As an ex-SME (small and medium-sized enterprises) owner myself, I know first-hand that taking over a business is not always easy and driving growth can be a serious challenge.

This is especially true in companies with performance issues related to the team. Most managers are aware that underperforming employees or ‘C-players’ are one of the biggest barriers to SME growth. 

How do I manage an underperforming employee?

Dealing with C-players is a difficult task that even the most experienced managers often struggle with. I have used ‘tried and tested’ methods and come up with a strategy that I believe will help you boost employee performance and turn your C-players into A-players.

Let’s start by discussing the most obvious question that managers often ask themselves when dealing with underperforming employees.

Should I simply fire underperforming employees? 

I don’t blame you if you think the best way to deal with C-players is to simply fire them – I used to have this opinion too! Conventional wisdom suggests: ‘if someone is not good, fire them.” 

Simply firing underperforming employees might seem like a quick solution, but in practice, I found it to be much more complex and there are lots of things to consider before making such a decision. 

Firing someone can have a big impact on company culture 

It is important to remember that your employees will form strong bonds with their colleagues and value their friendship and support in the workplace.

When you fire someone, this will have a huge impact on the rest of your team and workplace morale – especially if the person you are firing has been with your company for a long time and the dismissal is viewed as undeserved. 

Having a strong company culture is invaluable to your company’s success and you must maintain high morale by ensuring that you handle C-players with fairness and empathy. You must ensure that the rest of your team will continue to work well together if you fire the person in question. 

Firing someone can have a big impact on you as a manager

As business owners and managers, we form close relationships with our employees and firing someone (even if it’s for a valid reason) can cause intense feelings of guilt which can impact us mentally. 

I have always found it difficult to fire people, particularly if I know it will have a significant impact on them financially or they will struggle to find another job. It is important that we feel good (or at least okay) about our decision to let someone go and make the decision in the right way. 

A better solution to deal with underperforming employees

Through my experience managing SMEs, I found that firing people doesn’t generally deliver positive results for the company – so I came up with a better solution.

Remember that C-players are often not bad, they just don’t know how to do their role effectively. Most C-players have the potential to turn into A-players if they have the right training and support. You must investigate the reasons behind why employees are underperforming. 

What causes employees to underperform? 

In my experience, I have found that people can be C-players because:

• They are in the wrong role e.g. one that is not suited to their skills or interests. 
• They have a manager that does not inspire, motivate or support them. 
• They are lazy and unmotivated – this is the most difficult issue to resolve, but I’ll give you my tips for dealing with this.

How to manage underperforming employees

Step 1: Create a shared company vision 

During my management experience, I found that creating a shared vision is one of the best ways to manage C-players and improve employee performance.

Create a collaborative atmosphere and bring your team members together to agree on a vision of where you all want the company to go. 

This will make employees feel excited to be part of your company and ensure that everyone understands your long-term goals. It will also create accountability and make it easier to address behaviours that do not match your company’s vision and goals.

Step 2: Identify C-players and consider ways to improve their performance

You must then identify people that do not fit in with your new company plan and goals. However, you don’t necessarily need to fire these people. I have found that C-players can often be turned into A-players with the right support and motivation. 

Ways to manage an underperforming employee

An underperforming employee could thrive in a different role in the business. While there may not always be another position available for them, the important thing is to show that you are trying to find something for them and supporting them even if they can’t be part of your journey going forwards. 

Training is another way to lift someone’s performance and increase loyalty and motivation in the workplace.

How I turned a C-player into an A-player 

Whilst running my family’s company, I had a factory manager who was doing a poor job. He had been with us for around 20 years and had been great at his previous job as R&D manager. He was well respected for his seniority and technical know-how but was underperforming as a manager of a big operation.  

I didn’t simply fire him. Instead, I moved him into a technical sales role where he got to interact with clients and utilise his technological skills to sell our products.

