Managing Performance - Part Three: Cause and Consequence

By Deborah Lindemann


Managing underperformance presents as an unpleasant and complicated challenge for most small business owners. In Part 1 of this series we highlighted the risks of business owners acting too rashly, or not acting at all when faced with underperformance.  In Part 2 we introduced a practical and risk minimising approach to assist you tackle underperformance to secure the best outcomes for your business.


There are four elements you need to keep top of mind when facing underperformance: Clarity, Communication, Cause and Consequence. In Part 2 we looked at Clarity and Communication. Let’s now turn our focus to Cause and Consequence.



Establishing the cause of underperformance is paramount in identifying the best solution, and avoiding recurring underperformance. Exploring these matters with the employee is important as there may be causes or contributing factors to the underperformance that you are unaware of. There are generally three main causes of underperformance: Lack of training, lack of capacity, and lack of capability.

A lack of training includes formal training and qualifications as well as a lack of instruction, supervision, or guidance. This goes to ensuring the employee understands what they are employed to do, and has the skills to meet those expectations. An employer should ensure their staff are qualified for the role they are employed in, and provide clear instruction, guidance and training. At the same time, the employee needs to follow instructions and guidance, and participate in and apply learnings from training. Any issues with the former should be addressed prior to progressing a matter as underperformance.

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A lack of capacity relates to the ability of the employee to complete the required tasks in the time available. In the small business sector there is often blurred delineation between roles, and employees can be stretched across multiple demanding functions. Furthermore, in close-knit workplaces such as family-run businesses, there is often an expectation that employees will pitch in and help in all areas, at all hours. The cultural environment of these workplaces is often very positive, however the line between a reasonable or unreasonable workload can easily be crossed. If this occurs, the quality of an employee’s output will be compromised. What you may be picking up as underperformance might in-fact be unreasonable workload or task expectations. Make sure you have an accurate overview of everything an employee is tasked with doing, and assess whether their workload is reasonable.

A lack of capability means the employee, despite adequate training and instruction, and a reasonable workload, simply doesn’t have the skills or attributes to do the job. In these cases, it is very rare that the employee is able to address the underperformance, and more often than not it is in the best interests of the business and the employee to part ways.  However, before you do so, have a think about whether you can re-deploy the employee to a more suitable position within your businesses. As mentioned above, retaining valuable knowledge and experience is underestimated, and drawing on an employee’s skill strengths in another role might enable them to shine.

Once the causes are known, you can engage more effectively and fairly with the employee about possible solutions and support. You can also expose whether a fourth category for underperformance in is play: the ‘bad’ employee. This is where either due a bad attitude or bad work ethic, an employee just doesn’t do their job and doesn’t respond to training or assistance. You will want to move these employees on pretty quickly.  



Throughout any underperformance management process consequence is key. There is no use raising underperformance if you are not prepared to follow through and monitor that issue until it is rectified. You need to invest your time and energy to make this happen. After you have clarified the issue, raised it with the employee, explored and addressed contributory causes where possible, you need to advise the employee of a reasonable time frame in which you expect the matter to be addressed. You also need to advise the employee that if the matter is not addressed, you may take action up to and including terminating their employment.

Make sure you book regular performance review meetings, and keep those appointments until the matter is resolved. Document your discussions. If the employee does not address the issue, you can then proceed to a series of warnings and ultimately termination. If you’re not prepared to follow through, there is little point raising the issue in the first place.    

In conclusion, there is no magic wand to managing underperformance, but keeping the 4 C’s Clarity, Communication, Cause and Consequence in mind will assist you as you move to address an underperformance issue.

In addition to the 4 C’s, we want to leave you with one final tip: With the exception of trainee, graduate or apprentice programs where focussed coaching and guidance may be required, when a new employee displays significant capability gaps, learning or behavioural issues in the first three months of employment, consider cutting your losses and letting them go. As a small businesses you may be protected against employees making unfair dismissal claims where the employment has been less than 12 months. The first three months is the honeymoon period - the period they should be trying to impress you. It is likely only downhill from there. 


We strongly recommend employers seek expert advice specific to their business on legal obligations with regards to termination of employment.


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