How Addressing Underperformance Actually Increases Engagement

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Managing our underperforming employees is heart-breaking. It’s emotional — and it feels bad, on both sides of the equation.

It’s easy to intellectually acknowledge that much of employee performance is about being in the right role at the right time, in the right environment, and with the right team — but letting even low performers go feels intensely personal. If you have empathy, you’ll ask: “Why weren’t the circumstances different? How am I affecting this person’s livelihood?”

As humans, we avoid the discomfort and the hard conversations. We give light feedback so as not to ruffle feathers. We re-distribute work and create workarounds. The path of least resistance may be OK when the economy is moving and shaking and revenues are high. As I like to say, “Sales covers a lot of sins and woes.”

But when a downturn hits, each dollar of revenue is painstakingly hard to earn. That’s when the organizational debt of poor performance adds up. As companies take measures to be more efficient with capital and resources, employees will see their organizations make the hard decisions to demonstrate a focus on the long-term sustainability of the business.

Employee morale can often dip during these times, but it doesn’t have to. Here's my theory: One of the best ways to increase employee engagement — in good times and bad — is to focus on how you are managing underperforming employees. If that seems counterintuitive, let me explain.

Defining Underperformance

Exceptionally poor performance is easy to spot. These employees don’t possess the technical skills, motivation, or soft skills needed to perform well in their roles. However, the harder category to understand (and address) is that of “low-ish” or mediocre performance.

Unlike those clearly underperforming in almost all aspects of their job, this category of performers occupies a more nuanced middle ground. These folks do just enough to fulfill the basic requirements of their role and might show flashes of potential or sporadic high performance, but showing glimpses of positive impact on culture alone doesn’t mean they’re the right person for their role. 

That’s because these “pros” are often diminished by several “cons” — like a lack of initiative, insufficient skills, resistance to feedback, or a propensity to swirl the rumor mill.

When [you] fail to address inconsistent performers, it sends a message about what is deemed acceptable, inadvertently setting a lower bar for everyone.

It's important to note that factors such as lack of clear expectations, insufficient management support, personal challenges, or a mismatch between the employee's skills and current role can all contribute to lower performance.

If leaders and managers have attempted to address performance through targeted support, feedback, and development opportunities — with little to no progress — I would consider these employees underperforming.  

Engagement Through High Standards

Underperforming employees within an organization can have a profound and often underestimated impact on overall team morale, productivity, and engagement.

When managers fail to address inconsistent performers, it sends a message about what is deemed acceptable, inadvertently setting a lower bar for everyone. When team members observe that subpar performance does not yield consequences, it diminishes their own drive to excel, leading to a pervasive culture of complacency. Perhaps the most detrimental: High-performing employees, who often carry a disproportionate share of the workload, may begin to feel undervalued and disillusioned when they perceive a lack of accountability. 

Despite the discomfort of managing out underperformers, the act itself can be incredibly empowering for the rest of the team. It reaffirms the company's commitment to excellence and shows that leadership values high-impact employees. Managing out underperformers is not just about removing the lowest contributors; it's about actively shaping a culture that values engagement, accountability, and continuous improvement. This approach encourages all employees to invest fully in their work, secure in the knowledge that their efforts are recognized and that they are part of a team striving towards shared excellence.

The Role of a Chief People Officer

My diverse experiences working in engineering, operations, and human resources throughout my career have taught me that one of the most pivotal and strategic roles a chief people officer can play is to champion a high-performance culture while facilitating high levels of employee engagement. 

This role is essential in today’s economic climate. Perks and benefits only get you so far. What truly resonates with top performers are effective leadership, a respected peer group, and trust in managers to prioritize the organization's best interests.

The kindest thing we can do is be clear about expectations, give feedback, and hold a high bar.

As a people leader and professional coach, helping leaders and managers understand that they can’t deliver on the business mission if they don’t have the right team has been one of my areas of highest impact. In coaching managers through the performance management process, I reiterate that they don’t have to be mean or hard-hearted with underperformers. 

It’s vital to reassure managers that sometimes the kindest thing we can do is be clear about expectations, give feedback, and hold a high bar. While addressing underperformance is an unpleasant responsibility, it’s critical to the company’s ability to retain and engage the talent on the other side of the spectrum. 

The decision to manage out low and inconsistent performers is a strategic investment in the organization's culture and future success. It signals a commitment to maintaining high standards, fostering a motivated and engaged workforce, and creating an environment where excellence is the norm. By prioritizing engagement through accountability, leaders can cultivate a dynamic and resilient organization, poised to thrive even in the face of challenges.

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Learn more about the relationship between employee engagement and performance with Lattice’s free ebook, Performance and Engagement: Better Together.