What Should You Do With an Underperforming Employee in a Small Business?

If an employee is underperforming, do not start with:
"How do I get rid of them?"
And do not spend the next eighteen months hoping they somehow improve without anybody having the uncomfortable conversation either.
Start by establishing three things:
What standard are they failing to meet?
Why are they failing to meet it?
Is the problem realistically fixable?
Then act.
Sometimes the answer is:
Clearer expectations.
Training.
Better management.
More appropriate resources.
Reasonable adjustments.
A short period of focused support.
Sometimes the employee is perfectly capable but simply not doing what is required.
Sometimes the role has changed and the person has not developed with it.
Sometimes you hired the wrong person.
And sometimes, after a fair opportunity to improve, the right answer genuinely is ending the employment relationship.
What matters is reaching that conclusion from evidence rather than frustration.
Acas makes an important distinction between capability, where somebody is unable to perform the job to the required standard, and conduct, where the problem concerns their behaviour. The appropriate response can differ depending on which problem you actually have.
That distinction is a very useful place for a small business owner to begin.
Underperformance is not a personality diagnosis
Do not start with:
They're lazy.
They don't care.
They've got a bad attitude.
They're useless.
Those might describe how you currently feel.
They are terrible performance standards.
Instead ask:
What exactly is not happening?
For example:
Quotes should be issued within three working days.
Average is currently seven.
Customer calls should be returned the same working day.
Several have gone unanswered for two days.
Jobs should close below an agreed rework threshold.
This employee's jobs repeatedly exceed it.
Project updates are required every Friday.
Four of the previous six were missing.
Now you have something you can manage.
If you cannot explain what good performance looks like, be careful criticising somebody for missing it
This is one of the first places I would challenge an owner.
"What aren't they doing?"
"They're just not performing."
What does performing mean?
"They should know."
Maybe.
But perhaps the role has never had:
Clear outcomes.
Measures.
Deadlines.
Quality standards.
Decision authority.
Priorities.
You may have an underperforming employee.
You may also have an underdefined job.
Acas recommends objectives that are specific, measurable, achievable, relevant to the employee's role and time-bound, while CIPD similarly describes clear objectives, support, feedback and accountability as central parts of effective performance management.
Clarity comes first.
Do not wait for the annual appraisal to tell somebody they have been crap for nine months
That is weak management.
If an employee is materially below standard:
Talk to them.
Early.
Acas recommends regular informal conversations about performance alongside more formal reviews, including feedback, coaching and one-to-ones.
That makes sense commercially too.
The earlier you address a problem, the more options you normally have.
Wait twelve months and you may have:
A much bigger performance gap.
An angry manager.
Frustrated colleagues.
Customer damage.
And an employee who genuinely thought everything was fine because nobody told them otherwise.
The first conversation does not need to be a courtroom
For an ordinary performance issue, start like a manager.
Not a prosecutor.
Explain:
What you have observed.
What standard you expected.
The difference between the two.
Then ask:
What's happening?
You need their side.
Perhaps you discover something important.
Diagnose before prescribing
I would look at seven possible causes.
1. Clarity
Do they genuinely understand what is expected?
2. Capability
Do they have the knowledge, skill or experience to perform?
3. Conduct
Are they capable but unwilling to meet the standard?
4. Capacity
Is the workload realistically achievable?
5. Resources
Do they have the information, equipment, systems and support required?
6. Health or personal circumstances
Is something affecting their ability to perform that requires appropriate support or consideration?
7. Fit
Is this simply the wrong person in the wrong role?
Those produce very different conversations.
Capability and conduct are not the same problem
Imagine two employees miss the same deadline.
Employee A:
Doesn't understand the software.
Was poorly trained.
Has repeatedly asked for support.
Employee B:
Fully understands the system.
Has performed the task successfully for three years.
Simply keeps ignoring the agreed deadline.
Same outcome.
Different problem.
Acas defines capability problems as issues with someone's ability to perform the work, while conduct concerns behaviour and things over which the employee generally has more control. It also warns that what initially appears to be conduct can sometimes have another underlying explanation, including disability.
Do not manage those situations identically.
If they cannot do the work, ask why
Maybe they were never properly trained.
Maybe the job changed.
Maybe your business grew and the role became significantly more complicated.
Maybe the system changed.
