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managing poor performance

Managing Unsatisfactory Performance

Employee Performance

23 June 2025 (Last updated 3 Dec 2025)

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A crucial part of managing a business, is the management of employees and their performance. Business owners and employers need to consistently address performance instead of relying on annual reviews and discussions. Underperformance or poor performance can lead to low productivity, low morale, and conflict among workers. Unsatisfactory performance is not just a reflection on the employee, but is also a reflection on management and leadership.

In this guide, we outline what constitutes unsatisfactory performance, its underlying reasons, and approaches to manage performance concerns.

Understanding unsatisfactory performance

Unsatisfactory performance (also known as poor performance) occurs when an employee fails to meet the expectations of the job. They can be underperforming when they fail to meet certain milestones or goals or fail to meet a reasonable standard of work expected of them. Underperformance is unintentional and involves a lack of skill or competence to meet the required standards.

Underperformance doesn't just affect an individual employee, it has a ripple effect on co-workers, team morale, customers, and ultimately business productivity.

Reasons for under performance

Employees don’t deliberately set out to underperform and there are often underlying reasons behind unsatisfactory performance. Some common reasons include:

  • Burnout or lack of general well-being
  • Workplace conflict
  • Lack of motivation
  • Skills gaps
  • Personal problems
  • Lack of clarity around the job role and duties
  • Lack of communication around targets and goals

Understanding the root cause of poor performance can help you address it effectively.

Signs of unsatisfactory performance

Below are a few signs that can help you recognise poor performance:

  • An employee failing to accomplish their KPIs/goals/milestones for a month or more at a time. Failing to meet KPIs consistently can be a red flag.
  • An employee is regularly submitting subpar work.
  • An employee is becoming defensive and failing to implement changes.

Unsatisfactory performance vs misconduct (Will vs Skill)

The difference between misconduct and underperformance is quite simple.

Misconduct has more to do with the employee's behaviour (their will) where there has been a breach of the employment agreement or company rule or policy. Whereas unsatisfactory performance involves an employee's ability to do their job or their failure to meet the standards required of their role (their skill). It is important to be clear on the difference as misconduct and performance are addressed via different processes.

Managing underperformance

Having a clear policy around performance improvement and performance management can help reduce confusion, establish a fair process, and set clear expectations among employees.

Poor performance or underperformance is not likely to go away on its own and other employees may lose motivation if they have to constantly carry the burden of their under performing colleagues.

Informal measures are offered first, if the problem is identified early. Managers and employees can resolve issues together without going through a formal process.

The manager will have an informal discussion about the performance concerns and include solutions such as:

  • extra training
  • buddying, mentoring or coaching
  • changes to tasks
  • regular check-ins with managers and supervisors
  • referral to Employee Assistance Programme (EAP).

Your performance management policy should include what the manager needs to consider when implementing informal measures. It should also include what happens if performance doesn't improve and when formal measures can be put in place.

The formal steps for managing performance concerns are:

Identifying the problem - Performance concerns are not the same as a once off mistake or an error. Generally, a pattern of the employee failing to meet standards is observed by the employer.

Meeting with the employee - Organise a face-to-face meeting with your employee to discuss performance concerns. Let the employee know about the reason for the meeting in advance so they can adequately prepare. If you will be referring to documents to back your concerns, provide copies to the employee before the meeting. Inform the employee they can bring a support person of their choice to the meeting. The meeting should take place in a private and comfortable environment.

At the performance concerns meeting:

  • set out the standard expected of the employee
  • take note of the nature of and frequency of the underperformance (include details such as dates, times etc)
  • document why the below standard work is an issue and specify the impact
  • suggest changes and improvements that can be implemented so that the employee can meet the required standard and improve their performance
  • discuss any supporting documents or statistics such as business stats, KPIs, customer feedback
  • allow the employee to provide explanations and feedback about their performance and encourage them to contribute to potential solutions

Once you have identified the problem, consider the severity, the duration of the unsatisfactory performance, and the gap between expectations and delivery. By assessing the problem, you can prepare for potential solutions and pathways in collaboration with the employee.

Being professional in the meeting - During the meeting, things may get emotional. However, you should remain professional and calm. Clearly describe the problem without getting personal or aggressive. Do not use phrases such as 'You always' or 'You never.' Explain the impact on the business, the employee's work, and co-workers. Outline the outcomes you hope to achieve from the meeting. It is essential you make the employee feel safe and listen with an open mind. Ask questions to understand the context and the circumstances.

