How performance reviews tell you it's time to part ways with an employee

Companies are built on mutually beneficial relationships: every employee contributes something to the business and gets something in return. But as you grow, some of those relationships break down.

Responsibilities change over time, as do an employee's interests and needs. In some situations, the best outcome for company and employee alike is a change of job. Sometimes you need to be the person to trigger that change.

To grow in a way that's healthy for both your company and your employees, you need a way to figure out when those relationships have stopped being mutually beneficial. The performance review is a part of this, but the process goes well beyond any single meeting. So today, we're sharing a decision-making process designed to help you—and your employee—make the right choice in difficult circumstances.

Getting in the right mindset

Maybe you've noticed a drop in performance. An employee has stopped engaging with their team. Maybe they just... seem unhappy. When you encounter this situation, three objectives need to be front-of-mind:

  • Bolster your hunch with real-world data. In a small company, you'll notice when an employee starts to struggle—but it's your responsibility to test this hunch with extra context, from the employee themselves, the people they work closest with, and objective performance data. Even using the employee recognition data from tools like Recognize can indicate who is winning and who isn't across groups or locations.

  • Help your employee improve. Every struggling employee deserves a real chance to improve, and it's up to you to find the right mechanism to make that happen.

  • Make the right decision for company and employee alike. Letting somebody go is a huge decision for all parties. If you reach that point, you'll want to be confident that you've made the right choice for everyone involved.

These three goals help to frame the rest of the process: firing someone is a fraught, emotional event—but sometimes, it's the right thing to do for everyone involved.

1 - Have a direct conversation

The first part of the process is a simple one: raise your concerns with your employee. Be clear and direct, explaining that their performance has dropped, and something has to change. If you're worried about this step, you can find our guide on how to have world-class one to one conversations here. By leveling with the employee, you open yourself up to a fruitful, frank discussion, making it possible to:

  • Collaborate on a solution. It's in both parties' interest to fix performance and find a role that works. You stand a better chance of success if you're both working together to understand and remedy the problem.
  • Demonstrate the gravity of the situation. Firing someone has a huge impact on an employee's life, and they need time to reflect and prepare themselves for potential dismissal. Speaking in euphemisms and dodging the issue won't help the employee process the situation.
  • Reveal their willingness to improve. Many difficult situations can be salvaged if an employee shows a willingness to adapt and improve. Your first conversation can reveal their attitude to the issue.

It's an alien and awkward first step, but it's essential, allowing you to tackle the problem together instead of in opposition.

2 - Find the root cause of the problem

Recognising the symptoms of poor performance—like a declining work output or a shift in attitude—does little to solve the underlying problem. As part of your conversations with your employee, you need to identify the problem at the heart of their dissatisfaction.

Research from Leadership IQ found five common causes of new hire failure:

  • Coachability: Struggling to accept and internalize feedback
  • Emotional Intelligence: Difficulties managing emotions and understanding the emotions of others
  • Motivation: Lacking the drive required to excel in a given role
  • Temperament: Attitude and personality unsuited to a particular work environment
  • Technical Competence: Lacking the skills required to do the job

While no two circumstances will be exactly the same, many struggling employees can trace their problems back to a handful of these common causes

3 - Create a performance improvement plan (PIP)

This is the heart of the decision-making process: giving the employee the opportunity to improve their area of weakness. A performance improvement plan (or PIP) lays out a clear, structured path for progress, complete with clear goals and expectations.

If the employee can work through the plan, hitting each of the milestones along the way, they should finish as happy, good-fit employees. If they can't, you've at least given them the best opportunity possible and made your decision in a fair, unbiased way.

Expectations and Consequences

Share examples of the employees under-performance, and contrast them with you expectations for their role. What does “ideal” performance look like? Where do they need to improve to meet that ideal?

Concrete expectations will help the employee internalise your feedback and make it much easier to measure their progress. As Charlotte Hamill, COO of Born Social, explains, “...just telling people what not to do, doesn't drive positive change because the person doesn't know the [correct] behaviour to replace unwanted behaviour with.”

