Managing underperforming employees is one of the most uncomfortable responsibilities a manager faces. You know something isn’t working, the team knows it too, and the longer you wait, the worse it gets. But acting without a clear framework can make things worse, not better.

This guide walks you through a practical process: diagnosing why the underperformance is happening, having the right conversation, building a plan, and knowing when it’s time to part ways.

What Counts as Underperformance (and What Doesn’t)

Underperformance is a consistent failure to meet documented expectations in quality, output, behavior, or deadlines. The key word is documented. If you never established clear, measurable expectations for the role, you have a clarity problem, not a performance problem.

Before labeling someone as underperforming, rule out these situations:

• A temporary rough patch. A normally strong employee going through a difficult week or month isn’t underperforming. They’re human.
• A new hire still ramping up. If someone is within their first 90 days and hasn’t received structured onboarding, it’s too early to draw conclusions.
• A role that was never clearly defined. When priorities shift constantly and success criteria don’t exist, almost anyone would struggle.

The distinction matters because the intervention for each situation is completely different.

Why Do Employees Underperform?

When you manage underperforming employees effectively, you start by understanding why it’s happening. The cause determines the solution.

The Role Was Never Clearly Defined

Vague job descriptions and shifting priorities make it nearly impossible for anyone to succeed. If the role wasn’t defined well enough to hire for properly, it won’t be defined well enough to manage performance against.

Ask yourself: could this person point to a written document that outlines what success looks like in their position? If not, start there.

Onboarding Set Them Up to Fail

Rushed or nonexistent onboarding is one of the most common and most preventable causes of underperformance. When new hires are expected to figure things out on their own with no ramp-up plan, early struggles often solidify into long-term performance gaps.

Structured onboarding with clear milestones makes a measurable difference in how quickly people reach full productivity.

The Manager Is Part of the Problem

This is the hardest cause to identify because it requires honest self-assessment. Inconsistent standards, unclear feedback, micromanagement, and favoritism all create environments where underperformance thrives. If multiple people in the same role or on the same team are struggling, the common variable may not be the employees.

Skills or Motivation Have Changed

Sometimes the employee has outgrown the role and lost engagement. Other times, the role has evolved beyond their current abilities. Personal challenges (health, family situations) can also affect performance in ways the manager may not be aware of. These situations call for empathy and a direct conversation, not assumptions.

How to Diagnose the Real Problem Before You Act

When assessing underperforming employees, ask yourself four questions before launching any formal intervention:

1. Were expectations documented and clearly communicated?
2. Did this person receive adequate training and resources?
3. Have I given clear, timely feedback along the way?
4. Is this a pattern or an isolated incident?

If the answer to questions one, two, or three is “no,” the first step is fixing what’s broken on the management or organizational side. It’s not fair to hold someone accountable for standards they were never given.

If the answer to all three is “yes” and you’re seeing a pattern, it’s time to intervene directly.

Have the Conversation Early

Most managers delay performance conversations because they’re uncomfortable. They hope the problem will resolve on its own. It rarely does. Meanwhile, the cost of silence is real: team morale erodes, your strongest performers absorb extra work, and trust in your leadership declines.

According to Gallup’s research on manager engagement, the quality of the manager-employee relationship is one of the strongest predictors of team performance and retention.

When you sit down with underperforming employees, structure the conversation carefully:

• Meet privately. Never address performance issues in a group setting.
• Use specific examples. “You missed the last three project deadlines” is actionable. “You need to step it up” is not.
• Listen before prescribing. Ask the employee what they think is happening. You may learn something critical about the situation.
• Avoid the ambush. Don’t blindside someone with a laundry list of grievances. Focus on the most important issues first.

The goal of this first conversation isn’t to fix everything. It’s to establish a shared understanding of the problem.

Build an Action Plan Together

After the initial conversation, co-create an improvement plan with the employee. The word “co-create” matters. A plan imposed on someone generates compliance at best. A plan built together generates ownership.

Focus the plan on coaching, not compliance:

• Ask the employee what support would help them most. You may be surprised by the answer.
• Identify one or two high-priority areas to improve first, not everything at once. Trying to fix five things simultaneously fixes none of them.
• Agree on what “better” looks like in concrete terms. “Improve communication” means nothing. “Send a weekly status update to the project lead by Friday at noon” is something a person can actually do.
• Set a realistic timeline, typically 30 to 60 days, with weekly check-ins to track progress, remove obstacles, and adjust the plan if something isn’t working.