Having a plan - Once the problem has been discussed, work together with the employee to find a solution. Employees will be more motivated to improve their performance if they have given their input into the solution. While developing a solution ensure that:

  • the employee clearly understands the changes required
  • the employee contributes solutions and improvements
  • the employee has been offered appropriate support and assistance such as training, mentoring, or adjustments
  • there are set dates for follow-up meetings
  • there is a set date for the end of the review period.

Recording the actions in a Performance Management Plan {PMP) - A PMP outlines what actions the employee and the business need to take in order to improve the employee’s performance. The PMP will clearly identify:

  • where the employee is failing to meet the required standards of the position
  • what the required standards are, and
  • how such shortcomings will be addressed and remedied (including any support that will be provided by the employer).

The PMP will give the employee a reasonable time to improve their performance and should clearly mention the possible consequences if the employee's performance does not improve.

Monitoring the situation - It takes more than one meeting and conversation to resolve performance concerns. Employers should regularly check-in with the employee to discuss progress and any obstacles they may have encountered. The employee should be given continuous feedback and encouragement. Remember to be flexible and give time to the employee to improve their performance.

What if the employee does not improve?

At the end of the review period assess the employee’s performance against the PMP. If the employee’s performance doesn’t improve, invite the employee to a formal meeting to discuss the failure to meet the expectation of the PMP.

The meeting must be held to discuss the employer’s concerns and seek the employees’ feedback. If after the meeting you wish to issue the employee with a warning, send a letter proposing this to the employee, seeking their feedback in writing.

If the employee responds, consider their feedback and if you still wish to proceed with the warning, issue this to the employee and continue with the PMP.

If their performance does not improve after subsequent performance management processes, this may lead to termination of employment.

HR and HSW support for businesses

Peninsula works with small business owners and employers, supporting them in HR and HSW matters. Our advice team provides access to customised resources, documents, and advice in issues such as performance management and dismissal. Call us on 0800 234 037 to learn how we can help you.

