Employee underperformance: file building and approach

Dealing with an employee who isn’t meeting expectations can be one of the toughest challenges for any manager or HR professional, and effectively managing employee underperformance process is crucial for business health. We’ll explore how to identify, document, and address poor work performance, ensuring a fair and legally sound approach to help your team thrive.

What are the 3 main reasons for employee underperformance?

Employee underperformance typically stems from a combination of three key areas: a lack of clarity regarding expectations, insufficient skills or training, and external or motivational factors. Businesses get only 87% of expected output while paying 100% of salary costs, with 58% of workers not fulfilling established productivity goals, according to ActivTrak research (August 2025).

Often, the first place to look is whether the employee truly understands what’s required of them. Have the job expectations been clearly communicated? Sometimes, what seems like poor work performance is simply a misunderstanding of priorities or deliverables. Leann Schneider, director, HR Research & Advisory Services, at McLean & Company, suggests that “Performance criteria should aim to make success clearer, not more complicated” (April 2026). In my experience, this is the most common oversight.

Another significant factor is a skills gap. An employee might be willing but simply lacks the necessary tools or knowledge to perform effectively. This could mean inadequate training, outdated skills, or being placed in a role that doesn’t align with their strengths. Finally, external influences or a dip in motivation can play a huge role. Personal issues, workplace conflicts, or a feeling of disengagement can all contribute to employee productivity issues.

How do you identify and document employee underperformance?

Identifying employee underperformance requires consistent observation and a clear understanding of performance metrics, while documentation involves keeping detailed, objective records of specific incidents and conversations. Organizations lose the productivity equivalent of 130 workers for every 1,000 employees, translating to an average of $11.2 million annually, based on ActivTrak research (August 2025).

The key is to move beyond vague feelings and pinpoint concrete examples. What exactly is the employee failing to do? Is it missing deadlines, producing low-quality work, or failing to meet sales targets? Once identified, documenting employee performance issues becomes paramount. This isn’t about building a case against someone, but rather creating a factual record that supports the managing employee underperformance process. What most people miss is that documentation should start early, not just when things are dire.

Here’s how to effectively document underperformance:

• Specific Incidents: Record dates, times, and detailed descriptions of specific instances of underperformance. Avoid generalizations.
• Impact on Business: Note how the underperformance affects team morale, project timelines, client relationships, or revenue.
• Previous Discussions: Document any prior conversations, feedback sessions, or coaching attempts, including dates and outcomes.
• Company Policies: Reference any relevant company policies or procedures that the employee may be failing to adhere to.
• Expected Standards: Clearly state the expected performance standards or goals that are not being met.

This comprehensive approach to documenting employee performance issues is a critical step in any effective performance management strategies. It provides a foundation for constructive dialogue and, if necessary, for more formal interventions.

What is the process for managing underperforming employees?

The structured process for managing underperforming employees typically involves initial feedback, a formal Performance Improvement Plan (PIP), regular check-ins, and, if necessary, escalating disciplinary actions. When someone is underperforming, we lead with curiosity; we ask what’s getting in the way and how we can help, said Dawson, as quoted by the U.S. Chamber of Commerce (June 2025).

The short answer is: start with a conversation. Before anything formal, a manager should engage in an informal discussion, expressing concerns and actively listening to the employee’s perspective. This initial step in the managing employee underperformance process aims to understand the root cause. If informal efforts don’t yield improvement, then a more structured approach is needed.

A typical process involves:

1. Initial Feedback and Coaching: Provide specific, constructive feedback as soon as performance issues are noticed. Offer support and resources.
2. Goal Setting and Expectations: Clearly define what successful performance looks like and set measurable goals for improvement. Employees who understand their job expectations are 8.6 times more likely to be engaged in their work, according to McLean & Company’s Engagement Survey data (2023-2025).
3. Performance Improvement Plan (PIP): If informal coaching isn’t enough, implement a formal PIP. This outlines specific goals, timelines, and support.
4. Regular Check-ins: Schedule consistent meetings to review progress, provide ongoing feedback, and offer additional training or resources.
5. Review and Decision: At the end of the PIP period, assess whether the employee has met the outlined goals. Decisions can range from continued employment with sustained improvement to further disciplinary action, including termination.

