Every business has that one team member who just isn’t keeping up. You’ve given them time, tasks, and maybe even training, but the results still fall short.
Managing an underperforming team member is never easy. It can feel personal, frustrating, and confusing. But if you avoid the issue, it quietly drains your team’s morale and business growth.
In this blog, I’ll explain what underperformance really means, how to spot it early, and 17 practical tips for handling it.
Let’s get started!
Underperformance doesn’t always mean someone is lazy or bad at their job. It simply means they’re not consistently meeting the expectations set for their role.
For a small or growing business, every team member counts. So when even one person isn’t performing well, it puts pressure on others, affects output, delays work, and sometimes even leads to unhappy customers.
Here’s what underperformance can look like in a small business…
Underperformance is not about a one-time mistake. It’s about a pattern. And it’s something you need to address early, before it affects your entire team.
In a small team, it’s easy to sense when something’s off, but not always easy to pinpoint who or what is causing the problem.
Here’s how to spot underperformance early, with examples you might have seen in your own business…
You assign a job with a clear timeline, and the same person delays it every time.
Example…
Your operations person keeps saying “supplier delay” or “I’ll send it by EOD”, but never actually delivers on time.
Everyone makes mistakes, but it’s a red flag if someone keeps repeating errors, even after feedback.
Example…
Your sales team member sends incorrect quotations despite being corrected multiple times.
They rarely share ideas, ask questions, or participate in problem-solving.
Example…
During planning meetings, while others suggest new ways to improve work, one person just nods or stays blank.
When things go wrong, they always blame someone or something else.
Example…
“I couldn’t do it because I didn’t get the update,” instead of saying, “I should’ve followed up.”
The enthusiasm they had when they joined is gone. They do the bare minimum, and it shows.
Example…
A customer service representative sounds uninterested even on customer calls or chats, and it affects customer experience.
The rest of your team quietly does their part or fixes their mistakes to avoid delay.
Example…
Your accountant double-checks reports made by someone else every week because they can’t be trusted to get it right.
If you’re seeing these signs again and again, it’s time to stop hoping things will fix themselves and start taking action.
Before jumping to conclusions, it’s important to pause and ask, “Is the team member truly at fault… or is something in our system holding them back?”
Underperformance is often a mix of both sides in small and growing businesses.
Let’s break it down honestly…
They’ve lost interest in the work or feel disconnected from the company.
They’re not using their strengths, so they constantly struggle.
They were never properly trained or don’t have the technical know-how.
Disorganization, distraction, or inconsistency in effort.
Health, stress, or family challenges may be affecting focus and energy.
They don’t know what success looks like in their role.
They don’t get timely input or help when stuck.
You’re too busy or keep changing directions, and they’re confused.
They feel stuck, unseen, or undervalued.
Too much pressure, the blame game, or a lack of trust kills performance.
Here’s the truth…
Sometimes your underperforming team member isn’t lazy, but they’re lost.
And sometimes… they simply don’t care. In such cases, it’s about building systems to prevent these issues while still knowing the difference and addressing them with clarity and care.
As a business owner, it’s easy to get stuck between blaming the employee and blaming your systems. It’s often a sign that your business lacks a clear operational structure. The real solution is knowing what to fix and in what order.
These 17 tips will help you handle underperforming team members in a better way.
Most business owners notice poor performance, feel frustrated, but hesitate to bring it up. Maybe they’re worried about confrontation, or hopeful it will improve on its own. But the reality is, it rarely improves.
As soon as you see a pattern, like missed deadlines, sloppy work, lack of effort, please don’t wait.
Address it within a few days. Delaying only builds resentment and silently signals that underperformance is acceptable.
What should you say?
“I’ve noticed a few gaps in delivery lately. Let’s have a quick chat to understand what’s happening and how we can improve it.”
Most team members don’t improve simply because they don’t know exactly what they’re doing wrong.
General criticism like “you’re not working well” won’t help.
Bring specific examples of low performance. Avoid exaggerating (“you always mess up”)… stick to facts and timelines.
What to say?
“On the 5th and 12th, the reports had errors that delayed client handover by 24 hours. This affects our brand and client trust.”
If feedback feels like a personal attack, the team member will shut down or become defensive.
Shift your feedback from “you” to “the task.” Keep it neutral and objective.
What should you do?
Don’t say – “You’re careless.”
Instead, say – “The checklist wasn’t followed, and as a result, the product was dispatched without quality review.”
Many MSME employees carry heavy personal loads. Sometimes underperformance has a backstory, such as financial stress, health issues, confusion, or burnout.
Let them speak without interrupting. Even if you don’t agree, acknowledge what they’re saying.
What to ask them?
“Is there anything affecting your energy or focus lately, inside or outside of work?”
You may discover they’re overwhelmed, unclear, or silently struggling.
People struggle when they’re placed in a role that doesn’t suit them. A creative person in a data job, or an introvert in cold calling, will always underperform, not out of laziness, but mismatch.
What to do?
Ask yourself…
If needed, explore internal movement or redesigning the role slightly.
Saying “You need to improve” is vague. People need clarity, numbers, and deadlines to perform.
Pick 2–3 key tasks. Make them time-bound and outcome-based.
