How to Manage an Underperforming Employee (Without Making it Worse)

Hello and welcome to Episode 319 of the People Powered Business Podcast.

Got someone on your team who just is not cutting it, but every time you think about dealing with it, you put it off for another day? Maybe you are hoping they will sort themselves out, maybe you are gathering more “evidence”, or maybe you are trying not to rock the boat. Either way, the issue rarely fixes itself, and the longer it drags on, the messier it gets.

I keep seeing this with small business owners, and I get why. Managing underperformance is one of the hardest parts of leading a team, especially when your team is small, the person plays a big role, or there is a personal relationship involved. It is easy to avoid the conversation, overthink it, or soften things so much that nothing actually changes. But when we handle employee underperformance badly, we usually make it worse for everyone involved, including the rest of the team.

In this episode, I unpack why so many business owners struggle to manage an underperforming employee and the common leadership styles that get in the way. I talk through the three real reasons performance issues happen in the first place: a skills gap, a motivation problem, or a cultural mismatch. That distinction matters more than most people realise, because the right solution depends entirely on the real cause. If you misdiagnose the problem, you will often apply the wrong fix, and that is when frustration, resentment and poor team culture start to build.

I also walk you through what to do next if you have a problem employee on your team, including when to coach, when to re-engage, and when it is time to start planning an exit. This is a practical conversation for small business owners who want to handle performance management clearly, calmly and without making a hard situation even harder.

In this episode we cover:

• Why small business owners often avoid dealing with underperformance until it becomes a bigger issue
• The common leadership habits that can make employee performance problems worse
• The three main causes of underperformance at work and how to spot the difference
• Why getting the diagnosis right is the key to fixing the issue properly
• What to do next, whether the employee needs support, re-engagement or an exit plan

If you want practical, no-nonsense advice on managing your team delivered straight to your inbox every week, head to https://www.peoplepoweredbusiness.com.au/join 

Links & Resources:

💬 DM Kristy-Lee on Instagram @kristy.lee.billett and let me know if you have questions about underperforming employees email me at [email protected]