Managing poor performance in small businesses

Over the years, small business owners have confided in me that when a member of their team was underperforming they would just fire them. On questioning, firing seemed simpler than finding the time to use a performance management procedure. Surprisingly, some even thought that because they were a very small business employment legislation did not apply to them! This, of course, is not reality as all businesses must comply with employment legislation to either support the employee to improve or, if necessary, to legitimately dismiss them.

Here are the steps all small business owners should take to manage poor performance in the workplace:

Find out the reason for poor performance

Don’t jump to conclusions – have a conversation with your employee and ask them the reason behind their poor performance. Listen to what they say, as they may be experiencing difficulties in their private life that is having an impact on their work, such as going through a divorce or caring for an ill relative. Some business owners feel that staff should not bring their personal issues to work, but that is not reality. Remember that everyone is human, and you may find you are able to help. If you discover that they have a health issue, tread carefully as disability discrimination claims can be very costly.

Bad performance could also turn out to be a lack of knowledge or skills to do the job, so you could then agree a plan to train your employee and monitor their progress.

Is it because they can’t do it, or won’t do it?

If you consider the issue to be more of an employee behavioural problem, this can be much harder to change and you are likely to need to proceed to the disciplinary process.

Think about the hiring cost investment you already made!

As I mentioned above, some business owners will groan when they talk about the lengthy performance management process. But consider the money you have already invested in hiring them in the first place; it is usually worth spending time to bring their performance up to the required standard.

Keep a record of your conversations

Ensure you document the goals you agree and the main points of the conversations for clarity. Also, this could be critical should you move towards dismissal later on as you are required to prove that you have listened and done everything you can to help the employee perform at their best.

The performance management process explained

For clarity, and to ensure a fair and consistent process, have a good Capability Policy in place. This makes the entire process easier for the individual and the manager. Make sure the employee has a copy of the process and understands it before you start.

Once you have had that initial conversation and ruled out any health or personal issues, and you are sure it is not a behaviour problem, then you can proceed with the formal performance management process (or capability process), which is a series of formal meetings focusing on goals, measuring and monitoring, and supporting the employee.

During the first meeting:

·     Listen to what they have to say, as it may be invaluable and help you decide how to help your employee.

·     Agree tangible goals for your employee to achieve, and agree target deadlines. It is important that they agree to the goals you set and feel they are capable of achieving them, otherwise they will feel demotivated from the start and will fail to improve.

·     Set goals that are measurable. Ensure the employee knows how you will measure their progress so that they are clear on what needs to be achieved and by when. This is all very important to support your employee and help them improve their performance, but it will also help any arguments if there is a dismissal later.   Examples of measurable goals are achieving a certain number of sales, reducing mistakes to an acceptable level, or actively assisting customers with their enquiries.

·     Support your employee and measure them against the goals set for a reasonable period. This could be over a few weeks or months, depending on your business and the nature of the goals that have been set.

·     Offer any support needed, such as extra supervision or additional training.

Hold regular meetings throughout the process. Talk to them openly about how they are performing against their agreed goals and provide constructive feedback. Document the action plan you have in place and note your discussions at each meeting, sharing your notes with the employee so there is no misunderstanding or surprises.

When you get to the end of the agreed time period, you will need to decide whether to move forward to disciplinary action, take no action as the employee has made sufficient progress, or extend the review period if you feel some progress has been made and that more time is needed for additional support or training.

Working with your staff to improve their performance and investing in their skills can have all sorts of benefits across your workforce. Happy, motivated employees will help drive your business to achieve your business goals. This process exists to help both the employer and the employees, and when it works can have wonderful results.

For more information about dealing with poor performance in the workplace, or any other HR services, please contact Mandy Brearley, MB HR Support, on 07766 665665 or email her at