Maybe they were promoted beyond their current capability.
Maybe the employee has a gap that can realistically be developed.
Then the question becomes:
What support would give them a fair chance to reach the required standard?
Acas specifically identifies support, coaching, mentoring and training as possible responses to capability problems and says employers must provide adequate resources for employees to do their jobs.
That does not mean unlimited training forever.
It means first establish whether you have given the person a realistic opportunity to succeed.
If they can do it but repeatedly will not, that is different
The employee understands.
Has demonstrated capability.
Has the resources.
Expectation clear.
Yet repeatedly:
Does not follow agreed process.
Ignores reasonable instruction.
Misses commitments without explanation.
Refuses work within the role.
Then you may be dealing with conduct rather than capability.
Again, diagnose.
Don't give someone six months of technical training when the issue is that they simply will not do what is reasonably required.
Ask whether the job itself changed
This happens constantly in growing SMEs.
You hired somebody five years ago.
Back then the job was:
Book jobs.
Answer phone.
Raise invoices.
Now it involves:
Managing three people.
Interpreting dashboards.
Handling major customers.
Making commercial decisions.
Running systems.
Same employee.
Completely different role.
Perhaps the person did not suddenly become worse.
The business outgrew the original job.
That does not mean the company must freeze around them
Businesses change.
Roles change.
Standards rise.
People need to develop.
But acknowledge what actually happened.
Then ask:
Can this person develop into what the role now requires?
Do they want to?
How long would it reasonably take?
Or should the organisation consider a different structure?
That is a better conversation than simply:
"They used to be brilliant and now they're rubbish."
Check whether the role is actually possible
This one matters enormously.
Employee consistently misses deadlines.
Before concluding performance problem:
How much work have you given them?
You might discover the role requires:
Fifty-five hours of work inside a thirty-seven-hour week.
No prioritisation.
Constant interruptions.
Three managers issuing conflicting requests.
Then the employee gets labelled underperforming because mathematics failed.
Acas says objectives should be achievable and reflect the employee's normal tasks and workload.
Underperformance can sometimes be evidence of poor job design.
Compare like with like
Is everyone in the role struggling?
Interesting.
One person underperforming?
Maybe individual issue.
Every estimator missing the target?
Maybe the target.
Every Project Manager working late?
Maybe workload.
Every salesperson failing after a pricing change?
Maybe market or proposition.
Performance data becomes more useful when you look for pattern rather than automatically blaming the individual nearest the failure.
Check the manager too
This is uncomfortable.
Perhaps the employee is underperforming because their manager:
Does not set expectations.
Rarely gives feedback.
Changes priorities constantly.
Avoids difficult conversations.
Micromanages everything.
Never coaches.
Doesn't provide information.
Then twelve months later tells you:
"I think we need to get rid of Dave."
Maybe.
But what management did Dave actually receive?
CIPD's current performance-management guidance describes people managers as central to setting expectations, connecting individual work with organisational goals, providing useful feedback and holding employees accountable.
Employee performance and manager performance are often connected.
Do not confuse your own failure to manage with someone's failure to perform
Owner notices:
Sarah isn't strong enough.
Says nothing.
Two months pass.
Still annoyed.
Says nothing.
Another six months.
Complains about Sarah constantly.
Still no direct conversation.
Sarah cannot improve a standard nobody has explicitly discussed with her.
Have the conversation.
Use examples, not generalisations
Weak:
"Your attitude hasn't been good."
Better:
"During the last four Monday planning meetings, the agreed project update wasn't prepared. On two occasions the team could not finalise resource allocation as a result."
Now the employee can respond to something real.
Avoid:
Always.
Never.
Everyone says.
You're just not committed.
Stick to observable behaviour and results.
Ask for their explanation
Not because you need permission to manage performance.
Because you may be missing information.
Try:
"I've noticed X. The expected standard is Y. Talk me through what's causing the gap."
Then listen.
Maybe:
They misunderstand the target.
System is broken.
Another manager keeps reprioritising them.
They need training.
There is a health issue.
They disagree with the expectation.
They genuinely are not trying hard enough.
You need the information before deciding.
Health and disability require particular care
If health or disability could be involved, do not freelance your way through it.