He was completely revived and did an excellent job in his new role – it turns out he was a bad manager but a fantastic salesman. He ended up retiring at 72 and was a great asset to our company. 

Reshuffling can revive underperforming employees 

In my opinion, business owners can often utilise someone’s skills or personality traits and find a better place for them within their company rather than just firing them.

In some cases, reshuffling boosts morale if the employee is not satisfied in their role or doesn’t work well with their current manager.

Reshuffling can be an extremely effective way to improve productivity and performance, but it doesn’t always work. There is a risk that you are avoiding the root problem because you don’t want to acknowledge and deal with it.

Too much tolerance is dangerous and will not solve the problem. 

Things to consider before reshuffling an employee

Reshuffling requires time and resources

One of the major drawbacks of reshuffling is that you will need to invest valuable time and resources to do it right. You must therefore make sure that the person is motivated, excited and committed to their new role. 

In my experience, you should only reshuffle a team member once. If the team member does not show improvement then you have no option, you have to let them go.

Make sure that you give the person time to adjust to their new role (usually 6 months) and provide them with the training and support that they need to succeed.

Too much pressure can create a toxic environment

It can become a toxic environment if you are pushing someone who is unmotivated and doesn’t want to be there. Placing too much pressure on your employees can harm your company culture and create a negative atmosphere. 

Cutting ties may be the best option 

Sometimes cutting ties with an underperforming employee is the best option for your company and the team member. Letting them go may improve your business performance and allow them to use their skills and talents elsewhere. 

How to handle layoffs with fairness and compassion

As an ex-SME owner, I have found that while C-players can often be turned into A-players if you are able to utilise their skills in a better-suited role, sometimes layoffs are unavoidable.

Despite my best efforts to reform C-players, I still needed to dismiss employees in many circumstances. 

Tips to fire an employee gracefully & ethically

Firing someone may be the only option and you need to ensure that you do it with compassion and empathy. Here are some tips I would like to share with you on how to handle layoffs with compassion:

• Warn the employee ahead of time: We would give the employee several warnings that their work is not up to par. An abrupt firing can ruin morale and it is best if the employee can see it coming and has a chance to improve their performance.
• Celebrate the person when they leave: We would organise leaving parties to celebrate the person’s time at our company and ensure that they left on a positive note. Acknowledge that the relationship is not working rather than blaming the employee. 
• Choose your timings well: When I was managing my family business, we only had layoffs once a year after we had reviewed the annual performance reports. This meant that staff could relax and work productively for the rest of the year without worrying about random layoffs taking place.
• Pay staff fairly: You should never leave your employees high and dry. Pay them fairly when they leave so they can find a new job without falling into financial hardship.
• Help staff with their future careers: As a manager, I have found that giving employees advice on what they could do in the future is invaluable. Show that you are willing to support them. You may even decide to invest in some training or use your industry connections to help them find another job. This approach worked very well for me and I would recommend that all managers try it. 

Motivating people is your main role as a leader 

Don’t forget that motivating people should be your main focus as a manager. You need to create a culture of excitement and enthusiasm. If someone is not motivated, you need to find out why and talk to them one-to-one to try and solve the issue. People who are not motivated will not do good work.

I know from experience that a motivated and inspired team will push your business forward more than you can imagine. Give people the excitement of a better future, give them fair pay, and listen to them. Learning how to motivate staff takes time and experience, but it’s a major skill that leaders need to learn to be successful. 

I will be writing another article soon about how leaders can motivate and inspire their teams – so keep a lookout! 

Moonbase can help you improve employee performance and productivity 

The other partners at Moonbase Capital and I share more than 50 years of experience managing SMEs and we have learned a lot during that time.

I know from experience that dealing with underperforming employees can be one of the biggest challenges of running a business. 

Get in touch for more advice on how to manage underperforming employees

The good news is that it is possible to turn your C-players into A-players and maintain a strong company culture. Get in touch if you would like some more advice on ways to improve employee performance – I am always happy to help and answer any questions.