How to address underperformance, set clear expectations, and drive workplace success.
Imagine this — one of your employees has been with your business for a few years. At first, they were motivated and productive, but lately, their work has slipped. Deadlines are missed, errors are increasing, and their attitude seems disengaged. Other team members have started picking up the slack, causing frustration and resentment.
You want to address the issue, but you’re unsure how. Do you give them a warning? Provide more training? Let them go? Many New Zealand SME owners face this dilemma — and often avoid the conversation altogether, hoping things will improve on their own.
But ignoring performance issues rarely makes them go away. Poor performance affects productivity, team morale, and ultimately your bottom line. Unlike large corporations with full HR departments, SMEs rely on small, close-knit teams where every role matters. That means proactively managing and improving employee performance isn’t optional — it’s essential for long-term business success.
The solution – a proactive approach to performance management
Effective performance management isn’t just about dealing with underperformance. It’s about creating a workplace where employees are engaged, motivated, and clear on expectations. A structured approach helps prevent issues before they escalate — and builds a culture of accountability and support.
Here’s a proven framework to strengthen performance management in your SME:
1. Set clear expectations from day one
Many performance issues arise because employees aren’t clear on what’s expected of them. To prevent this:
Clearly outline job responsibilities and performance standards during onboarding.
Set measurable goals aligned with business objectives.
Provide examples of what “success” looks like in their role.
Employees should always know what they’re responsible for, how their performance will be measured, and what they need to do to succeed. Our HR team can help you define clear, compliant job descriptions and performance frameworks that make expectations crystal clear from day one.
2. Provide regular feedback (not just once a year)
Traditional annual reviews often fail because they happen too late to make a difference. Instead, create a culture of continuous feedback by:
Holding monthly or quarterly check-ins to discuss progress.
Encouraging real-time feedback — both positive and constructive.
Recognising achievements and reinforcing great performance.
When feedback is ongoing, employees feel supported rather than blindsided when challenges arise. If you’re unsure how to structure these conversations, our Business Advisory specialists can help you develop simple, effective performance review systems.
3. Address underperformance early and constructively
When an employee isn’t meeting expectations, act quickly but fairly. Ignoring the problem allows it to grow — and impacts the wider team. Handle it effectively by:
Having a private conversation: Start with an informal chat to understand the cause.
Being specific: Instead of “Your work has been poor,” say, “You’ve missed three deadlines this month — let’s talk about what’s happening.”
Collaborating on a solution: Develop a clear Performance Improvement Plan (PIP) with timelines, actions, and support.
Our HR consultants can guide you through the process, ensuring it’s fair, compliant, and focused on outcomes — not conflict.
4. Invest in training and development
Sometimes performance issues stem from a lack of skill or confidence, not effort. Providing opportunities for learning helps employees grow and re-engage. Consider:
On-the-job coaching: Pair employees with experienced colleagues.
External learning: Offer workshops, online courses, or industry events.
Cross-training: Let team members experience other roles to build perspective and motivation.
Our Training & Development programmes are designed to strengthen capability, build confidence, and create motivated teams ready to perform.
5. Recognise and reward high performance
Performance management isn’t only about fixing problems — it’s about celebrating success. Small businesses may not always compete on salary, but recognition goes a long way. Ideas include:
Public praise in meetings or newsletters
Small incentives like vouchers, time off, or a team lunch
Growth opportunities, such as leadership roles or project ownership
When people feel seen and appreciated, they’re more likely to stay engaged and contribute at their best.
Reflective scenario – what would you do?
Imagine you have a long-term employee who’s always been reliable, but their performance has recently declined. You’re concerned but don’t want to lose them.
Using the strategies above, you could:
Schedule a private discussion to understand the root cause
Collaborate on a realistic improvement plan with support and regular feedback
Provide targeted training to rebuild confidence and performance
By taking a proactive and supportive approach, you turn performance management into a win-win — helping both your employee and your business succeed.
Golden nugget
“Employees don’t need a boss who catches them doing things wrong. They need a leader who helps them get things right.”
By focusing on clear expectations, regular feedback, early intervention, training, and recognition, SMEs can build high-performing teams that drive lasting success.
If you need help addressing performance challenges or designing a practical performance management framework, talk to our HR specialists or Training & Development team today.
