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Hi folks!

Every week, I’m sharing a practical, hands-on guide on how to run your small business better.

Today: How to deal with an underperforming employee.

By the way — if you’ve ever been curious about joining the community and getting access to our whole playbook library, there’s no better time. Apply before Wednesday and you can get $300 off your first 3 months!

It’s a great community, and I’m in the Slack channels every day chatting with owners and operators. If you’re a small business owner/operator making over $500K in revenue, come and join us!​

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What to do With an Underperforming Employee

Someone on your staff isn’t getting the job done. It’s a bummer, and if you’re anything like me, you prefer to avoid conflict where you can.

But when someone isn’t hitting their numbers, you need to address it sooner rather than later.

That’s why I wrote up a playbook to follow. Having a standard process makes it easier and less stressful to remedy the situation.

Informal steps

Before you go down the “official” route — which is a pathway to letting them go — see if you can change their course with some informal tactics.

Offer them some coaching. Encourage them on their successes. Pair them up with someone in the company to see if they can learn something.

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As my business coach Tom Cuthbert says, you need to ask yourself two questions.

The first one is: How am I contributing to their performance?

So ask yourself: have you provided them the resources they need to succeed? Are they in the right seat in your company? Are you incentivizing the right things?

You chose to hire this person in the first place. What potential did you see? And how can you recapture it?

Tom’s second question: How do I know that they know exactly how I feel about their performance?

In other words… do they even know they’re underperforming? Do they have clear, measurable metrics to see whether they on or off target?

If they’re underperforming in ways that aren’t captured by KPIs, has anyone told them?

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In an ideal world, these questions prompt you to make some changes, and the situation gets resolved.

But sometimes it doesn’t work out that way.

If you’ve provided the resources to succeed, made them aware of it, and they’re still underperforming, it’s time to move to a more formal process.

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The formal process

For legal purposes you need to:

• have a standard, consistent formal process in place for dealing with underperforming employees.
• determine a reasonable timeline for the entire process that works for your business.

Businesses typically choose a 30-day, 60-day, or 90-day timeline. You can scale this timeline up or down based on state and other legal requirements.

Please note: this is not legal advice! Check with your lawyers to make sure you’re doing everything by the book. Laws about dismissal vary by country, state, and jurisdiction… and you can get in big trouble by doing this the wrong way.

1. Document the problem.

Start collecting proof of the employee’s underperformance. Collect:

• Evidence like emails or logs.
• Times and dates of the underperformance, e.g. lateness, not meeting deadlines.
• Meeting notes of conversations with managers/supervisors or other workers.
• Copy of previously set targets and goals agreed upon with the employee.

Make sure your documentation sticks to the facts.

Leave emotions out. No finger-pointing. Keep everything impersonal — don’t include opinions, whether yours or their coworkers’.

Avoid using absolute words like “never” and “always” to describe the situation – these are hardly ever true 100% of the time and could undermine your argument.

‍Stuff like: The employee handed in weekly reports only once on time (02 Sept 2022) over the past two months (August and September 2022).‍

2. Talk to the employee.

Schedule a one-on-one meeting with the employee. Send the invite at least one day in advance via email, using a generic title like “Discussion”.

Write detailed notes on what you plan to cover in the meeting.

Meeting tone

Once the meeting starts, avoid small talk and get down to the matter at hand immediately. Maintain a positive and constructive attitude.

Focus on the facts, the impact, and the solutions. Do not focus on the personalities, the emotions, or point fingers.

The beats of the meeting

1. Open by stating that this is going to be a difficult conversation about their performance issues. Make it clear that the goal of this meeting is to find a way for them to improve. This sets the tone.
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2. Next, describe the circumstances that have made this discussion necessary. Be specific about actions, dates and times, and tell them what the impact of their underperformance has been on the business and other co-workers. If applicable, tell them exactly where they’ve violated your policies.
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3. Get the employee’s perspective. Do they feel they have the necessary time, support, and resources to perform their job? Has anything changed in the business that has an impact on the employee’s performance? Has anything changed outside of the business, like a personal issue or health problem?
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4. Be clear about your expectations. Be specific, e.g. “Your job starts at 8 a.m. from Monday through Friday. You should be at your desk and available to answer client calls by that time every business day.”
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5. Together with the employee, make a detailed action plan you both understand and agree on. Set specific steps, deadlines, and targets. Include what you will do to support them. You should both sign and date the document.
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6. Schedule several followup meetings to check in on their progress.

Once you’re done, update your meeting notes to include everything you discussed.

3. Follow up

Send a recap of the meeting and your agreed upon action plan to the employee immediately after the meeting.

If you have any to-do items on your side, get through them ASAP. You want them feeling the urgency of the situation.

From there, things will go in one of two directions:

Hopefully, the situation will improve. If it does, give that employee recognition. Refer specifically to what they’ve accomplished.

Sometimes, things don’t get better. At that point, it’s time to move towards parting ways. Here’s my playbook on firing — sooner or later, any business owner will need it.

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There’s my playbook for today!

What do you think? Hit reply and let me know.

Michael