In Great Britain, employers have legal duties around disability discrimination and reasonable adjustments. GOV.UK states employers must make reasonable adjustments where disabled workers would otherwise be substantially disadvantaged, and Acas notes that reasonable adjustments can sometimes resolve capability issues.
Examples can include changes to equipment, working arrangements or other appropriate support depending on the circumstances.
This is an area where proper HR or employment-law advice is sensible if you are unsure.
Don't diagnose somebody's health yourself
You are their employer.
Not their GP.
You can discuss:
Performance.
Impact.
Support.
Adjustments.
Relevant occupational-health input where appropriate.
Do not decide:
"They're obviously depressed."
or:
"They're definitely not disabled."
Manage what you actually know and get proper advice where necessary.
What if the employee says they need more support?
Good.
Ask what.
Training?
Clearer priorities?
Different equipment?
More frequent review?
Coaching?
Information?
Then decide what is reasonable and useful.
Support should have a purpose:
Reach the required performance standard.
This is not simply:
"Tell us what would make the job nicer."
It is:
"What reasonable support would allow you to perform the role successfully?"
Give informal improvement a clear structure
For many ordinary performance problems, you do not need to go from:
No conversation whatsoever
to:
Formal disciplinary procedure.
You might agree:
What needs improving.
What good looks like.
What support you will provide.
What the employee will do.
How progress will be measured.
When you will review it.
Acas recommends trying to understand and support performance issues before moving into formal procedure where appropriate.
Document the conversation.
Documentation is not about building a secret file against them
This is where performance management can become toxic.
Manager privately starts creating:
"The Dave File."
Dave has no idea there is a serious issue.
That is not good management.
Record:
What was discussed.
What was agreed.
What support was offered.
What happened next.
Acas specifically recommends keeping records of performance conversations and sharing written records with the employee.
Transparency matters.
The employee should know there is a problem
Obvious?
Apparently not.
If you are quietly gathering evidence for three months while telling the employee:
"Yeah, all good."
your process has already gone wrong.
They need a real opportunity to understand and improve.
When should you use a Performance Improvement Plan?
If informal support is not producing sufficient improvement, a more structured improvement plan can make sense.
Acas says a Performance Improvement Plan, sometimes called a training or development plan, should set:
Specific objectives.
A reasonable timescale.
Any required support or training.
And employees should understand both the plan and what could happen if sufficient improvement is not achieved.
That is useful.
A PIP should ideally be an improvement plan
Not:
"We have decided to dismiss you in eight weeks and need some paperwork."
If the decision is already made, do not pretend the employee has a genuine improvement opportunity.
A credible plan should answer:
What needs to change?
How will we measure it?
What support is available?
What period is reasonable?
How often will we review progress?
What happens if the standard is met?
What happens if it isn't?
Clear.
There is no universal 30-day PIP
Some improvements can be demonstrated quickly.
Others cannot.
A salesperson with a six-month sales cycle cannot magically demonstrate six months of revenue in thirty days.
A customer-service response-time problem may be measurable immediately.
Use a timeframe appropriate to the job and the performance issue.
Acas explicitly refers to a reasonable timeline rather than a fixed period.
Do not move the goalposts halfway through
Employee starts improving.
Manager suddenly adds:
"And actually, we also don't like this..."
No.
If another genuine issue appears, deal with it properly.
But the employee should know which standards are currently under review.
A moving target destroys trust and makes fair evaluation difficult.
Measure enough to make the judgement fair
That may be:
Quality.
Output.
Deadlines.
Sales.
Customer complaints.
Accuracy.
Attendance where relevant.
Behaviour.
Not everything has to become a spreadsheet.
But avoid making a major employment decision based entirely on:
"I just feel like they're not good enough."
Be careful with subjective roles
Leadership.
Communication.
Judgement.
Teamwork.
These are harder to measure than widgets produced.
Still define behaviour.
For example:
Weak:
"Needs better leadership."
Better:
"Weekly one-to-ones with all six direct reports are not taking place; three documented performance issues have remained unaddressed for over two months; team actions from management meetings are not being followed through."
Now you can manage it.
Review progress frequently enough to be useful
Do not issue an improvement plan.
Disappear.
Return at the end.
"Failed."
If improvement is genuinely the objective, check progress.
Acas and CIPD both emphasise performance management as an ongoing process involving regular feedback and discussion, not a single annual or formal event.