This performance management process steps are designed to be supportive, giving the employee every opportunity to succeed while also protecting the business. It’s about creating an employee accountability framework.

How to approach an underperforming employee effectively?

Approaching an underperforming employee effectively requires a diplomatic, empathetic, and direct communication style, focusing on objective facts rather than personal opinions. This is where most guides stop – we won’t.

The conversation should be held in a private, neutral setting. Begin by stating the purpose of the meeting clearly and calmly. Use “I” statements to describe your observations and concerns, for example, “I’ve noticed a decline in project completion rates,” rather than “You’re not doing your job.” This helps avoid defensiveness and fosters a more open dialogue. What most people miss is that the goal isn’t to blame, but to understand and resolve. This is a critical part of the managing employee underperformance process.

Consider these points for an effective approach:

• Be Specific and Factual: Refer to documented examples of poor work performance.
• Listen Actively: Give the employee a chance to explain their perspective without interruption. Ask open-ended questions like, “What do you think is contributing to this?”
• Focus on Solutions: Collaborate with the employee to identify potential solutions and support mechanisms. Are there resources they need? Is there a training gap?
• Reiterate Expectations: Clearly state the expected standards and the consequences of continued underperformance.
• Offer Support: Emphasize your willingness to help them succeed, offering coaching underperforming staff and pointing them to available resources.

Remember, the aim is to help the employee improve, not to punish them. A strong performance management system not only helps in getting everyone aligned on the over-organization mission and goals but also goes a long way in building a culture of trust and meritocracy, according to Saurabh Nigam, Vice President-Human Capital, Omidyar Network (October 2022).

How do performance improvement plans (pips) support file building?

Performance Improvement Plans (PIPs) are formal documents that meticulously outline performance deficiencies, specific goals for improvement, and the support provided, thereby serving as crucial components in building a comprehensive employee file. For a PIP to be successful, “It should first be confirmed that the direct supervisor — or whoever is responsible for monitoring the performance — is willing to put the time into managing the PIP,” emphasizes Phyllis Hartman, an SHRM-certified professional and president of PGHR Consulting (May 2026).

A well-constructed PIP is more than just a warning; it’s a detailed action plan. It solidifies the documentation of employee performance issues by formally recording the problem, the agreed-upon solutions, and the timeline for improvement. This structured approach to the managing employee underperformance process ensures that all parties are aware of the expectations and the steps being taken. It’s an indispensable part of an employee accountability framework.

Key elements of a PIP that contribute to file building include:

• Clear Statement of Deficiencies: Precisely details the areas where performance is lacking, referencing prior documentation.
• Measurable Goals: Sets specific, quantifiable targets for improvement within a defined timeframe.
• Support and Resources: Lists any training, coaching, or resources the company will provide to assist the employee.
• Consequences of Non-Compliance: Clearly states the potential outcomes if performance goals are not met.
• Signatures and Dates: Requires signatures from both the employee and manager, acknowledging receipt and understanding.

This systematic approach ensures that the “file building” is robust, objective, and defensible, should further action be required. It provides a clear audit trail of the steps taken to address poor work performance.

What are the legal considerations when addressing underperformance?

When addressing underperformance, employers must navigate a range of legal considerations to ensure fairness, prevent discrimination, and mitigate the risk of wrongful termination claims. This is particularly important in the Netherlands, where employment law provides significant employee protections.

The legal aspects of employee termination, especially when related to underperformance, require careful adherence to local labor laws. For instance, in the Netherlands, there are strict rules regarding dismissal, and employers typically need permission from the UWV (Employee Insurance Agency) or a sub-district court to terminate an employment contract. Failing to follow a proper managing employee underperformance process with clear documentation can lead to significant legal challenges. We often advise clients that a strong, well-documented performance management process is your best defense.

Important legal points to remember:

• Non-Discrimination: Ensure that performance management is applied consistently and does not discriminate based on protected characteristics (e.g., age, gender, religion, origin).
• Fair Process: Provide the employee with a fair opportunity to improve and respond to allegations of underperformance.
• Documentation: Maintain thorough records of all communications, performance reviews, PIPs, and support offered. This is critical evidence.
• Privacy: Handle personal information and performance data with confidentiality and in compliance with privacy regulations like GDPR.
• Consultation: In some jurisdictions, consulting with employee representatives or works councils may be required before significant performance-related actions.

