Performance management

A simple definition of unsatisfactory job performance is a gap between the employee's actual performance and the level of performance required by your business.
There are three basic types of poor performance:

  1. Unsatisfactory work content — in terms of quantity, quality, etc;
  2. Breaches of work practices, procedures and rules — such as breaching work health and safety requirements, excessive absenteeism, theft, harassment of other employees, etc; and
  3. Employees' personal problems — usually 'off-the-job' issues that affect their performance at work.

Starting point

The performance management process should be able to identify these problems. The performance management interview and feedback processes can discuss the problems to diagnose the causes and explore possible remedies, such as job redesign, training or counselling.
Your starting point is to ask the following standard questions:

  • What actually is the performance 'gap'? 
  • How large is the gap? 
  • Is it increasing?  
  • What are the consequences of that gap? 
  • How serious are they? 
  • Has the employee's performance been acceptable in the past? 
  • Does the employee have the skills required to perform the job? 
  • If not, is he/she capable of obtaining and using the skills?
  • In general, is the employee capable of performing the job?
  • How important to the employee is performing the job well?
  • Does the employee benefit in some way from unsatisfactory performance (eg trying to prove a point, having a hidden agenda, undermining someone else, trying to orchestrate a payout or redundancy, etc)?
  • Are there any barriers to performance within the employee's control?
  • Are there barriers within the organisation's control (such as resources issues, communication problems, recruitment, training, job descriptions, etc)?
  • What is required to remove these barriers?
  • Is it feasible to do it?

Causal factors

It is essential to distinguish between causal factors that are 'employee issues' and those that are 'organisation issues'. Many situations have elements of both, with one causing or contributing to the other. There may be a tendency for both parties to allocate blame either to each other or to third parties, but if the true causes are not diagnosed and treated, the problems will be repeated.
This list indicates the scope of causal factors and their symptoms, and suggests appropriate remedial actions.

The work environment

Problems: inadequate resources and equipment, poor working conditions, occupational health and safety issues.

Strategies: feedback from employees should alert management to fix the problems, as should data from job analysis, WHS audits and inspections, etc.

Work organisation

Problems: workflow issues such as bottlenecks, shortcuts, breaches of rules and procedures, management and supervision issues, or errors that are not corrected.

Strategies: job redesign, work study, reviewing and enforcing rules/procedures, performance management of managers/supervisors.

Employment conditions

Problems: insufficient remuneration, excessive workloads/working hours, work/life balance issues.

Strategies: again, feedback from employees will identify these problems. Reviews of remuneration and work/life balance policies and practices should occur. Review of business performance and activity may show that business is expanding, and may justify increasing staffing levels.

Recruitment/selection issues

Problems: mismatch of job and employee, job 'oversold' at recruitment/advertising stage (eg with a misleading title or suggesting opportunities for advancement that aren't there), employee over-qualified, boring aspects of job not mentioned. Symptoms include employee boredom, alienation or 'looking for trouble'.

Strategies: in these situations, reviewing recruitment processes and procedures is advisable, as well as training or retraining recruiting staff and updating job descriptions and specifications. For the employee, look at possible transfers and career planning progression.

Alternatively, the employee may lack the ability to perform the job well, and training cannot change that. Transfers or job redesign are the most constructive options available here.


Problems: employee promoted beyond his/her ability, promoted too soon, or promoted into an unwanted or unsuitable role (eg a technical expert or successful salesperson who becomes a manager, but lacks people management skills or misses the intellectual content or 'buzz' of the previous job).
Strategies: performance management combined with the employer's support and resources (such as mentoring) may overcome the problem. Development and promotion policies also require review. In some cases, returning the employee to his/her old job (or an equivalent) may be an option. However, this should only be done with the employee's agreement (and without applying pressure or duress), otherwise it is unlikely that performance will improve much anyway, and there is the possibility of a claim of unfair dismissal against your business.

Job role unclear/communication issues

Problems: clashes over who does what, demarcation issues, employees not clear about what to do. These problems become more apparent when a business restructures and after managers are replaced.
Strategies: updating job descriptions, job redesign and teambuilding training.


Problems: performance deteriorates after having been satisfactory, the employee exhibits one or more of various behavioural symptoms.
Strategies: it is very important here to distinguish between employee-related causal factors (such as events occurring outside work) and business-related causes. If the latter, it is up to the business to fix them; if the former, employee counselling can be arranged.

Work group or peer group problems

Problems: personality clashes, 'groupthink', harassment, conflict between job requirements and cultural values, work hoarding (for example to exert control over others or to 'look busy' because there is a fear of redundancies), poor management of the work group. There is a wide variety of potential problems and causes, both individual and group-related.
Strategies: arranging transfers (to remove clashes), redesigning jobs (to eliminate parts that conflict with cultural values), counselling, teambuilding strategies, and performance management of the manager/supervisor/group leader. 

Taking remedial action

Remember, there is more to performance management than identifying what is wrong. You must back up the diagnosis with active steps to fix the problems and prevent them from recurring. This requires ongoing support, resources and reviews of progress. 

EBook: Performance Appraisal
Our eBook – Performance Appraisal, Why you need it, How to do it  – is packed with tips for developing and conducting a performance review with staff in your business, no matter how big or small.
Download it now


The HR Advance resources you need

You will need a performance management policy, as well as these forms and correspondence templates: 

For performance issues leading to termination, the following documents are also provided:

Our Document Library has even more documents – just refine the full document list by Topic.


More resources from the Knowledge Centre

Dip into this fantastic resource of webinars, infographics and videos to assist with managing performance in your business.

Webinar: Preventing Mountains From Molehills
Our webinar on performance management – Preventing Mountains From Molehills – with workforce specialist Tamara James was incredibly popular. Listen to Tamara explain how to handle employee performance issues in your business before they become major problems.

Video Q&A: Demotion as discipline
In this video Q&A, industrial relations expert Paul Munro discusses whether it can be a viable option for an employer to demote an underperforming employee.

Video Q&A: Bullying and performance appraisal
In this video Q&A, Paul Munro examines the thorny issue of a manager addressing poor performance, only to be accused of bullying.

Infographic: Employee discipline
This infographic outlines common forms of employee discipline and notes some “red flags” – where employers may find their actions are outside the law.


EBook: Performance Appraisal
Our eBook – Performance Appraisal, Why you need it, How to do it  – is packed with tips for developing and conducting a performance review with staff in your business, no matter how big or small.
Download it now