As part of this process, it's important to reiterate the consequences of not meeting this target: if the employee struggles to improve or simply doesn't want to, they'll be let go.

Extra help

If you've been able to identify a primary problem at the heart of their poor performance, outline any extra help you can offer to overcome it, like:

  • Extra coaching and training sessions to address issues of technical competence
  • Alternate forms of management, like one-on-ones or mentoring schemes, to tackle poor coachability
  • Clearer progression and development goals that might alleviate poor motivation

The PIP shouldn't feel needlessly adversarial, and this is an opportunity to reinforce the fact that you're working through this challenge together.

Performance Goals

Clear goals provide fair, unbiased feedback on your employee's progress. The nature of these goals will vary according to the problem you're trying to solve.

Output issues may be best monitored by quantitative metrics, like making their sales quota four weeks in a row or resolving 90% of their support tickets; temperament issues might be better measured with more qualitative goals, like making valuable contributions in their meetings or improving their collaboration with teammates.

Regular Check-ins

Firing decisions are never made over the course of a single performance review, and it's essential to periodically check in over the course of the improvement plan:

  • Regularly reconnect with the employee to evaluate their self-reported progress and willingness to improve. How are they finding the improvement plan? Are they still trying to improve?
  • Check in with peers and managers involved in their day-to-day. Have they noticed any changes in the employee's performance or attitude? Is the PIP improving their performance in the right way?

Charlotte recommends meeting “daily or bi-weekly, winding down over the course of the plan to weekly or every other week,” and using each session to “talk about times we've seen unwanted or wanted behaviour since the last meeting.”

Feedback should be a core part of every employee's day; when an employee is struggling, and their tenure at the company is at stake, that goes double.


You have a duty of care to both your troubled employee and the wider company, and it's important to realise that poor performance has a big impact—especially in a small business. An unhappy employee can easily alter the mood of their entire team; poor performance in a customer-facing role can lead to lost customers and lost revenue.

Setting a deadline for performance improvement—be it one month or three—protects both interests: allowing the employee as long as possible to improve without causing undue damage to the company.

4 -Make the decision

When the deadline rolls around, your initial hunch—that an employee is struggling with their work—will have been bolstered with a wealth of feedback, metrics and honest discussion.

If you've seen a clear-cut improvement, there's a great chance you've solved the underlying problem and helped the employee improve in their performance. In this instance, recognise their success: they've worked hard through a difficult process and made the right changes. If no improvement has been obvious—they've missed their goals and failed to engage with the extra support on offer—then you've reached the decision to let them go in a responsible, fair way.

When the decision isn't cut-and-dry, it's helpful to evaluate three factors:

  • Performance improvements. Have they reached the “ideal” level of performance or come close? If you continued to offer support and development, would they improve further? Can you afford to dedicate more resources to their development? As Charlotte Hamill explains, “...If getting someone to meet the level of performance you need is going to take more time / support / energy than you can afford to give or want to give, it's probably best for everyone that you let them go.”
  • Willingness to engage. How receptive has the employee been throughout the process? Are they obviously keen to continue working at the company, or have their interests drifted elsewhere?
  • Alternate roles. Are there other roles in your company that would be better suited to their skills and interests? Sometimes great employees end up in the wrong roles; offering an alternative is often beneficial to company and employee alike.

At the end of this process, you should have a good idea of the right move for both company and employee. When you've reached your decision, stick to it: you've done your due diligence, and for the benefit of everyone involved, action needs to be taken.

The end result

There are two outcomes at the end of this process: your struggling employee either gets better at their job and finds a new sense of accomplishment in their work, or you let them go. The latter is one of the hardest, most emotionally-fraught decisions you'll ever have to make.

In spite of that, both outcomes are good. You've brought data to bear on your decision. You've balanced the interests of your employee and the wider team. Most important of all, you've given your employee a chance to improve. If you then decide to let them go, it was probably the right choice for everyone involved.

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