The Worst Ways to Manage Underperforming Employees (and How to Fix Them)

In this episode of World’s Greatest Boss, Jackie Koch talks about one of the most common and challenging issues in leadership: handling underperforming employees. As a boss, it’s tempting to make subtle changes—like cutting hours, posting a new job, or quietly giving tasks to other team members—hoping the problem will resolve itself. Spoiler: It doesn’t work.

Jackie breaks down the four biggest mistakes managers make when dealing with performance issues and provides practical advice for handling these situations the right way. You’ll learn why direct and honest communication is crucial, how to avoid sending mixed messages, and why leading with transparency fosters a culture of trust. Plus, Jackie shares how to document conversations to protect your business while also being fair and kind.

What you’ll hear in this episode:

[1:00] The problem with cutting hours or changing schedules to encourage employees to quit.

[6:45] Why posting a higher-level job and letting current employees apply is unfair and ineffective.

[12:10] How subtly taking away responsibilities can lead to confusion and resentment.

[18:30] The danger of ignoring underperformers in the hope they’ll leave on their own.

[25:00] Bonus mistake: Stopping engagement with an underperformer instead of addressing the problem.

Resources

Visit PeoplePrinciples.co for more resources on building a compliant and effective team.

Follow Jackie on LinkedIn:Jackie Koch

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Handling Underperforming Employees the Right Way: Avoid These 4 Common Mistakes

Managing an underperforming employee can feel like you’re stuck between a rock and a hard place. You know something needs to change, but figuring out how to address the problem without making things worse can be tricky.

The truth is, small business owners and managers often make the same mistakes when dealing with performance issues. These mistakes may feel like they’re solving the problem, but they usually just make it more complicated. Let’s break down four common missteps and what you should do instead to keep your team thriving and your business on track.

Mistake #1: Changing Schedules to Encourage Quitting

One common mistake managers make is reducing an underperforming employee’s hours or changing their schedule, hoping they’ll take the hint and quit. While this might seem like a subtle nudge, it often creates confusion and frustration—not improvement.

Why It Doesn’t Work: Changing someone’s hours without addressing the problem directly sends mixed messages. The underperformer might not connect the schedule change with their performance, while other team members might feel anxious about job security, eroding trust within the team.

What to Do Instead: Have an honest, straightforward conversation about performance. Clearly outline what needs to improve and set expectations. Document the conversation so that everyone is on the same page. Direct communication builds a stronger, more transparent team dynamic.

Mistake #2: Posting a New Job and Letting Them Reapply

Sometimes, when a role evolves or the business grows, managers think they’re being fair by letting current employees apply for the updated position alongside external candidates. In reality, this approach can feel like a slap in the face to your existing team member.

Why It Doesn’t Work: You hired this person, so you know what they’re capable of. Posting the role and asking them to compete sends a message that you’ve already written them off. Plus, it can make your whole team feel insecure about their own positions.

What to Do Instead: If the role changes, discuss it openly with the current employee. Either help them grow into the position or, if you know they’re not the right fit, be direct and kind about why the change is necessary. Honesty fosters respect and keeps morale high.

Mistake #3: Taking Away Responsibilities Without Explanation

When employees underperform, managers sometimes respond by shifting important tasks to other team members without directly addressing the issue. While it might seem like a low-conflict way to maintain productivity, it often leads to resentment and confusion.

Why It Doesn’t Work: Your top performers notice when you don’t hold others accountable. They may feel overburdened or start looking for new jobs. Meanwhile, the underperformer may not even realize there’s a problem.

What to Do Instead: Sit down with the employee, discuss performance gaps, and explain why certain tasks are being reassigned. If a role needs to change, be upfront about it rather than gradually chipping away at responsibilities.

Mistake #4: Ignoring the Problem and Hoping It Goes Away

It can be tempting to avoid an underperforming employee entirely, especially if you’re busy or uncomfortable with confrontation. But ignoring the issue won’t make it disappear—it’ll make it worse.

Why It Doesn’t Work: Without feedback, employees have no chance to improve. You’ll eventually hit a breaking point and might end up firing them without proper documentation, which is risky.

What to Do Instead: Stay consistent with your feedback, even when it’s uncomfortable. Document performance issues and give the employee a fair chance to improve. Clear communication helps you make better decisions without legal risks.

Building a Culture of Accountability

Addressing performance issues head-on might not be easy, but it’s essential for maintaining a strong, reliable team. Your best employees want to work with competent peers, and your business can’t afford to let performance issues slide.

Take the time to have the hard conversations, document your process, and make decisions that align with your business goals. Your team—and your bottom line—will thank you.

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