Skip to content

Tips for Managing an Underperformer

Employee performance is central to the success of any business. But leading productive employees takes more than inspiring speeches or a team-building happy hour.

Earning a Master of Business Administration (MBA) can help managers build essential competencies, including the skills to address performance problems. For instance, the online MBA program from Boise State University includes coursework designed to enhance supervisory communication and manager-employee relations. Topics include performance appraisal, discipline, coaching and termination issues, as well as motivation.

What Leads to Poor Performance?

Engaged employees are critical to a company's bottom line. Yet, based on a recent Gallup poll, 87 percent of employees worldwide are not engaged. Employee engagement is linked to productivity and profitability. According to Gallup, engaged employees mean:

  • 24 to 59 percent less turnover
  • 21 percent greater profitability
  • 17 percent higher productivity
  • 41 percent less absenteeism

Clearly, improving engagement is a priority. That means pinpointing the problem. Is the onboarding process effective? Do employees have a clear understanding of performance goals? Other questions to ask include:

  • Is there a gap between what the job requires and an employee's knowledge, skills and abilities?
  • Do employees receive ongoing training and mentoring?
  • Do employees have the opportunity to do what they do best? Do they have the time, materials and equipment they need to succeed?
  • Does the organization provide opportunities for learning and development? Is there a clear path to growth?
  • Is continuous improvement incentivized?
  • Are employees recognized for their contributions? Do they know they matter?

How Can Managers Address Performance Problems?

To understand the importance of addressing underperformance, consider the true cost of an employee. Payroll taxes, benefits and overhead add up. What employees contribute, such as sales, helps offset the cost of their employment.

According to Management Issues, employees must generate twice their gross salary for their employment to be profitable. Clearly, ignoring underperformance leads to losses. But managing underperformers does not have to mean firing them.

Demotion is another option. According to OfficeTeam, nearly 80 percent of demotions are due to performance issues. But the decision to demote requires careful consideration.

Reducing an employee's responsibilities will not necessarily improve performance. In fact, it may have the opposite effect. A demotion can be demoralizing. Employees may feel anxious about their job security. They may wonder: Are they trying to get me to leave?

OfficeTeam reports that about 50 percent of employees who are demoted do, in fact, leave their jobs. Managers can reduce the risks of demotion to retain valuable employees:

  • Be honest and respectful about the demotion. This includes discussing why the company chose to demote vs. terminate.
  • Establish a path toward future advancement.
  • Provide training, coaching and mentorship in the new role.
  • Set clear expectations. Schedule opportunities to connect one on one with the employee.
  • Build on the employee's strengths in the new role. Look for opportunities for the employee to use those skills in a leadership role. Turning the "student" into the "teacher" can boost engagement.

Dealing with underperformers does not have to mean dismissal or demotion. Depending on the issue, targeted training and more regular coaching and feedback may be all it takes to boost performance.

How Can an MBA Build Management Skills?

Essential business skills go beyond fundamentals such as marketing and finance. Managers with the right skill set can lead employees to perform at their best. Addressing employees who need to improve their performance is part of that process.

Earning an MBA can help managers develop key competencies for turning underperformance around. Boise State, for example, offers several courses in its online MBA that target manager-employee relations and supervisory communication. Areas of emphasis include:

  • Performance appraisal, discipline, coaching and termination issues.
  • Written and oral managerial communication with a focus on team-oriented and supervisory communication strategies.
  • Collaboration, group dynamics, motivation, leadership and problem-solving.
  • Team formation and conflict management.

Even the best managers will have to address poor performance at some point in their careers. It could be an employee is not meeting sales targets. Or, maybe absenteeism is the issue. Either way, managing performance means being able to handle those times when employees are not at their best.

For underperformers, a skillful manager can make the difference between getting fired and having a future with the organization. Managing underperformers effectively is not just good for morale. It can save a company the considerable expense of hiring and training new employees. That, of course, is good for the bottom line.

Learn more about Boise State University's online MBA program.


Gallup: Little Change in U.S. Employee Engagement in January

Gallup: The Damage Inflicted by Poor Managers

Management Issues: The Cost of Employee Under-performance

PR Newswire: Nearly Half of HR Managers Say Their Companies Have Demoted an Employee

SHRM: Demotion: How Should We Handle Employee Demotions?

Have a question or concern about this article? Please contact us.

Need more information?

Submit the form below, and a representative will contact you to answer any questions.

Request Information

*All fields required.

Ready to get started?

Start your application today!

Apply Now
or call 855-290-3840855-290-3840

for help with any questions you have.

Need more information?

Submit the form below, and a representative will contact you to answer any questions.