How To Evaluate Underperforming Employees

Underperforming employees can hit an organization's revenue hard through lost productivity, rework and other associated expenses. Yet astonishingly, just 20% of employees feel their performance is managed in a way that motivates them to excel in their work.

For businesses looking to thrive, it’s crucial to adopt a comprehensive approach to performance management that inspires improvement while maintaining a supportive environment.

In this article, we explore effective strategies for an empathetic and fair evaluation of underperforming employees, fostering growth within the organization.

Signs that an employee is underperforming

There are multiple signs that can help organizations identify underperforming employees.

It’s important to note that individual signs may be isolated incidents or temporary lapses in performance, which may not necessarily indicate a persistent underperformance issue.

However, when multiple signs consistently manifest over a period of time, it suggests a broader pattern that warrants attention. The most common signs include:

Missed deadlines: consistently failing to meet project deadlines or deliver work on time is a clear indicator of underperformance.

Decline in quality: when the quality of an employee's work noticeably decreases, with more errors, lack of attention to detail or reduced customer satisfaction, it's time to address the issue.

Decreased productivity: a significant drop in productivity, such as completing fewer tasks or assignments, can be a sign of underperformance.

Lack of initiative: employees who consistently show a lack of motivation, initiative or enthusiasm may be struggling to meet expectations.

Poor attendance or punctuality: frequent absences, tardiness or excessive breaks can indicate disengagement and underperformance.

Negative attitude or behavior: persistent negativity, conflicts with colleagues or resistance to feedback are red flags that an employee may not be performing up to par.

Missed targets or goals: if an employee consistently fails to achieve set targets or goals, it may indicate a performance issue.

Lack of skill progression: employees who do not show growth or improvement in their skills over time may also be struggling to perform at the expected level.

What causes employees to underperform?

Just as there are many signs of underperformance, so too are there many contributing factors. Understanding and addressing the root causes is a crucial part of effective performance management:

Lack of clarity: unclear expectations or ambiguous goals can leave employees unsure of what is expected of them, leading to underperformance.

Inadequate skills or training: insufficient training or a lack of necessary skills can hinder employees from performing at their best.

Low motivation or engagement: when employees feel disengaged, unmotivated or disconnected from their work, their performance can suffer.

Poor work-life balance: employees who face excessive workload, long working hours or persistent stress may experience burnout, affecting their performance.

Ineffective leadership: poor management, lack of support, or inadequate feedback can demotivate employees and contribute to underperformance.

Personal issues or external factors: personal problems, health issues or external circumstances can impact an employee's ability to perform optimally.

Cultural or organizational barriers: a toxic work culture, lack of teamwork or inadequate resources can hamper employee performance.

Job mismatch: poor performance can also be an issue when an employee's skills, interests or values do not align with their job responsibilities.

What’s the impact of underperforming employees on the organization?

The impact of underperforming employees on an organization can be significant and far-reaching.

First, underperforming employees can directly affect productivity and efficiency. Their inability to meet deadlines, deliver quality work or complete tasks in a timely manner can disrupt workflows and create bottlenecks in projects, causing delays and affecting overall output.

Underperforming employees can also have a negative impact on team morale and dynamics. Their lack of engagement, poor attitude or subpar performance can demotivate and frustrate colleagues and may create an atmosphere of complacency or indifference.

If their underperformance directly impacts customer satisfaction or the quality of products or services, these employees can also prompt negative reviews, reduced customer trust and potential loss of business through poor reputation. This can be particularly detrimental in competitive industries where customer loyalty is paramount.

Steps to evaluate underperforming employees

The evaluation process for underperforming employees is a multistage approach that involves careful assessment and strategic interventions. What follows are ten essential steps to effectively evaluate and address underperformance.

Step 1: Identify performance issues

To effectively evaluate underperforming employees, it’s crucial to clearly define the specific performance gaps or areas where they are not meeting expectations. This involves analyzing objective data - such as missed targets, customer complaints or quality issues - and comparing them against predetermined benchmarks or performance standards.

Using a comprehensive performance management tool can provide valuable insights into individual performance metrics, allowing for a more accurate assessment of the employee's strengths and weaknesses.

By pinpointing the specific areas in which the employee is falling short, managers can establish a solid foundation for addressing the underperformance effectively.

Step 2: Gather supporting evidence

To support the evaluation process, employers should gather thorough and objective evidence that demonstrates the employee's subpar performance. This evidence can include performance records, project deliverables, customer feedback or any documented instances of errors or quality concerns.