The tone of these check-ins matters as much as their frequency. They should feel like coaching conversations, not surveillance. You’re asking “what’s getting in your way?” not “why haven’t you done this yet?”

Document the plan (the goals, timeline, and who owns what) but keep the emphasis on development. This stage is about genuine investment in the person’s success.

When to Use a Performance Improvement Plan (PIP)

A PIP is a fundamentally different conversation. Where the action plan says “we believe you can succeed and here’s how we’ll help,” a PIP says “this is the formal path to keeping your job.”

That shift in stakes is why a PIP should never be your first move. Using one too early signals to the employee that you’ve already decided they’re failing, which kills any genuine motivation to improve.

Escalate to a PIP when the action plan hasn’t produced adequate results despite real support and clear expectations. A well-constructed PIP should include:

• Specific deficiencies with documented examples. Not “your work quality is low,” but “the last three client deliverables required substantial revision before they could be sent, with errors documented on [dates].”
• Measurable goals with a defined timeline, typically 30 to 90 days.
• Resources and support the company will provide. If you promise mentorship or training, deliver it. A PIP that offers support on paper but not in practice is a paper exercise, and employees recognize the difference.
• Clear consequences if goals aren’t met.

Be honest with yourself about intent. If you’re writing a PIP with unrealistic goals, a compressed timeline, or support you know won’t materialize, you’re building a termination file, not an improvement plan. Employees see through this, and so do courts. The ILO’s guide on managing underperformance includes sample PIP templates that illustrate what a genuine, well-documented improvement process looks like.

The documentation in a PIP serves both parties. For the employee, it provides a written path to success with no ambiguity. For the employer, it creates a defensible record if the situation ultimately leads to separation.

How to Manage the Team During the Process

Your other team members almost always know when a colleague is underperforming. Silence from leadership doesn’t protect anyone; it erodes trust.

You can’t discuss the specifics of someone’s performance process with the rest of the team. But you can:

• Acknowledge that you’re aware of workload imbalances and are working to address them
• Redistribute work fairly so your top performers aren’t carrying the burden indefinitely
• Recognize and appreciate the extra effort people are putting in
• Demonstrate through your actions that performance standards matter

Protecting your strongest people is part of managing underperforming employees. If your best contributors burn out because they’ve been covering for someone else for months, you’ve traded one performance problem for several.

When It’s Time to Let Someone Go

Sometimes, despite genuine effort on both sides, underperforming employees don’t improve. Signs that coaching and PIPs won’t bridge the gap include: no ownership of the problem, repeated regression after short bursts of improvement, and fundamental misalignment between the person and the role.

Retention Isn’t Always Kindness

There’s a common instinct to frame keeping an underperformer as the compassionate choice. But consider what staying actually looks like for them: months of falling short, sensing their teammates’ frustration, and slowly losing confidence in their own abilities. Meanwhile, their colleagues absorb extra work, resentment builds, and your credibility as a leader erodes.

The most respectful outcome is often an honest conversation that frees both parties to move forward. That’s not failure. It’s clarity.

When you reach this point:

• Follow your documentation trail. Every conversation, plan, and PIP should already be on record.
• Consult HR and legal counsel before the termination meeting. If you’re in California, Amtec’s step-by-step guide to terminating an employee in California covers the process and legal requirements.
• Conduct the separation conversation with dignity. Be direct, be brief, and be humane.

What comes next matters just as much: backfilling the role and making sure the hiring process is set up to prevent the same cycle from repeating.

Prevention Starts with Hiring

Many underperformance situations trace back to a mismatch that was baked in before the employee’s first day. The role wasn’t defined clearly enough, the interview process didn’t test for the right competencies, or onboarding was an afterthought.

Three upstream fixes can break the cycle:

1. Write a job description with clear performance criteria, not just a list of responsibilities. Define what measurable success looks like at 30, 60, and 90 days.
2. Use behavioral interview questions that test for the actual competencies the role requires, not just technical qualifications.
3. Structure onboarding around milestones with clear expectations at each stage, so new hires know exactly what’s expected and when.

Learning how to manage underperforming employees well is hard, but so is building a workforce that performs consistently. If you’re ready to take a closer look at how your hiring and workforce strategy connect to the performance issues you’re seeing, a structured review can help you identify the root causes and build a clear plan forward.