How to manage underperformers — and why it’s so crucial to your bottom line

A well-functioning team runs like clockwork: all the cogs, gears, and hands working together. But when one piece isn’t performing, teams (quite literally!) lose time. 

That’s the opposite of what we want for our direct reports, teams, and organizations at large, so we’ll spend today learning how to manage underperformance to keep everyone on track and ticking along in both the short and long term.

Let’s get started.

What does underperformance look like?

Ultimately, you know it when you see it, but we’re talking about instances where an employee:

• isn’t carrying their weight,
• consistently misses deadlines,
• makes passive-aggressive comments,
• has a poor attitude, or 
• consistently doesn’t deliver quality work.

Two things are true of the above list of behaviors: they can all happen even if a coworker is a lovely, kind person for the majority of the time, and they come at a huge cost to the company.

Why is managing underperformance important?

Those issues are only magnified when no one does anything about them … which is where managers come in. 

The financial cost of doing nothing is high

When we talk about the money lost due to underperformance, we’re talking about more than just an employee’s salary. The resources that go toward closing the gap between where they are and where they need to be could’ve been spent on marketing campaigns, new business opportunities, improved company benefits — the list goes on. 

Long story short, employees are a company’s biggest expense, and in today’s economic climate it’s increasingly important for companies to be intentional about budgets and spend. 

Underperformers are a drain on company resources

We acknowledge that identifying someone as an underperformer can feel personal and harsh, but ignoring the case doesn’t make the problem disappear. In fact, it’s the opposite: it costs managers time and energy to fix the underperformer’s mistakes, as well as the team’s time and energy (including high performers) to pick up the slack. 

Managing underperformance means saving time and energy in the long run, even if it’s difficult or awkward in the immediate.

Not taking action hurts the whole team

When someone is underperforming, it affects the whole team. Coworkers are left to handle the fallout, which can lead to poor team dynamics, burnout, and other team members feeling undervalued and overwhelmed. (Read: at a high risk for turnover, which hurts the team and its bottom line.)

Anytime team members’ career growth, job satisfaction, and bandwidth are in play like this, it always behooves a manager to step up and get to the root of the issue. 

Why do managers tolerate underperformance?

At this point, you might be rolling your eyes at the idea of letting a team member underperform. But there are a number of reasons why a manager might tend toward tolerating rather than addressing underperformance. For example…

• Fear of being disliked, hurting someone’s feelings, having an awkward work relationship, or having to let someone go
• A worry from managers that they themselves are the problem (i.e. their standards are too high, they’re not providing enough support, or they’re not setting clear expectations)
• Giving the benefit of the doubt or finding excuses like “they’ve only been here for three months,” or “there’s lots going on in the world and they’re probably having a tough time adjusting”
• A lack of empowerment to handle and address performance issues — maybe managers aren’t actually clear on the performance expectations they should hold their reports accountable to in the first place!

How to start managing underperformance

All those reasons make perfect sense, but here’s the truth: Although it can be difficult to tell someone they’re underperforming, withholding that feedback means you’re not giving them a chance to reach their full potential. 

So despite a manager’s best intentions, it’s almost certainly doing more harm than good to keep their lips zipped. (For them and for their report!)

The great news is that there are steps you can take to manage underperformance. Here are a few actionable performance management best practices to bring back to your workplace. 

Define and prioritize high performance

Set clear, realistic standards that are applicable to all roles and are true deal-breakers — not “nice-to-haves.” For example, at Ethena, high performers are autonomous, quick learners, team players, and action- and solution-oriented. By acknowledging what high performance looks like at your workplace, those meeting expectations can spend less time compensating for their coworkers and more time focusing on their own output.

Normalize performance management

The first time employees hear about performance management issues shouldn’t be after those issues are too big to do anything about. It’s vital to have regular 1:1s with your direct reports and to give feedback on a consistent cadence. To remove any subjectivity, ask yourself pulse check questions to remove any subjectivity, such as:

• Is my direct report ultimately freeing up my time or making my job harder? 
• If I were to open the role today, knowing what I know now about their performance and ability, would I hire my direct report again? 
• What would happen if my direct report turned in their resignation today? Would I panic or be relieved?

Pro tip: a hesitation on any of the above questions is a signal that you probably need to dig a little deeper. 

Create a timeline and action plan for improvement

In order to create an effective path forward, think about where the underperforming employee ultimately needs to get to, then work your way backwards. Where are there gaps? And what are the steps the employee can take to fill those gaps? Remember to provide clarity around timelines — especially noting how much time the employee is being given to show improvement before their job is at risk.

Ethena’s top-tier trainings are key to managing underperformance

Like clockwork, it’s time for another reference to our chronology theme: When it comes to performance management, we at Ethena think it’s high time that we level up how companies manage underperformance. 

That’s just one of the reasons why we created our Management Essentials training — a tool designed to help managers gain valuable insights on managing performance expectations, solution-oriented coaching, expectation setting, and more. 

If you’re ready to start that training today, we’re ready for you! Talk to a member of our top-tier sales team, download our performance management training deck, take a look at our pricing page, or send yourself a sample of our Management Essentials training to see what our customers are so excited about.