FCB Article: Managing Underperforming Employees

By Ceri Hohner, Senior Associate at FCB Workplace Law

Managing employees is time-consuming and can distract you from running your business. When you are required to manage an employee who is consistently underperforming, this additional work can quickly transform your day from manageable to manic. Here’s a refresher on managing difficult employees in a way which reduces your risk, and helps to focus on workforce productivity.

What’s the difference between performance management and conduct issues?

Employers need to undertake performance management processes where an employee is not meeting the expectations set by the employer in relation to the quality or quantity of work.

Conduct issues usually take the form of a breach or breaches of a rule or policy: this could include a general law or expectation (for example, racist conduct) or something specific to the business (for example, failing to declare a potential conflict of interest or breaching a safety direction).

Why do performance issues arise?

Often, unsatisfactory performance reflects the gap between actual and expected performance. This may result from the employer or the employee, such as the following examples:


  • Lack of knowledge or awareness
  • Inadequate skill and experience
  • Personal problems outside of work
  • Capacity
  • Conflict
  • Perceptions of fairness or equality
  • Lack of motivation or effort


  • Unrealistic expectations
  • Lack of supervision or training
  • Lack of/unclear performance goals, measures or priorities
  • Insufficient or inadequate resources
  • Lack of leadership, direction or instruction
  • Pressure on leaders
  • Poor culture and values

What are the objectives of performance management?

Once you have identified that an employee is underperforming, consider whether you are in a position to determine why.

Is the employee’s poor performance caused by a capability, capacity or behavioural issue?

  • Capability – skills, experience, knowledge, behavioural competency such as communication skills
  • Capacity – availability, physical/psychological capacity, resources
  • Behavioural – attitude, motivation, conduct, confidence

Could there be any other factors contributing to the employee’s poor performance?

  • Personal circumstances?
  • Conflict/grievances/bullying or harassment?
  • Leadership, management or culture issues?

Once you have determined some or all of the factors causing the poor performance, you can then identify what needs to be achieved to remedy it.

When you’re considering performance managing an employee, it’s important that as an employer, you set the objectives from the outset so all parties have a clear and consistent understanding of the goal. Unless you plan a staggered improvement approach from the beginning, you should not move the goalposts halfway through the process: this is confusing to the employee, and undermines their trust and confidence in you as an employer/manager.

The overall objectives of a performance management process may include aspirational achievements such as improving performance, repairing employee relationships or overcoming barriers to performance, but it is important to break down the actual goals in a performance management process to something which can be clearly and unambiguously assessed as having been met (or not). This reduces dispute, gives the employee certainty, and increases transparency between the parties.

Next, consider how these goals can be achieved. This might include providing the employee with training or additional support, setting up regular catch-up meetings, or reaching agreement on an action plan for the employee to follow.

Don’t forget to specify when you expect the employee to reach their performance targets. These timelines should reflect realistic improvement expectations: for example, requiring an employee to adopt a more positive, friendly demeanour to their colleagues can be a short-term goal (perhaps 2-3 weeks), while some achievements may take longer (for example, improving quarterly sales results). It is a good idea to check in with the employee at least once during the review period, to see how they think they are going, offer feedback, and ask if they need any further support to achieve their goal.

Performance management is a collaborative process, and to be effective, it needs both employer and employee to be committed to achieving improvement. Where it is not managed appropriately, it can result in greater workplace problems including continued under-performance, reduced employee

morale and productivity, legal risks resulting from adverse action such as termination of the underperforming employee, and the costs and effort of fresh recruitment. It’s worth getting right from the beginning, to save yourself and your workforce a lot of hassle and headaches.

If you would like to discuss employee management, please contact Ceri Hohner, Senior Associate, or Bianca Seeto, Partner, on 07 3046 2100.

Date: 19 July 2021