Ignoring these legal aspects can be costly. For Dutch employers, understanding the nuances of local employment law is key to avoiding disputes and ensuring that any actions taken are legally sound. If you are dealing with complex cases of incapacity for work, it’s also wise to understand the rules around continued wage payment during illness, as underperformance can sometimes be linked to health issues.

Tools and strategies for effective performance management

Effective performance management relies on a combination of practical strategies and modern tools that streamline the managing employee underperformance process, ensuring consistency and transparency. The most consistent drag on workplace performance isn’t a lack of tools, it’s the friction created when systems, processes, spaces, and support don’t work together, states a report from SPS Global (April 2026).

Beyond the formal process, integrating technology and proactive strategies can significantly improve outcomes. Many HR best practices performance suggest a continuous feedback loop rather than annual reviews alone. This fosters an environment of ongoing development and prevents issues from festering. Real talk: regular, informal check-ins can often prevent the need for a formal PIP.

Consider these tools and strategies:

• Performance Management Software: Platforms like Lattice, PerformYard, or even HR suites like BambooHR offer features for goal setting, feedback tracking, 360-degree reviews, and PIP management. These tools centralize documentation and provide analytics on performance trends.
• Regular 1:1 Meetings: Consistent, scheduled one-on-one meetings between managers and employees are invaluable for providing feedback for underperforming employees, discussing progress, and identifying potential roadblocks early.
• Skill Development Programs: Invest in training and development to address skill gaps proactively. This demonstrates a commitment to employee growth.
• Clear Job Descriptions and KPIs: Ensure that every role has a well-defined job description with clear Key Performance Indicators (KPIs). This sets the baseline for expected performance.
• Coaching and Mentorship: Pair underperforming employees with experienced mentors or provide professional coaching to help them develop specific skills or overcome challenges.

By using these tools and strategies, businesses can create a robust performance management system that supports employees and ensures that the managing employee underperformance process is fair, efficient, and ultimately, effective.

Frequently asked questions

How do you document underperformance?

You document underperformance by recording specific incidents, including dates, times, and detailed descriptions of the poor work performance, noting its impact on the business. It is crucial to also document any previous discussions, feedback sessions, or coaching attempts, according to ActivTrak research (August 2025), to build a comprehensive and objective record.

What is the process for managing underperforming employees?

The process for managing underperforming employees typically starts with informal feedback and coaching, followed by goal setting and, if necessary, a formal Performance Improvement Plan (PIP). This structured approach involves regular check-ins and a final review to assess improvement, with 58% of workers not fulfilling established productivity goals, highlighting the necessity of such processes, according to ActivTrak research (August 2025).

What is a good way to approach an underperforming employee?

A good way to approach an underperforming employee is to initiate a private, diplomatic conversation, focusing on objective observations and specific examples of employee productivity issues rather than personal judgments. Lead with curiosity, asking what challenges they face and how you can help, as suggested by Dawson, quoted by the U.S. Chamber of Commerce (June 2025).

What are the 3 main reasons for underperformance?

The three main reasons for underperformance are unclear expectations, a lack of necessary skills or training, and external or motivational factors impacting the employee. Employees who understand their job expectations are 8.6 times more likely to be engaged in their work, according to McLean & Company’s Engagement Survey data (2023-2025), underscoring the importance of clear communication.

How to handle underperforming employees?

To handle underperforming employees, first identify the root cause through open dialogue, then implement a structured plan that includes clear expectations, training if needed, and consistent feedback. This proactive approach, including an employee accountability framework, helps to foster improvement and align individual performance with organizational goals.

Successfully managing employee underperformance process isn’t just about addressing problems; it’s about fostering a culture of accountability and continuous improvement within your organization. By clearly defining expectations, documenting issues thoroughly, and offering supportive, structured interventions like PIPs, you empower employees to grow while protecting your business interests. Remember, a fair and consistent process, backed by robust documentation, is the cornerstone of effective performance management. If you need expert guidance on employment law matters or navigating complex underperformance scenarios in the Netherlands, don’t hesitate to reach out to our team at Amice Advocaten for tailored legal advice.