Improving KPI : Strategies for Managing Underperformers and Setting KPIs

Dealing with an employee who isn't performing well is tough, but addressing it properly matters for productivity and for the rest of the team watching how it's handled. This guide walks through a step-by-step process for managing underperforming employees and helping them improve — largely through the same structured approach known in Malaysian HR practice as a Performance Improvement Plan (PIP), with a particular focus on how KPIs fit into that process.

Step 1: Identify the Problem

Start by figuring out exactly what's causing the underperformance. Observe the employee's work, gather feedback from others they work with, and document specific issues rather than relying on a general impression. This groundwork helps you pinpoint the actual areas that need improvement, rather than guessing.

Step 2: Have a Conversation

Schedule a meeting to discuss their performance directly. Approach it with empathy and genuinely listen to their perspective — clearly communicate your expectations and the specific areas needing improvement, and give them space to share any challenges they're facing that you might not be aware of.

Step 3: Offer Support and Resources

Provide the support needed to help the employee improve — additional training, mentoring, or coaching, tailored to their specific gaps rather than a generic program. Giving them the right tools signals that you're invested in their success, not just documenting a case against them.

Step 4: Set Clear, KPI-Based Goals

This is the step where the process becomes measurable rather than aspirational. Establish clear performance goals and expectations, and work together to create an action plan with specific steps. Break the goals down into smaller milestones and review progress regularly — a KPI like "resolve 90% of tickets within 24 hours" gives both of you something concrete to check progress against, unlike a vague goal like "improve customer service." For guidance on setting KPIs that are actually achievable and relevant, see 7 Simple Ways to Improve Employee Performance with KPIs.

Step 5: Provide Feedback and Coaching

Give regular feedback to keep the employee informed of their progress — constructive criticism paired with genuine acknowledgment when they improve. Regular check-ins show commitment to their growth and keep them engaged rather than anxious about a single looming deadline. Our guide on How to Give Constructive Feedback During Employee Appraisals covers the specific techniques for making this feedback land well.

Step 6: Monitor Progress

Track the employee's progress and document both improvements and setbacks. Review their performance against the goals you set regularly, celebrate milestones when they happen, and offer additional support if they hit difficulties along the way.

Step 7: Explore Solutions

If the employee continues to struggle despite genuine effort on both sides, consider alternative solutions — a role change, additional training, or a different reporting structure. Disciplinary action or termination should always be the last resort, not the default outcome once a PIP begins.

This Process Has a Name: The Performance Improvement Plan (PIP)

What's described above is, in practice, a Performance Improvement Plan — a formal, documented process Malaysian employers use to give an underperforming employee a genuine, fair chance to improve before considering more serious action.

This matters for a reason beyond terminology: Malaysian courts scrutinise whether a PIP was genuine or just a formality on the way to a predetermined dismissal. In Heineken Malaysia Berhad v. Heng Hui Chuen, the Industrial Court ruled in favour of an employee who successfully argued unfair dismissal after a poorly executed PIP — a reminder that the process needs to be documented, supported, and applied consistently, not just gone through as a checkbox exercise before termination.

For the full structure of a compliant PIP — including typical timelines (30, 60, or 90 days), documentation requirements, and how to run the kick-off and review meetings — see What is a PIP at Work? Definition, How To, and Tips.

Frequently Asked Questions

What role does coaching and mentoring play in managing underperformers?

Coaching and mentoring give employees one-on-one guidance, support, and feedback, helping them identify areas for improvement, develop new skills, and work through specific challenges. It also helps foster a more supportive environment overall, rather than one where underperformance is only ever addressed punitively.

How can I motivate underperforming employees to improve?

Understand their individual needs rather than applying a one-size-fits-all approach. Recognise and reward genuine progress, provide opportunities for professional development, offer constructive feedback alongside encouragement, and build a supportive environment that values their contributions rather than only flagging their shortfalls.

What should I do if an underperforming employee doesn't improve despite interventions?

Explore other options such as additional training, reassignment to a different role, or, as a last resort, disciplinary action or termination — but only after genuinely exhausting reasonable avenues for support. This isn't just good practice; as the Heineken case above shows, it's also what protects the employer if the outcome is ever challenged.

How can I prevent underperformance in the first place?

Establish clear expectations from the start, provide thorough training and onboarding, foster a culture of open communication and feedback, check in regularly to catch issues early, and provide ongoing support and development opportunities rather than waiting for a formal review cycle to surface problems.

Key Takeaways

Managing underperformance well comes down to treating it as a genuine improvement process, not a paper trail toward an exit. Clear, KPI-based goals give the process something measurable to track, regular feedback keeps the employee engaged rather than anxious, and documenting everything protects both sides if the outcome is ever questioned. Whether or not you call it a PIP internally, the substance — support, clarity, and a fair chance to improve — is what actually determines whether the process works and holds up if challenged.