Give the employee enough information to adjust.
Praise improvement where it is real
Do not become so committed to your original judgement that nothing the employee does counts.
They improve:
Acknowledge it.
The objective should be a functioning employee relationship if that is realistically achievable.
Not proving that you were right about them.
But do not accept microscopic improvement forever
This is the opposite problem.
Standard:
Employee performing:
After three months:
Owner says:
"Well, they are improving."
Technically.
Is the improvement sufficient?
Are they likely to reach the required level inside a reasonable period?
You are allowed to make that judgement.
Support does not require indefinite tolerance of unacceptable performance.
Underperformance affects good employees too
Owners often think keeping an underperformer is the kind option.
Sometimes it creates unfairness elsewhere.
Other employees:
Carry extra workload.
Fix mistakes.
Deal with unhappy customers.
Work around the person.
Watch standards go unenforced.
That has consequences.
Your responsibility extends to the whole team.
Not only the employee you are reluctant to challenge.
High performers notice what you tolerate
You tell the team:
Quality matters.
One person repeatedly produces poor work.
Nothing happens.
What is the actual standard?
The one on the wall?
Or the one people observe?
Performance management is part of culture because it shows whether expectations mean anything.
Do not compensate forever
You check all their work.
Manager finishes their tasks.
Team works around them.
Customer issues are diverted.
Now the employee appears functional.
Only because other people are subsidising the role.
Calculate the hidden support.
How much management time?
Rework?
Lost output?
Owner involvement?
The employment cost is not only salary.
Ask whether a different role genuinely fits better
Perhaps the employee is weak at:
Management.
Brilliant technically.
Why keep forcing management?
Could they move back into a technical specialist role?
Possibly.
Acas says employers dealing with capability issues should consider whether changes to duties or a different suitable role are possible before dismissal, although any role change should be discussed appropriately with the employee.
But be sensible.
Do not invent a useless job to avoid a difficult decision
"We'll make Dave Special Projects Manager."
What does Dave do?
"Not sure."
Salary?
£52,000.
Excellent.
You did not solve the problem.
You hid it in the organisation chart.
Alternative roles should be real, valuable and suitable.
Sometimes a demotion is not a simple unilateral option
Changing somebody's duties, status, pay or contractual terms can create legal and employee-relations issues.
Do not casually announce:
"You're not Manager anymore."
Get appropriate advice and follow the contractual and procedural requirements relevant to the situation.
This article is business-management guidance, not a substitute for employment-law advice on an individual case.
What if they are still in probation?
Use probation properly.
A probation period exists precisely to assess whether somebody is suitable for the role.
Acas says probation can be used to assess performance, skills and organisational fit. Its updated July 2026 guidance says employers should use performance-management steps to support improvement where appropriate, can consider extending probation where further training or support is likely to help, and should still follow a fair process if dismissal becomes necessary.
Do not let probation simply expire while everybody avoids making a decision.
Small businesses need to pay particular attention to the law changing on 1 January 2027
As of September 2026, employees in England, Scotland and Wales generally need two years' qualifying service to claim ordinary unfair dismissal, subject to important exceptions and day-one protections.
From 1 January 2027, the Employment Rights Act 2025 reduces that qualifying period to six months. The same date also removes the existing cap on compensatory awards for successful unfair-dismissal claims. The day-one protections around discrimination and automatically unfair grounds remain.
That makes good probation management and early performance conversations even more important.
Northern Ireland has separate employment legislation and these particular changes do not apply there.
Short service does not mean "do whatever you want"
This is important.
Owners sometimes hear:
"They haven't got two years' service."
and interpret:
"No employment risk."
Wrong.
Automatically unfair reasons and discrimination protections can apply without the ordinary unfair-dismissal qualifying period, and other contractual or statutory issues can still matter.
If you are considering dismissal and there is anything potentially sensitive involving:
Disability.
Pregnancy.
Family leave.
Whistleblowing.
Health and safety.
Discrimination.
Trade-union matters.
or another protected issue,
get proper advice.
What if the issue is misconduct?
Then you may need a disciplinary route rather than treating it as simple poor performance.
Acas recommends trying to resolve ordinary conduct issues informally where appropriate, but more serious issues may require a formal disciplinary process.
