How to Handle Underperformance in Your SME

Underperformance in the workplace costs your SME far more than you might realise. It’s not just about one person missing a target; it’s the ripple effect across your team, the projects that slip, the clients who notice, and the time you spend firefighting instead of focusing on growth.

At Starfish People HR, we believe the key lies in acting early, understanding the root causes, and creating systems that support people to succeed. Here’s how to spot underperformance before it escalates, address it with confidence, and build a culture where your team can thrive.

What Does Underperformance Look Like?

Underperformance isn’t always obvious. Yes, it can show up as missed deadlines, poor‑quality work, or client complaints, but often it starts with subtle shifts in behaviour.

Early warning signs include:

• A previously engaged team member is becoming withdrawn

• Small but repeated errors from someone usually reliable

• Slower response times or reluctance to take on new tasks

• Rising tension with colleagues

• Increased absence or lateness

Tip: Use simple data to confirm what you’re seeing. Track task completion rates, absence patterns, customer feedback, and whether agreed deliverables are being met. Regular one‑to‑ones are invaluable for spotting changes in engagement before they become bigger problems.

Why Performance Drops

Performance issues rarely start with the individual. More often, they’re symptoms of wider challenges.

Common causes include:

• Role confusion – expectations aren’t clear, or the role has evolved

• Poor systems – unclear processes or inadequate tools

• Skills gaps – the role has changed, but development hasn’t kept pace

• Personal circumstances – health, family, or financial pressures

• Hiring mismatches – the wrong skills or cultural fit

• Cultural issues – lack of accountability or unclear standards

Managing Performance Effectively

To address underperformance, focus on four key areas:

1. Clear Roles and Expectations

• Update job descriptions to reflect reality, not history

• Set measurable, business‑aligned goals

• Track and share performance data regularly

• Fix broken systems before blaming individuals

2. Training and Development

• Identify specific skills gaps, not just broad training needs

• Use coaching to build confidence and communication skills

• Encourage peer learning. Often more effective than formal training

3. Right People, Right Roles

• Assess honestly whether someone can succeed with support

• Consider redeployment if their strengths fit elsewhere

• Make tough calls quickly if the role isn’t right

• Refine your hiring process to prevent repeat issues

4. Culture and Accountability

• Set and uphold clear standards

• Normalise regular, constructive feedback

• Recognise and celebrate good performance

• Address team dynamics so accountability is shared

Managing underperformance isn’t about blame; it’s about creating clarity, support, and accountability across your business. By addressing the root causes and building strong systems, you’ll not only resolve current challenges but also prevent future ones.

At Starfish People HR, we help SMEs in West Sussex, Hampshire, Surrey, and London  put the right HR metrics, processes, and culture in place to support consistent performance and growth.

Book your free 30‑minute HR review today, and let’s explore how we can help your business thrive.https://calendly.com/starfishpeople-coaching/30min