6 steps to help ensure your small business handles staff underperformance effectively

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We recognise that informing your member of staff that they are underperforming may be a daunting prospect and that you may be wondering where to start. This article provides an insight on:

1. The definition of underperformance

2. Possible causes

3. Communicating an Informal Plan

4. Communicating a Formal Performance Improvement Plan

5. What to do if there is little or no improvement

6. Sanction or dismissal

1. What is underperformance?

Underperformance or poor performance is a failure to perform the duties of a role or to perform them to the standard required by the business. Employers sometime confuse underperformance or poor performance with misconduct or poor conduct. Here are the key distinctions:

2. What are the possible causes of underperformance?

It is important to identify this before you consider whether you will take an informal or formal approach to performance management.

Have you made your expectations clear?

Has the employee had sufficient training to carry out the work requirement?

Is the workload too high?

There may be other possible causes such as:

You hired the wrong person for the job

There may be personal outside influences restricting the person from performing the role

There is ineffective or lack of communication between the person and staff structure / people / colleagues / clients in order to perform the role effectively.

Once you have considered the above, you can set out a Plan for improvement.

3. Informal Plan

ACAS (Arbitration, Conciliation and Advisory Service) is an independent government organisation devoted to preventing and resolving employment disputes. It takes into account UK employment law when offering advice and guidance. ACAS guidelines state that before considering formal action, you should be able to demonstrate that:

  • The employee is clear as to what is expected of them
  • You have provided feedback on their performance
  • The employee is clear about the gap between their performance and the required performance
  • You have an agreed plan outlining what improvement you expect of them and by when, and the sup-port you have provided to help them improve
  • The agreed action plan has been in place for long enough for the employee to demonstrate some improvement
  • You have been clear to the employee about what will hap¬pen if their performance doesn’t improve
  • You have a clear audit trail of all of the above

4. Formal Performance Improvement Plan – SMART objectives

You should develop a Formal Performance Improvement Plan before considering any formal disciplinary action. Here are the key components that go into such a Plan. Expert PR professionals such as PlusHR’s HR Manager can help you to create a plan. You can clearly explain that the consequence of not meeting the objective set in the plan may be formal disciplinary action.


* Set clear objective(s)

* Explain how the objective(s) contributes to the business plan/strategy


* Quantify or at least give an indicator for progress


* Ensure responsibility / accountability is clear as to who will do what


* State what can realistically be achieved based on available resources


* State when the results should be achieved

5. What if there is still no improvement in performance?

If there is still no improvement in performance, you may proceed to the formal stage of a disciplinary process which involves:

  • Inviting the employee in writing to a formal disciplinary hearing, giving reasonable advance notice
  • Allowing the employee an opportunity to be accompanied
  • Clearly setting out the reason for the disciplinary hearing
  • Allowing the employee to provide their feedback and any evidence before you make a decision on the level of sanction.
  • Setting out the sanction at the end of the meeting and following up in writing
  • Allowing the employee the right of appeal within five days of receiving the decision in writing

6. Sanction or dismissal?

UK employment law recognises that small businesses may not be able to sustain an underperformer for a lengthy period of time therefore the guidance above has taken this into account.

An employee with less than two years continuous service (employed after 1 April 2012) is not eligible to bring an unfair dismissal claim to a court other than that for discrimination or breach of contract.

For more guides to employee rights, have a look at our sister site Startups.co.uk’s section on recruitment here.

This article was written by by Satwinder Gill. For further information or advice contact us on 0843 289 5933 or visit www.PlusHR.com.