Do not disguise conduct as capability because:
"I don't like disciplinary conversations."
And do not describe lack of skill as misconduct because:
"I'm angry."
Use the right category.
What about gross misconduct?
That is a different situation entirely.
Potential gross misconduct can justify dismissal without normal notice in some circumstances, but a fair investigation and procedure still matter. GOV.UK specifically warns that even alleged gross misconduct should be investigated and the employee given a chance to respond before a dismissal decision is made.
If that is what you are dealing with, get HR or legal support.
It is not what this article is primarily about.
When does dismissal become a legitimate option?
When you have established that:
The required standard is legitimate and clear.
The performance gap is real.
You have understood the likely cause.
Appropriate support has been provided.
The employee has had a reasonable opportunity to improve where required.
Any relevant adjustments or legal considerations have been addressed.
Performance remains below the required standard.
And there is no suitable alternative that genuinely makes sense.
At that point, continuing indefinitely may not help:
You.
The employee.
The team.
The customer.
Capability can be a fair reason for dismissal, but the process matters
For employers in England, Scotland and Wales, capability and conduct are recognised potentially fair reasons for dismissal under section 98 of the Employment Rights Act 1996. But having a potentially fair reason is not enough by itself. The employer's actions and procedure still matter.
Acas says capability dismissal should be a last resort and employers need evidence both of the poor performance and of steps taken to support improvement.
This is where proper professional advice is worthwhile.
Small business does not mean informal legal exemption
"We're only a small company."
Does not remove employment obligations.
You may not have:
HR department.
People Director.
Legal counsel.
But the employee still has rights.
Use:
Acas.
Qualified HR support.
Employment solicitor where appropriate.
Do not rely on something your mate did with his apprentice eight years ago.
Do not performance-manage somebody because you actually need a redundancy
This deserves its own section.
Suppose the employee performs perfectly adequately.
But:
You no longer need the role.
Business contracted.
Technology changed the work.
You reorganised.
That may be a redundancy or organisational-change issue.
Do not manufacture a fake performance case because redundancy feels inconvenient.
Different problem.
Different process.
Likewise, "I don't really like them" is not a performance standard
They are not your friend.
Question is:
Can they perform the job?
Can they work appropriately with others?
Do they meet required behaviours?
You can manage genuine behaviour problems.
But personality preference should not become a hidden performance criterion.
Avoid recency bias
One terrible week.
Manager decides:
"They've completely gone downhill."
Look at the evidence.
How long?
What changed?
What is normal performance?
One-off incident?
Pattern?
GOV.UK notes that an informal discussion may be sufficient where underperformance is a one-off and the employee otherwise has a good record.
Respond proportionately.
Avoid halo effects too
Employee has been with you twelve years.
Great person.
Everyone loves them.
Performance has been materially inadequate for two years.
Owners can become equally irrational in the opposite direction.
Length of service deserves respect.
It does not remove the need for role performance.
Have the conversation properly.
Long service can make the conversation more important, not less
Perhaps the employee does not realise the role changed around them.
They deserve:
Honesty.
Clarity.
Support.
The opportunity to adapt.
Silently becoming increasingly frustrated with them is not kindness.
Do not let gratitude become permanent organisational debt
Someone helped enormously in 2018.
You are grateful.
Excellent.
Does that mean they can remain indefinitely in a role they can no longer perform?
No.
You can value what somebody contributed historically and still address what the business requires now.
Both can be true.
What if the employee used to be excellent and suddenly declined?
That should make you more curious.
What changed?
Manager?
Role?
Workload?
Health?
Personal circumstances?
System?
Motivation?
Relationship?
Don't jump immediately to:
"They don't care anymore."
Explore.
Sudden change is information.
What if the issue is motivation?
Motivation is often used as another vague diagnosis.
Why is motivation low?
No recognition?
No progression?
Manager relationship?
Impossible target?
Wrong role?
Or genuinely disengaged?
You cannot fix every person's motivation for them.
But understand enough to avoid treating symptoms.
Pay is not always the answer
"Maybe if we give them a bonus..."
Perhaps.
But money does not train someone who lacks capability.
It does not clarify an ambiguous role.
It does not repair terrible management.
And paying somebody more to perform badly creates a particularly expensive version of the same problem.
Fix the actual cause.