By relying on tangible and verifiable data, employers can ensure fairness and objectivity. Collecting supporting evidence also helps to substantiate feedback and performance discussions, making it easier to provide specific examples of where the employee's performance is lacking and where improvements are needed.

Step 3: Communicate expectations

Effectively communicating expectations is a fundamental step in evaluating underperforming employees, and employers must engage in open and transparent discussions with the employee, clearly articulating the standards and performance targets they are expected to meet.

It’s essential to provide specific feedback on the areas in which the employee is falling short, highlighting both the shortcomings and the desired improvements. By setting clear expectations, employers empower employees to take ownership of their performance and understand the specific areas they need to focus on for improvement.

Step 4: Identify underlying causes

While evaluating underperforming employees, it’s crucial to delve deeper into the underlying causes of their subpar performance. Managers should engage in empathetic and supportive conversations to understand any challenges or obstacles the employee may be facing.

These could include inadequate training, lack of resources, personal issues, or a mismatch between the employee's skills and their assigned responsibilities. By identifying the root causes, managers can tailor their support and interventions to address these specific challenges, providing the employee with the necessary tools and resources to overcome them.

Step 5: Develop an employee improvement plan

An effective employee improvement plan serves as a roadmap for addressing underperformance and guiding the employee toward success, and should outline specific actions, goals and timelines to facilitate improvement.

The plan should be collaborative, with input from both the employee and the manager, fostering a sense of ownership and commitment to the improvement process. It’s important to set achievable goals and provide measurable objectives that allow for clear progress tracking.

Step 6: Provide support and resources

Supporting underperforming employees through the evaluation process is crucial for their growth and development, and employers should provide the necessary resources, guidance and support to help employees succeed.

This may involve offering additional training or upskilling opportunities, assigning mentors or coaches, or providing access to relevant tools and resources. Regular check-ins and feedback sessions enable ongoing support and ensure that the employee feels empowered and motivated to make the necessary improvements.

Organizations may also consider introducing employee resource groups to create a supportive network for underperforming employees, fostering collaboration, knowledge-sharing and peer support.

Step 7: Monitor the employee’s progress

Regularly monitoring the employee's progress is essential to assess the effectiveness of the improvement plan and make any necessary adjustments. This involves conducting periodic performance evaluations, objective assessments, or performance reviews to track the employee's improvement and address any emerging challenges.

It’s important to provide timely and constructive feedback during these check-ins to reinforce positive changes and address any persistent areas of underperformance.

Monitoring progress allows managers to gauge the employee's responsiveness to interventions and make informed decisions about ongoing support and development opportunities.

Step 8: Document performance discussions

By documenting performance discussions, employers ensure transparency, consistency, and fairness in the evaluation process. Documentation includes recording details of feedback sessions, performance improvement plans, and any agreed-upon actions or timelines.

These records serve as a reference point for future evaluations, potential disciplinary actions, or as evidence of the support and guidance provided to the employee.

Step 9: Assess the effectiveness of the improvement plan

Periodically assessing the effectiveness of the improvement plan is crucial to determine whether the employee has made satisfactory progress in addressing their underperformance.

This assessment involves evaluating whether the defined goals and objectives have been met, reviewing performance metrics and analyzing the employee's overall improvement.

It’s essential to provide feedback on the progress made, celebrate milestones and address any remaining gaps or challenges. Evaluating the effectiveness of the improvement plan enables managers to make informed decisions about the employee's ongoing development and support.

Step 10: Consider further actions

If the employee's performance does not improve despite support and interventions, employers may need to consider further actions. These actions can range from providing additional training or coaching to considering role reassignment or a performance improvement plan with more specific targets and timelines.

In some cases, if all efforts to improve performance are unsuccessful, employers may need to explore disciplinary measures like verbal and written warnings or, as a last resort, employment termination.

It’s important to approach further actions with fairness, empathy, and a focus on providing opportunities for improvement while maintaining the overall productivity and success of the organization.

Final thoughts

The impact of underperforming employees goes beyond their individual performance. It can have ripple effects on productivity, team dynamics, resources, and the organization's reputation, so promptly addressing underperformance is crucial for mitigating these consequences.

The added bonus is that with a focus on fairness, transparency and ongoing feedback, the evaluation process becomes an opportunity for improvement, fostering a positive work culture and driving overall organizational success.