Why underperformance is harder than it looks
Underperformance is subjective unless you anchor it to expectations.
Many businesses know someone “isn’t cutting it”, but struggle to articulate:
- what success actually looks like
- how the employee is missing the mark
- whether expectations were ever made clear
This creates hesitation.
And hesitation is what turns a manageable issue into a drawn-out, risky one.
Why this problem shows up at 20–80 employees
Growth creates distance between decision-makers and day-to-day performance.
At this size:
- founders rely on managers’ accounts
- managers are often inexperienced
- performance feedback is irregular
- documentation is inconsistent
What used to be obvious now has layers.
By the time termination is considered, the story is often incomplete.
What businesses usually get wrong
Most employers wait too long, then move too fast.
Common mistakes include:
- avoiding early performance conversations
- hoping things will “turn around”
- giving vague feedback
- tolerating underperformance for months
- then terminating suddenly when frustration peaks
This creates two problems:
- The employee is surprised
- The process looks unreasonable in hindsight
Neither helps you.
What the law actually expects
The law does not require perfection. It requires fairness.
In most underperformance terminations, Fair Work looks for:
- clarity of expectations
- evidence issues were raised
- a reasonable chance to improve
- a decision that makes sense in context
You do not need:
- a perfect paper trail
- months of warnings
- corporate-style performance systems
But you do need a process that holds together logically.
Do I need warnings or a formal PIP?
Warnings and PIPs are tools, not legal requirements.
Warnings help when:
- expectations were unclear
- the role is complex
- improvement is realistic
PIPs help when:
- there is a genuine desire to retain the employee
- performance can be measured
- the manager can actively support improvement
They hurt when:
- the decision is already made
- they’re used to “tick a box”
- no one believes improvement will happen
Using a PIP to justify a foregone conclusion increases risk.
How long is “a reasonable opportunity to improve”?
Reasonableness depends on role, impact, and history.
Factors that matter:
- seniority of the role
- how critical the performance gap is
- whether feedback has been given before
- how quickly improvement could realistically occur
There is no fixed timeframe.
Dragging it out to feel safer often achieves the opposite.
The commercial cost of getting this wrong
Underperformance rarely stays contained.
When poor performance lingers:
- team morale drops
- high performers compensate
- managers disengage
- founders get pulled back into operational issues
The cost is not just legal risk.
It’s distraction and erosion of standards.
Risk-based options when dealing with underperformance
There is no zero-risk option. Only lower and higher risk paths.
Lower risk:
- early, documented conversations
- clear expectations
- calm, timely decisions
Medium risk:
- informal feedback with no record
- extended “wait and see” periods
- mixed messages
Higher risk:
- sudden termination after months of silence
- emotional feedback
- inconsistent treatment across employees
Good HR advice helps businesses choose the least damaging option, not the most comfortable one.
Where HR support makes the biggest difference
Underperformance is where outsourced HR support earns its keep.
At this stage, HR support usually involves:
- helping frame expectations
- sense-checking timelines
- advising whether a PIP is appropriate
- preparing termination steps if improvement doesn’t occur
This prevents drift and reduces regret
FAQs
Before you act
Underperformance decisions are easiest when they are handled early and deliberately.
If you’re unsure whether to coach, formalise, or terminate, that’s usually the moment to pause and get advice before the situation hardens.
👉 Get free initial HR advice before making the call.
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