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Employee Performance

Performance appraisals

The last few years has been challenging for employers and organisations. Add the Great Resignation, talent shortages, and economic challenges and it has been a tough time for both employers and employees. Companies in Australia and New Zealand must review their processes and look to reinventing their old standard processes which have not given effective results. One of the ways you can revamp your approach to performance management and employee well-being is rethink your appraisals. Work appraisals can be a key ingredient in effective performance management and help boost productivity and retain vital talent. In this guide for employers, we explain performance appraisals, the process of performance appraisals, benefits of appraisals, and ways Peninsula can help you. Appraisals Appraisals refer to the regular review of an employee’s job performance and overall contribution to the company. Also known as an annual review, employee appraisal, performance review, or evaluation, you don’t have to legally do it in the workplace. An appraisal also evaluates an employee’s skills, achievements, growth, and tasks. In an appraisal, you periodically review and assess past performance to determine compensation and promotions. You can use appraisals to justify raises, bonuses, or even termination. Appraisals do not need to be formal and do not need to be on a set timeframe. However, they should be documented and the more often they occur, the less risk there is of problems developing. Unless it is outlined in the employment agreement, contract, or any workplace policies there is no requirement for a formal time period or structure for an appraisal, but there are a few tips you should consider for every employee and their appraisal. Performance appraisals vs performance reviews Performance appraisals and performance reviews are terms used interchangeably but there are few differences. Performance appraisal is the formal, structured, and specific process while a performance review can be informal, unofficial, and even a friendly chat between a manager and an employee. Performance appraisals process Setting clear goals and objectives as to what is expected is an easy way to ensure employees are clear on what they need to accomplish. In this process, not only should you outline what you expect but employees should be encouraged to state what they would like to accomplish. In an appraisal you have the steps as follows: Let your employee know you will be holding an appraisal on so and so date. This should be done weeks or months in advance so employees can prepare. Schedule the meeting weeks in advance and confirm it with the employee. Inform the employee about the nature of the meeting, the agenda, and any questions that may arise in the meeting. Some questions that you may ask: How well they think they’re doing in their job? Which areas can use improvement? Whether they need any additional support or help for their role? How they feel about their job and company? What would they change if they could? Have your own thoughts and notes prepared for the meeting. This should include your employee’s job description, their tenure, notes from previous reviews if any, performance indicators, metrics, any other relevant figures that are related to their role. Get feedback from other stakeholders, seniors, and even colleagues. Discuss the tough questions with your employees- if they are not performing well, you will need to ask why certain targets weren’t met. Give them time to prepare answers. Take notes in the meeting and share the copy with the employee. Share final thoughts, next steps, and a written summary. Carry out follow-up meetings to ensure the development program is achieving the desired outcomes. You have the freedom to make the appraisal interview as formal or casual as you wish. Although, as a general rule of thumb, it is a good idea to conduct the meeting in a safe, secure environment (e.g. private meeting room or quiet local café), where you can both speak openly – free of distractions and interruptions. Types of appraisals There are the standard appraisals which are usually the manager or supervisor taking the lead on it and evaluating the employee with no external input. A range of new performance employee methods have been developed and put into practice in the modern workforce. As a result, employers have the freedom to pick-and-choose from a number of approaches, which can be tailored to match their style and the needs of the business. Ideally, a combination of methods would be adopted to get the best all-round picture of the employee’s performance. Peer assessment: Your employee’s colleagues or workgroup rate their performance Self-assessment: Employees rate their performance and behaviour 360-degree feedback assessment: A holistic approach as it includes input from an individual, supervisor, and peers Management by objectives (MBO): This approach works when you have short-term projects and are more about specific and measurable goals. It is ideal for teams that have quarterly or annual targets that need to be met. Behaviourally anchored rating scale (BARS): While this is a newer method of performance appraisals, it admits that behaviours play a big role in employee performance. This method involves rating employees on defined behaviours relevant to their role. For example, if an employee is in a customer service role, how they perform their role is equally important as what they achieve. Objectives and key results (OKRs): This can be used in combination with MBO or self-assessments. This method is suitable for growth-focused businesses and encourages employees to set individual measurable goals that align with company objectives. Graphic rating scale: Graphic rating scales are visual scales used to evalute employees on a continuum. The scale has numerical or descriptive options such as (1-5, 5-10) or (below expectations, meets expectations, exceeds expectations). Performance appraisal form Regardless of your approach to the performance appraisal, it is important to have all your bases covered. Below is a checklist of the key details to include in your appraisal form: The employee’s details. Summary of the employee’s performance results within the reporting period. Summary of the employee’s performance and whether they’re reaching development goals. Agreement on new development goals for the next performance period. Section for both the supervisor and employee to sign-off on the details. Benefits of performance appraisals Performance appraisals have multiple benefits for both employees and employers. When executed effectively, they have a strong impact on the workplace. Regular appraisals ensure that your employees have a clear target they are working towards. They feel motivated and have established expectations about potential rewards. Appraisals boost employee morale and productivity and incentivize hard work and dedication. Criticism of appraisals While performance appraisals have several benefits, they also have some drawbacks for the organisation and employees. Appraisals are standardised and do not take into account individual temperament and style of working. Several companies tend to use standardised or general appraisals without considering their company culture. Appraisals can have unrealistic goals and demoralise workers or push them to feel resentful. Due to the close relationship between a manager and their employee, appraisals can become about likability and not performance strictly. Not all roles may have clear metrics or figures that can signify good performance or progress. Key things for employers to remember Appraisals should be an ongoing process. Through the year, ensure that managers and supervisors feel comfortable to engage with employees. They should establish goals, note progress, and provide feedback consistently and regularly. You also don’t necessarily need to wait till appraisal to give your employees feedback or get feedback from them. You can set up informal chats with them once or twice a month to keep track of progress and any other support they may need. Managing poor performance Poor performance can occur for many reasons. An employee may be suffering from low morale, lack certain skills or abilities, or the issue could relate to problems outside of the workplace (i.e. problems at home). Regardless, it is crucial to identify the cause of the underperformance first before you jump to conclusions. First, carry out a general observation of the employee in question. Do they appear to be stressed, upset, or over-worked? How do they interact with other staff and customers? Even a few basic observations may clue you in to what is really going on. Secondly, reach out to other team members and find out if they have noticed any strange behaviour lately. Don’t pry though! You do not want the team to feel as if they are being investigated. Otherwise, this may reduce morale and productivity. From there, have a meeting with the employee. Give clear examples as to where the employee has underperformed, let them share their side of the story, and listen carefully. Depending on the reason for the underperformance, the next step is most likely to provide the necessary guidance, training, and education to improve the situation. When managing underperformance, always set clear, reasonable goals for the employee to focus on and reach. And carry out follow-up meetings to ensure the program is achieving the desired outcomes. Peninsula can advise you on how to manage your employee’s performance effectively and implement feedback processes.  Establish effective policies with Peninsula Communication between employers and employees is key to productive workplaces. Poorly handled appraisals can be detrimental to your company and also cause attrition. You need a bespoke approach and tailored advice that allows you to create effective policies and procedures for your business. Peninsula understands the specific needs of your business and ensures that we provide the customised resources and help you need.

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