How to Manage Underperforming Employees in Malaysia: Tips for Employers & HR

Poor employee performance can affect productivity, customer satisfaction, team morale, and overall business performance. When an employee consistently fails to meet expectations, employers should address the issue early instead of allowing it to continue.

However, underperformance does not always mean an employee lacks ability or commitment. In many cases, the issue can be resolved through communication, coaching, clear expectations, and the right support.

This guide explains how employers and HR professionals can identify, manage, and improve employee performance while maintaining a fair, consistent, and professional workplace.

What Is an Underperforming Employee?

An underperforming employee is someone who consistently fails to meet the expected standards of their role.

Examples include:

Frequently missing deadlines.
Producing poor-quality work.
Failing to achieve Key Performance Indicators (KPIs).
Low productivity.
Repeated mistakes.
Poor communication.
Lack of initiative.
Difficulty following instructions.

One isolated mistake does not necessarily mean an employee is underperforming. Employers should look for consistent performance patterns over time.

Common Causes of Poor Performance

Before deciding how to manage an employee, employers should understand the possible reasons behind the performance issue.

Common causes include:

Unclear job expectations.
Insufficient training.
Personal or family challenges.
Health-related issues.
Poor communication.
Low motivation or engagement.
Heavy workload.
Lack of resources or support.

Understanding the root cause helps employers choose the most appropriate solution.

How to Manage Underperforming Employees

Identify the Performance Gap

Clearly identify where the employee is not meeting expectations.

Instead of saying:

"Your performance is poor."

Use measurable examples such as:

Monthly sales target achieved only 45% of KPI.
Missed four project deadlines in two months.
Customer complaint rate increased.
Repeated errors in work that require corrections.

Specific examples help employees understand exactly what needs improvement.

Meet with the Employee

Arrange a private meeting to discuss the concerns.

During the meeting:

Explain the performance issues.
Listen to the employee's perspective.
Identify possible causes.
Agree on improvement goals.

The discussion should focus on finding solutions instead of placing blame.

Questions to Ask Underperforming Employees

A productive conversation can help employers and HR understand why an employee is underperforming. Instead of making assumptions, ask open-ended questions that encourage honest discussion.

Some questions you can ask include:

How do you feel about your current workload?
Do you clearly understand your job responsibilities and performance expectations?
Are there any challenges affecting your work performance?
Is there any training or support that would help you perform better?
Do you have the resources and tools needed to do your job effectively?
What do you think is preventing you from meeting your goals?
How can your manager or the company better support you?
What actions do you think would help improve your performance?

The purpose of these questions is to identify the root cause of the performance issue and work together on a realistic improvement plan before considering formal action.

Set Clear Expectations

Employees should know exactly what is expected of them.

Explain:

KPIs.
Performance targets.
Deadlines.
Quality standards.
Expected behaviours.

Clear expectations make it easier to measure improvement.

Provide Coaching and Support

Before considering disciplinary action, employers should provide reasonable support.

This may include:

Additional training.
Coaching.
Mentoring.
Regular feedback.
Better tools or resources.

Providing support often leads to better long-term performance.

Use a Performance Improvement Plan (PIP)

If performance does not improve, consider implementing a Performance Improvement Plan (PIP).

A PIP should include:

Performance issues.
Improvement goals.
Review dates.
Timeline.
Support provided.
Success measurements.

A structured PIP gives employees a fair opportunity to improve.

Give a Reasonable Improvement Period

There is no fixed improvement period for every employee.

Many employers review performance over 30, 60, or 90 days, depending on:

The employee's role.
The performance issue.
Company policies.

During this period, managers should provide regular feedback and monitor progress.

Monitor Progress

Schedule regular review meetings to discuss:

Progress made.
Remaining challenges.
Additional support needed.
Next steps.

Regular communication keeps employees engaged and accountable.

Document Everything

Good documentation is an important part of performance management.

HR should keep records such as:

Performance reviews.
KPI reports.
Coaching sessions.
Meeting notes.
Emails.
Customer complaints (where relevant).
Performance Improvement Plans.
Warning letters.

Accurate documentation helps ensure a fair and consistent process.

Consider Formal Action When Necessary

If performance remains unsatisfactory despite coaching, support, and a reasonable opportunity to improve, employers may consider formal action in accordance with the company's policies.

Possible next steps may include:

Issuing a warning letter.
Extending the Performance Improvement Plan.
Taking further action based on company policies.

Any action should be supported by proper documentation and applied consistently.

Manager vs HR Responsibilities

Managing underperformance is a shared responsibility between managers and HR.

Managers should:

Monitor daily performance.
Set clear expectations.
Provide coaching and regular feedback.
Review employee progress.
Communicate performance concerns early.

HR should:

Ensure company policies are followed.
Support managers throughout the performance management process.
Maintain proper documentation.
Promote fairness and consistency.
Provide guidance on company procedures when needed.

Working together helps employers manage performance issues more effectively.

Performance Management Checklist

Managing employee performance requires a structured and consistent approach.

To help employers and HR professionals, we've created a Performance Management Checklist that you can use throughout the performance management process.

Download here.

Common Mistakes Employers Should Avoid

Avoid these common mistakes:

Ignoring poor performance.
Waiting too long before taking action.
Giving unclear feedback.
Comparing employees unfairly.
Failing to document discussions.
Applying company policies inconsistently.
Assuming poor performance is caused by laziness.
Skipping coaching or support.

Addressing issues early usually leads to better outcomes for both employers and employees.

Signs an Employee Is Improving

Positive signs include:

Meeting KPIs consistently.
Better quality of work.
Improved attendance and punctuality.
Fewer mistakes.
Increased productivity.
Better communication.
Greater initiative.
Positive feedback from managers or customers.

Recognising progress helps motivate employees to maintain good performance.

FAQs

What is an underperforming employee?

An underperforming employee is someone who consistently does not meet the expected standards or performance required for their role.

How should employers manage underperforming employees?

Employers should identify the performance issue, discuss it with the employee, set clear expectations, provide coaching or training, and monitor progress before considering formal action.

Can an underperforming employee improve?

Yes. With clear goals, regular feedback, coaching, and support, many employees are able to improve their performance.

When should employers issue a warning letter?

A warning letter may be appropriate if an employee's performance does not improve after receiving reasonable support, coaching, and opportunities to improve.

Why is documentation important?

Documentation helps employers keep accurate records of performance discussions, coaching, feedback, and improvement efforts while supporting a fair and consistent performance management process.

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