Do not promote them out of the problem
This happens more often than it should.
Employee not especially good at current role.
Owner assumes:
"They need more responsibility."
Promotes them.
Now you have:
A poorly performing manager.
With direct reports.
Performance problems became more expensive.
Promotion should be evidence-led.
Not an escape route.
Managers must be willing to have the difficult conversation
A manager who continually tells you:
"Dave isn't good enough."
but will not tell Dave,
is not fully managing.
Performance management is part of the job.
CIPD explicitly identifies managing underperformance, setting clear expectations and giving feedback as core people-management responsibilities.
Article #38 matters here.
Sometimes the employee problem exposes a manager problem.
Give feedback close enough to the event
Employee mishandles customer meeting.
Manager waits four months until appraisal.
Ridiculous.
Discuss it while:
Context is fresh.
Examples are clear.
Improvement can happen.
Good performance management should be continuous, not an annual historical reconstruction.
A useful first conversation
You do not need corporate HR language.
Something like:
"I want to talk about your current performance in X. The standard we need is Y, and over the last six weeks we've had A, B and C. I want to understand what's causing that gap before we decide what needs to change."
Then listen.
From there:
"This is what we need to see."
"This is the support we'll provide."
"This is what you are responsible for."
"We'll review it on this date."
Straightforward.
A simple underperformance diagnostic
Before deciding what to do, answer these ten questions.
1. What precisely is below standard?
2. What evidence do I have?
3. Does the employee know the expected standard?
4. Have they previously demonstrated they can meet it?
5. What does the employee say is causing the problem?
6. Do they have adequate training, resources and capacity?
7. Is health, disability or another protected issue potentially relevant?
8. Is the problem capability or conduct?
9. Is there a realistic route to improvement?
10. What happens if performance does not improve?
That will give you a much better starting point than:
"I'm sick of them."
A 30-day informal improvement process might look like this
Not because thirty days is universally right.
Because sometimes it provides a useful short structure.
Day 1
Clear conversation.
Agree performance gap.
Understand causes.
Define expected standard.
Agree support.
Weekly
Short progress review.
What improved?
What remains off track?
What support is required?
Document key points.
End of period
Has performance:
Recovered?
Improved enough to continue support?
Barely moved?
Declined?
Then decide the next appropriate step.
For other roles the period might need to be much longer.
Use judgement.
A formal PIP should be simple enough to understand
You do not need nineteen pages.
Potential structure:
Performance concern
What is below standard?
Required standard
What result is expected?
Evidence
What demonstrates the current gap?
Employee actions
What must they do?
Employer support
Training, resources, coaching, adjustments where relevant.
Measure
How will progress be assessed?
Review dates
When?
Timescale
Reasonable period.
Potential consequence
What may happen if sufficient improvement is not achieved?
Clear.
Do not turn the PIP into a daily punishment ritual
If you check the employee every thirty minutes, you may alter the role so dramatically that the assessment becomes meaningless.
Give appropriate support and review.
Let them demonstrate whether they can perform.
The purpose is evidence and improvement.
Not humiliation.
What if they improve during the PIP and fall back afterwards?
Then you have more information.
Was the improvement sustainable?
Was the standard clear?
Did management stop supporting once the plan ended?
Is the underlying issue unresolved?
Performance management is not a ceremony you perform once.
You are trying to establish stable role performance.
What if they partly improve?
Use judgement.
Suppose they needed to move from 50 to 80.
They reached 76 and the trajectory is strong.
Perhaps extend support.
Reached 53 after substantial intervention?
Different judgement.
Acas specifically notes extending the improvement period can be appropriate where there has been some improvement but not yet enough.
This does not mean extending forever.
What if they simply cannot reach the level the business needs?
That happens.
It does not necessarily make them a bad person.
You may have:
Good human.
Wrong job.
Good technician.
Poor manager.
Great administrator.
Weak commercial lead.
The kindest long-term outcome is not always preserving employment in a role where somebody continually fails.
Sometimes honesty is kinder than years of mutual frustration.
But don't rush that conclusion because managing them is inconvenient
There is a temptation:
"They're hard work. Replace them."
Recruitment is not frictionless.
A new employee needs:
Search.
Selection.
Notice.
Onboarding.
Training.
Time.
And may still turn out worse.