What to say?
“For the next 7 days, let’s focus on replying to all client queries within 3 hours and updating the CRM daily. We’ll review on Friday.”
Short goals feel doable and help rebuild confidence.
Many MSMEs assume training is a “big company thing.” But often, poor performance is simply a lack of guidance or instruction.
What can you do?
Instead of saying “They should know this already,” ask yourself…
“Have I taught or shown them how to do this well?”
Train through…
Even 1 hour of focused support can change everything.
Embarrassing someone in front of others doesn’t motivate them. It shuts them down and kills team morale.
Give feedback privately, even if their mistake affected the whole team.
What to say?
“Let’s quickly step aside. I want to discuss something 1:1 with you.”
Praise publicly. Correct privately.
A one-time conversation won’t fix performance. You need to follow up consistently to track progress and show you care about improvement.
Set a simple review system, like weekly 10-minute check-ins. Don’t wait for the next big crisis.
How to run it?
“Quick check-in. How are things going with the 3 tasks we discussed last week? Are you stuck anywhere?”
Memory fails. Confusion grows. A shared tool keeps things transparent.
What to do?
Use a whiteboard, Google Sheet, or even WhatsApp group to track tasks and expectations. Mark what’s done, pending, delayed, with dates.
It’s not about micromanaging. This will help you maintain visibility and will make it easier to hold them accountable.
If there are no consequences, there’s no reason to change.
Without sounding harsh, be transparent about what will happen if things don’t improve.
What to say?
“If this continues, I’ll have to reduce client-facing work and move you into a support role temporarily.”
This isn’t a threat. It’s a wake-up call.
Positive reinforcement helps them rebuild confidence. Especially if they’ve been underperforming for a while, even small wins feel big.
Don’t overdo the praise, just be specific and sincere.
What to say?
“You handled the report delivery really well last week. That’s the kind of ownership we need more of.”
If high performers keep cleaning up someone else’s mess, they’ll burn out or lose respect for you as a leader.
What to do?
Make it clear that each person is accountable for their work. Don’t silently shift responsibilities.
Some people underperform because they feel unsupported. Others underperform because they’re over-managed.
Reflect honestly…
Leadership style matters more in small teams than anywhere else.
When they help design the improvement plan, they’re more likely to follow it.
Ask…
Their input might surprise you, and it builds responsibility.
If you’ve tried everything, like clear feedback, support, time, and there’s no change, it’s okay to let them go.
Don’t feel guilty. Your team’s energy and your business growth are too important.
When you delay exits, your best people suffer the most. That’s a bigger loss.
Every case of underperformance is feedback, not just about the person, but about your hiring, onboarding, training, or culture.
What to do?
After handling the situation, take 15 minutes to ask yourself…
Use each case to build a stronger team and a stronger business.
As a leader, fixing one person’s performance is a temporary win. The real goal is to stop firefighting individual issues and start building a system that prevents them.
In a small or growing business, every team member matters. When someone underperforms and nothing is done about it, the cost isn’t just missed deadlines, it’s much bigger and deeper than that.
Here’s what can happen when underperformance is ignored.
When your top performers see that poor performance is being tolerated, they lose motivation. They start thinking, “Why should I put in my best effort if it doesn’t even matter?”
Over time, this creates a silent resentment that spreads across the team.
If one person gets away with low performance, others start to lower their standards too.
Soon, “just finishing the task” becomes acceptable, even if it’s late, poor quality, or not aligned with expectations.
In a small team, someone else always ends up covering the gaps.
That means your best people are picking up the slack which leads to burnout, frustration, and eventually even attrition.
When one person keeps dropping the ball,
Underperformance isn’t just a people problem, it becomes a growth blocker.
As the business owner, how you handle low performance sets the tone.
If your team sees that you avoid tough conversations or don’t hold people accountable, they start taking you less seriously, no matter how committed you are.
If you let underperformance slide, it multiplies, quietly but quickly. Address it early, address it clearly, and your entire team will thank you for it.
Here’s a quick list of what to do and what to avoid when dealing with underperformance in your team.
| DOs | DON’Ts |
| Address performance issues early | Ignore or delay the conversation |
| Be clear and specific in your feedback | Be vague or emotionally reactive |
| Listen to their side of the story | Assume you know what’s going on |
| Offer help, training, or clarity | Blame without offering solutions |
| Track progress regularly and fairly | Micromanage or overcorrect publicly |
| Set realistic short-term goals | Set unrealistic or unclear expectations |
| Recognize even small improvements | Only criticize without acknowledging effort |
| Protect the morale of high performers | Let others silently carry the extra load |
| Document conversations and agreements | Rely only on memory for tracking progress |
| Reflect on your own leadership style | Avoid feedback thinking it’s uncomfortable |
Managing an underperforming team member is your job as a business owner to protect the momentum, morale, and quality of your team.
Start with clarity. Add empathy. Follow up with consistency.
Every tough conversation you avoid today becomes a bigger problem tomorrow. You don’t need to be a perfect manager. You just need to be a fair and proactive one.
None can destroy iron, but its own rust can! Likewise, none can destroy a person, but their own mindset can.
Former chairperson of the Tata Group
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