingly. Then they start doing the maths. They are carrying extra load, the person causing it is paid the same or close to it, and the owner has either not noticed or noticed and decided it is fine. Neither of those is a great thing for a high performer to believe about the place they work.

Every week an underperformance issue goes unaddressed, your team is learning what the standard really is here. The standard is whatever you tolerate on an ordinary Tuesday, whatever the values poster in the kitchen says.

I think the most expensive part of an underperformer is usually the good person who resigns because of them. And that person will almost never give it as the reason in their exit interview.

Why Good Owners Wait

The owners who put this off longest tend to be the ones who care most.

There is loyalty. This person was there early. They worked the weekend in the year it nearly all fell over, and you remember that. There is hope, the belief that the new system or the new quarter or a bit less pressure will turn it around. And there is plain discomfort, because nobody trained you for this conversation and the last time you tried one it went sideways.

Managers everywhere are struggling with the same thing. Gallup’s latest State of the Global Workplace report found manager engagement has dropped from 31 per cent in 2022 to 22 per cent, and overall employee engagement has fallen to 20 per cent, the lowest since 2020. When the people responsible for hard conversations are running on fumes themselves, the hard conversation is the first thing to slip off the list.

Do Your Half First

Before you have the conversation, there is a harder question to answer honestly. How much of this is on you?

Is the role actually written down? Does the person know what good looks like, in numbers or in outcomes they could point to? Have you ever told them plainly that their work is falling short, or have you hinted, sighed, and redone it yourself?

A lot of underperformance starts upstream. Someone gets promoted into a role they were never set up for. Priorities change every fortnight and nobody tells the person at the end of the chain. The job grows around them until it is three jobs. It is the same pattern that sinks plans with no owner and no definition of done. People can only hit a target they can see.

If you have not been clear, that is your first conversation, and it is a different one. It is a reset, with no warning attached. You set the expectation properly, give them a fair run at it, and see what happens. Clarity comes before execution, with people as much as with strategy, which is why it is where coaching with me always starts.

How To Have The Conversation

When the expectations were clear and the work still is not there, book the conversation. This week, in private, with enough time set aside that neither of you is watching the clock.

• Bring specifics. Three recent examples, what was expected, what actually happened. “Your attitude has been off” starts an argument. “The Henderson quote went out two days late with last year’s rates” starts a conversation.
• Skip the compliment sandwich. People can smell it, and it buries the one thing you need them to hear. Say the hard sentence early and plainly, then give them room to respond.
• Ask what is going on, and listen. Sometimes there is something you do not know about. A sick parent, a relationship ending, a health issue, burnout. You would want to know, and it may change the path forward.
• Agree what good looks like for the next four to six weeks. In writing. Specific outcomes, the support you will give, and a weekly check-in in the diary.
• Actually follow up. This is where it usually falls apart. The first conversation is hard, the next three are awkward, and it is tempting to let the weekly check-in drift. Hold it. The follow-up is what tells the person this is real.

When It Does Not Improve

Sometimes you do all of that and it still does not work. At that point it is a decision, and making it is kinder than letting it drift for another year.

Sometimes the answer is a different role that fits what the person is genuinely good at. Sometimes it is an exit, handled with honesty and dignity. In Australia, get this part right. If you employ fewer than 15 people, the Small Business Fair Dismissal Code sets out what Fair Work expects from you, and it is worth talking to an HR adviser or employment lawyer before you act. A fair, documented process protects the business, and it protects the person too.

Where AI Can Help, And Where It Should Stay Out

AI is useful in the preparation. Give it your scattered notes and it will help you turn them into a clear summary of what was expected against what happened. It will draft the written plan. It is surprisingly good as a rehearsal partner, too. Ask it to play the employee, including the defensive version, and practise saying the hard sentence out loud before it matters.

It should not have the conversation for you, and nobody should receive performance feedback in a message that was obviously written by a chatbot. Be careful what you paste in, as well. Performance notes about a named employee are personal information, and they belong in a tool your business controls, under an AI policy that actually says so.

The Person Nobody Asks

There is one person in this story who rarely gets asked how it feels, and it is the person being tolerated.

People can usually tell when they are being worked around. The meetings they stop getting invited to. The good jobs quietly going to someone else. Conversations that stop when they walk into the kitchen. That is a miserable way to spend a year of your working life, and nobody has said a word to them about it.

The early conversation gives them a real shot, with a clear target and a manager who is actually paying attention. The late one arrives after everyone in the building has made up their mind, sometimes including them. If you are going to have it anyway, and you are, have the version that still leaves room for things to go well.

Frequently Asked Questions

How do you manage an underperforming employee?

Start by checking that expectations were clear: a written role, specific outcomes, and an honest conversation in which the person was told their work is falling short. If expectations were clear and performance is still below standard, meet privately, bring specific examples, ask what is going on, and agree in writing what good looks like over the next four to six weeks, with weekly check-ins. Follow up consistently. If it still does not improve, make a decision about a different role or a fair exit, and get advice on the correct process.

How long should you give an underperforming employee to improve?

Four to six weeks is a reasonable window for most roles, provided the expectations are specific and you meet weekly to review progress. Roles with longer cycles, such as sales with a long buying process, may need longer. The bigger risk for most small businesses is the months or years before the conversation starts. Robert Half research found managers spend around 26 per cent of their working hours dealing with underperformers, so waiting has a real cost.

What should I say in a performance conversation?

Be specific and direct early in the conversation. Describe two or three recent examples, what was expected and what actually happened, then ask for their view and listen. Avoid vague judgements about attitude and avoid burying the message between compliments. Finish by agreeing clear outcomes, the support you will provide, and when you will meet next, and put it in writing afterwards.

Can a small business in Australia dismiss an underperforming employee?

Yes, provided the process is fair. Small business employers with fewer than 15 employees can follow the Small Business Fair Dismissal Code, which the Fair Work Ombudsman publishes along with a checklist. In practice that means the employee has been told clearly why their performance is not acceptable, given a reasonable chance to improve with support, and warned of the consequences. This is general information only, so speak to an HR adviser or employment lawyer about your specific situation before acting.

Can AI help with performance management?

It can help with preparation. AI is good at turning scattered notes into a clear summary, drafting a written improvement plan, and acting as a rehearsal partner so you can practise a difficult conversation. It should not deliver feedback on your behalf, and performance information about named employees should only go into AI tools your business controls, in line with your principles for using AI well.