Where a capable person can reasonably improve, improving them can be commercially and culturally valuable.
The job is diagnosis.
When should you decide it has gone on too long?
When you can answer:
Expectation is clear.
Support appropriate.
Timescale reasonable.
Measures fair.
Employee had genuine opportunity.
Still not enough.
At that point, another six months of vague hope may be unfair to everybody.
Escalate appropriately.
Use your procedure.
Get advice.
Make the decision.
Indecision is still a decision
Owners often believe they are avoiding the harsh option.
Actually they chose:
Keep the situation exactly as it is.
That means:
Colleagues continue compensating.
Customers continue experiencing the gap.
Manager continues spending extra time.
Employee continues in a role where they are not succeeding.
You are allowed to make a decision.
How Evolve approaches an underperforming employee
If an owner tells me:
"I need to get rid of someone."
I am probably going to ask:
Why?
What exactly are they not doing?
What evidence?
Have you told them?
What does their manager say?
What does the employee say?
Can they do it?
Have they ever done it?
What changed?
What support have they had?
What does the role actually require now?
Is this conduct or capability?
What happens to the rest of the business because of this issue?
And have you already taken HR advice?
I am not an employment lawyer and Evolve does not replace qualified HR or legal advice.
My role is helping the owner think clearly about the business and management problem before they stumble into an employment process based entirely on frustration.
Sometimes the owner is avoiding the conversation because they feel guilty
Common.
You've known them years.
You like them.
Know their family.
They worked hard in the early days.
That makes it harder.
Not less necessary.
You can be:
Human.
Respectful.
Fair.
And still clear about the standard.
Those are not opposites.
Sometimes the owner is avoiding the conversation because they fear confrontation
Also common.
So performance drifts.
Then resentment grows.
Eventually owner explodes over something relatively small.
That is worse.
Early, calm, factual conversations are usually easier than delayed emotional ones.
Sometimes the manager wants you to do it for them
If they manage the employee:
Why are you conducting every performance conversation?
Maybe appropriate in some circumstances.
But if managers continually pass difficult people conversations upwards, your management structure remains dependent on you.
Support the manager.
Do not automatically replace them.
Ownership before optimisation applies here too
Before buying new systems.
Adding incentives.
Creating dashboards.
Ask:
Who owns employee performance?
Manager?
Owner?
Nobody?
A team cannot become strong if poor performance simply circulates indefinitely because responsibility for addressing it is unclear.
Build a culture where performance conversations are normal
Then they become less terrifying.
Regular one-to-ones.
Feedback.
Clear objectives.
Recognition.
Development.
Early correction.
The annual "you've been underperforming for nine months" bomb becomes unnecessary.
CIPD's January 2026 performance-management guidance describes effective performance management as a continuous, two-way process of objectives, feedback, development and accountability rather than an isolated event.
That is a much healthier model.
Good performance management should help good people perform well too
Do not only speak about performance when somebody fails.
Tell high performers:
What they do well.
Where they can develop.
What opportunities exist.
This makes the whole thing less punitive.
Performance management should mean:
How we help people perform.
Not:
The process we use when we want somebody gone.
So, what should you do with an underperforming employee?
Define the performance gap.
Use evidence.
Talk to them early.
Understand why.
Separate capability from conduct.
Check whether the expectations, workload and role are reasonable.
Provide appropriate training, resources or support where required.
Consider health, disability and reasonable-adjustment obligations where relevant.
Set a clear standard and reasonable timeframe for improvement.
Review progress.
Record important conversations.
Recognise genuine improvement.
Manage repeated failure.
And if the employee still cannot or will not meet a legitimate standard after a fair opportunity, consider the appropriate next step, including formal process and potentially dismissal, with proper HR or employment-law advice.
Do not keep someone forever because difficult conversations make you uncomfortable.
But do not sack someone simply because you never properly managed them either.
The standard should be higher than both of those.
Clear expectation.
Fair opportunity.
Real accountability.
Then a decision.
Because a strong small business does not protect poor performance from reality.
Nor does it treat people as disposable the moment something goes wrong.
It manages performance properly.
Something in your business needs to change?
You probably already know more than enough to keep reading about it.
If you want an experienced outside perspective to help you work out what’s really getting in the way — and what to do about it — let’s have a conversation.






