Managing Employee Performance

Are Your Employees Reaching Their Full Potential?

When you are Managing Employee Performance effectively, you will have a happy and productive workforce that is fully engaged with your vision for the business and will create satisfied customers and increased profits that will help you to outperform your competitors.

Performance Is More Than Targets

A common mistake in performance management is focusing only on whether employees meet numerical targets or complete tasks within a given timeframe. While outputs are important, they do not provide a full picture of performance on their own.

Effective performance management considers both what employees achieve and how they achieve it. The “what” refers to results, productivity and delivery against agreed objectives. The “how” refers to behaviour, approach, consistency, communication, teamwork and the way work is carried out on a day-to-day basis.

Both elements are relevant when assessing performance. An employee may meet their targets but do so in a way that creates problems within the wider team, damages customer relationships, or undermines operational standards. Equally, an employee may demonstrate strong behaviours and professionalism but fall short on output, which may indicate a training, resource or clarity issue rather than poor performance.

Separating “what” and “how” helps managers take a more balanced and objective view of performance, rather than relying solely on results or personal impressions. It also provides a clearer foundation for setting expectations, giving feedback and addressing concerns consistently.

What Good Performance Looks Like

Good performance is not defined solely by the results an employee achieves. It also includes how those results are delivered in practice. Two employees may achieve similar outcomes, but the quality, consistency, behaviours and approach used to reach those outcomes can be very different. Both elements matter when assessing overall performance.

Clear standards are therefore essential. Standards define what “acceptable performance” looks like in a particular role and provide a consistent benchmark for managers and employees to work towards. Without defined standards, expectations can become subjective, which often leads to inconsistency in management decisions, misunderstandings about performance, and disputes when concerns are raised.

Setting Standards

Initially you need to ensure that each employee is clear about what you require them to do and the minimum standards you require them to achieve.

The key documents you will need to have in place are:

• Job Descriptions for every role in your business
• Offer Letter for every employee
• Statement of Main Terms and Conditions of Employment for every employee
• Employee Handbook outlining your main policies and procedures and describing the minimum standards you expect from your employees

Once you have the basics in place you can start to review how each employee is performing.

Definition of Performance

When I talk to clients about measuring how employees are performing, they almost always start talking about what the employee is delivering i.e. their outputs. Whilst this is important concentrating solely on outputs can lead to rewarding dysfunctional behaviour. We’ve all seen at some time the employee who achieves all their targets and objectives but not in the way that is acceptable to you or your business. Measuring good performance should therefore be a balance between what the employee achieves and how they achieve it.

Outputs (WHAT is delivered)

Outputs refer to what an employee achieves in their role, including whether they meet their objectives, deliver work on time, and perform to the expected standard for their role, experience and level.

Low Outputs
Where outputs are below expectations, it is important to consider whether there are underlying organisational or structural issues, such as:

• Unclear or inefficient processes
• Lack of appropriate systems or technology
• Insufficient training or support
• Unclear reporting lines or structure
• Recruitment mismatches
• Inappropriate or misaligned remuneration

In many cases, output issues reflect a wider systems or setup problem rather than individual capability alone.

Inputs (HOW work is delivered)

Inputs refer to how an employee carries out their role, including behaviours, attitude, communication style and their impact on others within the workplace.

This includes whether they understand the purpose of their work, demonstrate appropriate behaviours, support colleagues and contribute positively to team culture and continuous improvement.

Where inputs are below expectations, potential contributing factors may include:

• lack of shared vision or purpose
• unclear or inconsistent values
• weak or inconsistent leadership
• poor communication
• lack of recognition or feedback
• limited clarity around development or progression

Input issues often reflect engagement, leadership and cultural factors as much as individual behaviour.

Relationship between Outputs and Inputs

Performance is influenced by both outputs and inputs. An employee may become disengaged if they feel ineffective in their role, just as an employee’s productivity may decline if they feel undervalued or disconnected from the organisation.

For effective performance management, both dimensions should be considered together rather than in isolation.

Why Performance Problems Are Often Not Just Employee Problems

When performance issues arise, it is easy to assume that the root cause lies with the employee. In practice, performance problems are often the result of wider organisational factors rather than individual capability alone. Taking a broader view is important, as it helps employers identify underlying issues and apply the correct solution.

For example, poor recruitment decisions can result in employees being placed into roles that do not match their skills or experience. Similarly, unclear or incomplete job descriptions can lead to confusion about what is expected from the outset.

In other cases, performance issues arise because objectives are not clearly defined or consistently communicated. Without clear expectations, employees may be uncertain about priorities, standards or what “good performance” looks like in practice.

Inadequate training and support can also contribute to underperformance. Where employees are not properly equipped to carry out their role, performance issues are more likely to emerge, even where motivation and willingness are not in question.

Weak management practices, including a lack of regular feedback or inconsistent supervision, can further compound the problem. Performance is difficult to manage effectively where employees are not given ongoing guidance or the opportunity to adjust their approach over time.

Ultimately, unclear expectations and a lack of structured communication often sit at the heart of performance difficulties. Recognising these factors allows employers to address the underlying cause rather than focusing solely on the outcome, which is essential for achieving sustainable improvement.

Clear Expectations Come First

Effective performance management depends on employees having a clear understanding of what is expected of them from the outset. Without this foundation, it becomes difficult for managers to fairly assess performance or address concerns in a consistent way.

