The Biggest Mistakes Employers Make When Managing Employee Performance (and how to avoid them!

Performance Management is one of the most important responsibilities of any employer. When employees perform well, businesses are more productive, customers receive better service, and workplace morale improves.

Unfortunately, many employers only think about performance when there is a problem. By that stage, issues may have been building for months, making them much harder to resolve.

The good news is that most performance problems can be prevented through regular communication, clear expectations and a fair process.

Why Does Performance Management Matter?

Performance management isn't about finding fault with employees.  It's about helping people succeed.  A good performance management system helps employees understand what is expected of them, how they are performing, where they can improve, what support is available to them, and how they can develop their career.

When employers invest in good performance management, they often see better productivity, higher employee engagement, lower staff turnover, fewer disciplinary issues, and reduced risk of personal grievances.  Just as importantly, employees are less likely to be surprised if concerns arise because they have received regular feedback along the way.

Mistake 1: Waiting Until There Is a Problem

One of the biggest mistakes employers make is saying nothing while performance gradually declines.  Managers sometimes hope problems will improve on their own. Others avoid difficult conversations because they don't want conflict.  Months later they suddenly tell the employee they are underperforming.  From the employee's perspective, this often comes as a complete surprise.  Performance issues should be addressed early.  A simple conversation after noticing declining performance is usually far more effective than waiting until problems become serious.

Mistake 2: Not Setting Clear Expectations

Employees cannot meet expectations they do not understand.  Many employers assume staff know what good performance looks like.  Instead, employers should clearly communicate:

• Job responsibilities.

• Performance standards.

• Quality expectations.

• Productivity expectations.

• Behavioural expectations.

• Customer service standards.

• Teamwork expectations.

These expectations should ideally be reinforced through employment agreements, position descriptions, workplace policies, and training.  Employees should have regular one-on-one meetings with the person they report to so they are aware of performance expectations and if there are any problems.  Clear expectations make later performance discussions much easier.

Mistake 3: Only Giving Feedback During Annual Reviews

Annual performance reviews have their place, however, they should never be the first time an employee hears about a concern.  Good managers provide feedback regularly.  That means recognising good work as well as discussing areas for improvement throughout the year.

Employees who receive regular feedback generally improve more quickly, feel more supported, are more engaged, and have greater confidence in their manager.  Performance conversations should become part of everyday management rather than a once-a-year event.

Mistake 4: Confusing Performance with Misconduct

Poor performance and misconduct are not the same thing.  

Performance relates to whether an employee has the skills, knowledge, experience or capability to perform their role to the required standard.  Performance issues might include:

• Missing deadlines.

• Poor quality work.

• Struggling to meet targets.

• Difficulty learning systems.

Misconduct relates to behaviour or breaches of workplace rules.  Misconduct might include:

• Refusing reasonable instructions.

• Dishonesty.

• Harassment.

• Serious lateness without explanation.

• Breaching workplace policies.

Using a disciplinary process to manage genuine performance issues is often unfair and can expose an employer to legal risk.

Mistake 5: Not Investigating the Cause

Performance problems are often symptoms rather than the real issue.  Before assuming an employee simply is not trying, employers should consider whether something else is affecting performance.  Possible causes include:

• Lack of training.

• Unclear instructions.

• Poor supervision.

• Excessive workload.

• Health issues.

• Personal difficulties.

• Workplace conflict.

• Bullying or harassment.

• Outdated systems or equipment.

Taking time to understand the cause often leads to much better outcomes.

Mistake 6: Failing to Provide Support

Employers have an obligation to act fairly and reasonably.  If an employee is struggling, support should usually be offered before considering disciplinary action.  Support might include:

• Additional training.

• Coaching.

• Mentoring.

• More regular supervision.

• Written guidance.

• Refresher training.

• Extra resources.

• Adjusted workloads where appropriate.

Employees should have a genuine opportunity to improve.

Mistake 7: Poor Documentation

Many employers have conversations about performance but fail to record them.  Months later nobody remembers exactly what was discussed.  Good documentation protects everyone. Managers should keep records of performance discussions, agreed expectations, support provided, training completed, review dates, employee responses, and progress made.  Documentation helps demonstrate that a fair process has been followed if concerns later arise.

What Does a Good Performance Review Process Look Like?

A good performance review should not feel like an interrogation.  Instead, it should be a constructive discussion focused on improvement and development.  A typical review process should include:

1. Preparation

Both the manager and employee should have time to prepare.  Performance should be assessed against agreed expectations rather than personal opinions.

2. Two-Way Discussion

Employees should have the opportunity to share:

• Their achievements.

• Challenges.

• Training needs.

• Career goals.

• Suggestions for improvement.

Good performance reviews involve listening as much as talking.

3. Balanced Feedback

Recognise successes before discussing areas requiring improvement.  Employees are generally more receptive to constructive feedback when they know their contributions are valued.

4. Clear Goals

Finish the meeting with agreed goals that are:

• Specific.

• Measurable.

• Realistic.

• Time-based.

Employees should leave knowing exactly what success looks like.

5. Follow-Up

The review should not be forgotten until next year.  Managers should check progress regularly and provide ongoing support.

Why Do Regular Performance Conversations Matter?

The best employers don't rely solely on formal reviews.  Instead, they hold regular one-on-one conversations throughout the year.  These meetings can be short but valuable.  Topics might include current workload, recent successes, challenges, training needs, future priorities, wellbeing and give the opportunity for feedback from the manager and the employee.  These conversations help identify issues early before they become significant problems, and they also strengthen trust between managers and employees.

FAQs

How often should performance reviews be conducted?

Formal performance reviews are commonly held once or twice a year. However, managers should also have regular one-on-one conversations throughout the year to provide feedback, discuss goals and address any concerns early.

Can I discipline an employee for poor performance?

Poor performance should generally be managed through a fair performance management process that gives the employee clear feedback, reasonable support and an opportunity to improve. Disciplinary processes are generally more appropriate for misconduct rather than capability issues, but may be used if performance issues are prolonged and the employee is not making an effort to improve.  

How long should a performance improvement process last?

There is no fixed timeframe. The appropriate period depends on the nature of the role, the issues involved and how long it would reasonably take for improvement to occur. Employees should be given a genuine opportunity to demonstrate improvement.

What should I document during performance management?

Keep records of meetings, expectations discussed, support provided, agreed actions, review dates, employee responses and any progress made. Good documentation helps demonstrate that a fair and reasonable process has been followed.

Can I dismiss an employee if they fail to improve?

Potentially, but only after following a fair and reasonable process. Employers should ensure the employee understands the concerns, has had appropriate support and a genuine opportunity to improve, and has been consulted before any final decision is made. Every situation is different, and obtaining professional advice before making a dismissal decision is strongly recommended.

What if poor performance is caused by illness or personal issues?

Employers should avoid making assumptions. Discuss the situation with the employee to understand what may be contributing to the performance concerns. Depending on the circumstances, reasonable support, workplace adjustments or medical information may need to be considered before deciding on the appropriate next steps.

Effective performance management is not about catching employees doing something wrong.  It is about creating an environment where people understand what is expected, receive regular feedback, and have every reasonable opportunity to succeed.  

By setting clear expectations, holding regular performance conversations, providing appropriate support, and following a fair process when concerns arise, employers can improve performance while significantly reducing legal risk.

The best performance management systems are proactive, consistent and focused on helping people achieve their potential.  If believe your performance management system could improve, or you need help creating one, we have documents in our store which may help.  Alternatively, get in touch with Employer Direct today for a free consultation on your needs.  Employer-Direct.co.nz | 0800 612 355

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