Managing Underperformance: From Feedback to PIP to Final Decision

Managing underperformance is one of the most challenging aspects of people management. While misconduct cases often involve a deliberate act or omission by an employee, poor performance typically arises from an employee's inability to meet the required standards of work.

Many employers make the mistake of immediately resorting to disciplinary action or termination when faced with an underperforming employee. However, the Industrial Court has consistently emphasised that employers must first provide employees with a fair opportunity to improve before considering dismissal for poor performance.

A common mistake made by employers is to rush into a Performance Improvement Plan (PIP) or even termination without adequately addressing the root cause of the performance concerns. In practice, a well-managed performance improvement process should be progressive, transparent and supported by proper documentation. More importantly, it should provide the employee with a genuine opportunity to succeed.

Step 1: Identify and Document the Performance Gap

Before any action is taken, employers must first establish that there is indeed a performance issue. Concerns should be based on objective evidence rather than general perceptions or personal opinions.

Examples may include:

• Failure to achieve sales targets;

• Repeated missed deadlines;

• High error rates in work output;

• Poor customer feedback; or

• Failure to meet agreed KPIs.

At this stage, managers should gather relevant records and examples to clearly demonstrate the performance gap. Proper documentation will form the foundation of any subsequent performance management process.

Step 2: Conduct an Initial Performance Discussion

Once the performance concerns have been identified, the employee should be informed of the shortcomings through a constructive performance discussion.

The purpose of this meeting is not to issue a warning, but to:

• Explain the areas of concern;

• Understand any challenges faced by the employee;

• Clarify expectations; and

• Discuss possible support measures.

Employers should also consider whether factors such as insufficient training, unclear instructions, lack of resources or personal circumstances may be contributing to the employee's performance issues.

Following the discussion, a written record should be maintained for future reference.

Step 3: Provide Coaching and Informal Feedback

Not every performance issue requires an immediate PIP. In many cases, informal coaching and regular feedback may be sufficient to address the problem.

Managers should provide guidance, monitor progress and communicate expectations clearly. This stage demonstrates that the employer is genuinely attempting to help the employee improve rather than simply building a case for dismissal.

Where the employee shows improvement, no further action may be necessary. However, if performance remains unsatisfactory despite coaching and support, a more structured intervention may be required.

Step 4: Implement a Performance Improvement Plan (PIP)

A PIP should be introduced when informal measures have not resulted in the desired improvement. The purpose of the PIP is to provide the employee with a clear roadmap towards achieving the required performance standards.

A well-structured PIP should include:

• The specific performance deficiencies;

• The expected standards or targets;

• The duration of the PIP;

• The support that will be provided; and

• The consequences of failing to improve.

Importantly, performance targets should be realistic, measurable and relevant to the employee's role. Unrealistic targets may undermine the credibility of the entire process.

Step 5: During the PIP Period

One of the most common mistakes employers make is issuing a PIP and then remaining silent until the review period ends. A PIP should be an active process involving regular engagement between the manager and employee.

A typical 60 to 90-day PIP may include the following milestones:

Week 1 - PIP Commencement

The manager explains the performance concerns, expected outcomes and available support. The employee should clearly understand what success looks like.

Week 2 to 4 - Initial Progress Review

The first review meeting should assess whether the employee is making early progress and whether any obstacles require additional support.

Mid-Point Review

This is often the most important milestone. The employer should evaluate the employee's performance against the agreed targets and document any improvements or continuing deficiencies.

Final Review

At the end of the PIP period, the employee's overall performance should be assessed objectively against the agreed expectations.

All review meetings should be documented to ensure transparency and consistency throughout the process.

Step 5: Making the Final Decision

At the conclusion of the PIP, employers should evaluate whether the employee has successfully met the required performance standards.

Generally, there are three possible outcomes:

Successful Improvement

Where the employee has achieved the required standards, the PIP should be closed and the employee should continue under normal performance monitoring.

Partial Improvement

Where some improvement is evident but further progress is required, employers may consider extending the PIP or implementing a further review period.

No Significant Improvement

Where the employee has failed to meet the required standards despite receiving reasonable guidance, support and opportunity to improve, the employer may consider termination on grounds of poor performance.

Before taking such action, employers should ensure that the entire process has been properly documented and that the employee was given a genuine opportunity to improve.

Common Mistakes Employers Should Avoid

Employers frequently encounter difficulties when poor performance dismissals are challenged due to procedural shortcomings.

Common mistakes include:

• Failing to identify objective performance deficiencies;

• Imposing unrealistic targets;

• Conducting a PIP merely as a formality;

• Providing insufficient support or training;

• Keeping inadequate documentation; and

• Terminating employment without giving a reasonable opportunity to improve.

A PIP should never be viewed as an administrative exercise. Rather, it should be a genuine effort to help the employee improve while ensuring the organisation can demonstrate fairness and reasonableness throughout the process.

Conclusion

Managing underperformance requires more than simply identifying shortcomings. Employers must adopt a structured and consistent approach that balances business expectations with fairness to the employee. By addressing concerns early, providing meaningful support and implementing a properly managed PIP, organisations can improve performance outcomes while minimising the risk of disputes arising from poor performance management.