Clear expectations should be established through a combination of structured documents and ongoing communication. This typically includes job descriptions that define the core responsibilities of the role, employee handbooks that set out general workplace standards, and agreed objectives that clarify short and long-term performance expectations.

The probation period is also a key stage in setting and confirming expectations. It provides an opportunity for employers to assess performance in practice, provide feedback, and ensure that any gaps in understanding or capability are addressed early on.

Read: Making An Offer Of Employment

Once the employee is fully in role, ongoing objectives and regular performance discussions help reinforce expectations and ensure they remain relevant as the business evolves. Without this ongoing reinforcement, expectations can become unclear over time, leading to inconsistency and performance issues.

Where expectations are not clearly defined or communicated, it becomes significantly more difficult to manage performance fairly. This is why strong documentation and consistent communication are essential foundations for effective performance management.

Read: Probationary Periods

Managing Performance Requires Ongoing Conversations

Performance management is not something that happens once a year or only when problems arise. It is an ongoing process that relies on regular communication between managers and employees. Without this, small issues can go unaddressed until they develop into more significant performance concerns.

In practice, many SMEs tend to avoid regular performance conversations, particularly where feedback may be difficult or uncomfortable. Managers may delay raising concerns, hoping that issues will resolve themselves, or only address performance when frustration has already built up.

This approach often leads to a sudden escalation into formal processes such as capability procedures or disciplinary action, without there having been a clear record of earlier feedback, support or attempts to resolve the issue informally.

Regular conversations help to prevent this escalation. They provide opportunities to clarify expectations, address concerns early, and offer support where needed. They also allow employees to understand how their performance is being viewed and what improvements may be required.

When feedback is given consistently and in a timely way, performance issues are more likely to be resolved at an early stage. This reduces the need for formal intervention and helps maintain a more constructive working relationship between managers and employees.

A structured approach to ongoing conversations ensures that performance management remains proportionate, fair and focused on improvement rather than correction after the event.

Why Documentation Matters

Documentation is a key part of effective performance management because it provides a clear and consistent record of expectations, conversations and decisions over time. Without this, it becomes difficult to demonstrate what has been agreed, what support has been provided, or how performance concerns have been addressed.

Good documentation typically includes records of objectives that have been set, notes from review meetings, feedback provided to employees, and any support or training that has been offered. It may also include records of performance concerns raised, along with any actions agreed to help improve performance going forward.

These records are particularly important where performance issues persist. They help ensure that decisions are based on evidence rather than recollection, and that managers can demonstrate a fair and consistent approach if formal processes such as capability or disciplinary procedures become necessary.

In many cases, clear documentation also supports earlier resolution of issues. When expectations, feedback and support are recorded properly, it is easier to identify patterns, track progress and ensure that employees understand what is required of them.

Documentation should be factual, objective and focused on what has been discussed, agreed or observed. It should avoid subjective language or personal opinion, and instead provide an accurate account of performance-related conversations and outcomes.

This approach links closely with wider HR processes such as note taking at formal meetings and the management of capability and disciplinary procedures, where accurate records are often essential in demonstrating a fair and reasonable process.

Common Performance Management Mistakes SMEs Make

Many performance issues in SMEs do not arise from a single cause. Instead, they develop over time due to gaps in management practice, communication and structure. Identifying these common mistakes can help employers reduce the likelihood of issues escalating into formal capability or disciplinary processes.

Some of the most frequent performance management mistakes include:

• Unclear objectives that do not define what good performance looks like or fail to set measurable expectations.
• Inconsistent management where expectations or standards vary between employees or over time, leading to confusion and perceptions of unfairness.
• No regular review meetings, meaning performance is not monitored or discussed until issues become significant.
• Poor recruitment decisions where individuals are placed into roles without the right skills, experience or support.
• Lack of training or development, resulting in employees being expected to perform tasks without being properly equipped to do so.
• Avoiding difficult conversations and delaying feedback until frustration has built up or performance has already declined.
• Poor documentation of objectives, feedback and support, making it difficult to evidence what has been discussed or agreed.
• Waiting too long before addressing problems, which often results in minor issues escalating into more serious performance concerns.

In many cases, these issues are not the result of poor intent but of a lack of structured processes. However, the impact on performance management can be significant, particularly where expectations are unclear and concerns are not addressed early.

Addressing these areas proactively helps create a more consistent and fair approach to performance management and reduces the need for formal intervention later.

Performance Management and Capability Procedures

Capability processes become much harder to manage where performance expectations were never clearly communicated or documented.

Why Performance Problems Are Often Management Problems

Before concluding that an employee is underperforming, it is important for employers to consider whether the issue is actually being driven by factors within the organisation or the way the role has been managed.

In many cases, performance concerns arise where expectations have not been clearly communicated, objectives have not been properly defined, or the employee does not fully understand what is required of them. Without this foundation, even capable employees can struggle to perform consistently.

Training and support also play a significant role. Where employees have not been properly equipped to carry out their role, performance issues may reflect a lack of preparation rather than a lack of ability or effort.

It is also important to consider whether feedback has been provided consistently and whether the employee has had a fair opportunity to improve. Performance management is most effective when issues are identified early and addressed through ongoing support, rather than left to escalate over time.

Taking a step back to assess these factors can help employers distinguish between genuine capability concerns and issues that are rooted in unclear expectations, inconsistent management or a lack of structured support. This leads to fairer decision-making and more effective performance outcomes.

Read: How To Set Objectives

Do you have a difficult workplace situation? Speak directly with our CIPD-qualified HR expert with 30+ years’ experience.

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