How employers can manage employee performance
One of the ways you can stay competitive in your industry is by making sure all your employees are performing at their best. Managing performance well creates a more productive and harmonious workplace because employees can see the value of their work. So always take a consistent approach to performance management.
The employee handbook should set out the standards expected at work and the steps you have to take if an employee starts to fall short. It's important that this handbook is comprehensive, easy to understand, and accessible to all employees. This ensures that everyone is aware of the expectations and the procedures in place for managing performance.
Steps to manage employee performance
Conducting regular performance appraisals will also help you measure their skills, abilities, and output against these expectations. These appraisals shouldn't just be a formality; they should be a meaningful exercise to understand an employee's progress, strengths, and areas for improvement. They provide an opportunity for open dialogue between managers and employees, fostering a culture of transparency and continuous development.
If there is a gap between your employee’s performance and what you expect, you need to address it early. Proactive communication is key here. Make a note on their record and talk to them as soon as possible. It's essential to approach these conversations with a balance of firmness and empathy. Clearly set out how you expect them to improve, with measurable targets if possible.
Employees need to feel supported in their journey to improvement. Consider offering further training or professional development opportunities. This not only helps in bridging the performance gap but also demonstrates your investment in their growth. However, it's equally important for employees to understand the potential consequences if they do not meet the expected standards.
Sometimes, an issue with performance may not be due to a lack of effort or skill but rather a physical inability to perform certain tasks. This isn't underperformance but a matter of medical capability. In such cases, you need to establish the medical facts by getting an independent medical report done. This helps in making informed decisions about how to proceed, ensuring fairness and compliance with workplace laws and regulations.
Employment Compass is here to guide you in achieving the best performance at work through our employee relations support. For personalised advice tailored to your business needs and for peace of mind, don't hesitate to call our 24/7 HR advice line now on 1300 144 002. We're committed to supporting you in creating a thriving, productive workplace where every employee can realise their full potential.
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Frequently asked questions
How can employers effectively manage employee performance?
Employers can manage performance by maintaining a consistent approach, outlined in the employee handbook, which sets clear work standards and steps for addressing underperformance. Regular performance appraisals are crucial for measuring skills and output against these standards.
What should be Included in performance appraisals?
Performance appraisals should go beyond formalities and provide a meaningful assessment of an employee's progress, strengths, and areas for improvement. They should facilitate open dialogue between managers and employees, fostering a culture of transparency and development.
How should employers address gaps in employee performance?
Address performance gaps proactively through clear communication, setting measurable improvement targets, and documenting these discussions. Offering training or professional development can also be beneficial.
What if an employee's poor performance is due to medical reasons?
If performance issues are related to medical incapability, employers should obtain an independent medical report. This ensures informed decisions are made, balancing fairness and compliance with workplace laws.
Can Employment Compass assist in employee performance management?
Employment Compass offers personalised advice to help businesses create a productive work environment. Our 24/7 HR advice line is available for businesses by calling 1300 144 002.
General information only
This content is general information about Australian employment law, current at the date it was last reviewed. It does not take your circumstances into account and is not legal advice. For advice about your situation, call Employment Compass on 1300 144 002.
Last reviewed: October 2026