Dealing with problem employees

Is the Employee Really the Problem?

Before deciding that an employee is difficult, Lisa encourages employers to question their own assumptions.

In small businesses, owners often have established ways of working and strong expectations about how tasks should be completed. When employees approach those tasks differently, it can create frustration even when their work is satisfactory.

Timekeeping is one example Lisa explores. An employee arriving later than expected may have little impact in a role where they work independently and complete their responsibilities. In a retail business or trade team, however, the same behaviour could delay colleagues and disrupt operations.

The distinction is whether the behaviour genuinely affects the business or simply differs from the employer’s preferred approach.

Lisa also suggests considering whether recurring employee problems could indicate issues with recruitment or management expectations.

Understanding the Root Cause of Employee Behaviour

Poor performance or difficult behaviour does not always mean an employee is unwilling to do their job.

Lisa identifies several possible causes, including unclear instructions, insufficient training, a lack of appropriate tools, frustration and personal circumstances outside work.

An employee who previously performed well may also experience a change in motivation or attitude.

Understanding what has changed allows employers to consider an appropriate response rather than immediately moving towards disciplinary action.

As Lisa explains:

“It’s not an excuse, but if we understand the cause, we can tailor the solution.”

Lisa Mackay, HRtoolkit | 06:29

This approach also involves checking whether employees genuinely understand what is expected of them, rather than assuming that instructions have been understood simply because someone has agreed to them.

Why Clear Communication Matters

One of the central messages in Lisa’s presentation is that employers need to be honest and direct about workplace concerns.

She discusses the duty of good faith in New Zealand employment relationships, explaining that both employers and employees are expected to communicate constructively and avoid misleading or deceiving one another.

Avoiding uncomfortable conversations may seem considerate, but it can allow problems to continue.

Lisa encourages managers to define exactly what is wrong, explain why the behaviour matters and give employees an opportunity to share their perspective.

Expectations should then be confirmed in writing so there is a clear understanding of what needs to change.

Setting Clear Expectations for Workplace Performance

Vague instructions can create misunderstandings, particularly when employees interpret workplace expectations differently.

Lisa uses the example of starting work on time.

An employee scheduled to begin at 8:30 am might arrive at that time but spend the next 30 minutes preparing breakfast, checking their phone or getting ready for the day.

Her suggested expectation is more specific:

“You need to be at work, ready to start productive work at your scheduled work time.”

Lisa Mackay, HRtoolkit | 12:53

Lisa explains that even small delays can accumulate over a year and create additional pressure when other employees are waiting to begin their work.

The same principle applies to workplace conduct and established procedures. Employees need to understand not only what is expected, but also how their actions affect colleagues and business operations.

What Happens When Employee Behaviour Improves, Then Slips Back?

An initial conversation may produce a positive change, but Lisa warns that improvement is not always permanent.

In her experience, some employees respond well to clear expectations for several weeks before gradually returning to previous habits.

She recommends addressing this promptly rather than waiting for the problem to become established again.

Managers should acknowledge the improvement, explain that the expectations remain in place and reinforce the need for consistent performance.

If the behaviour continues, employers may need to consider a more formal approach.

When to Use a Performance Improvement Plan

Lisa discusses Performance Improvement Plans, commonly known as PIPs, as a formal way to address ongoing performance concerns.

These plans provide a structured opportunity to clarify the required standards and monitor whether the employee is making progress.

Drawing on her own professional experience, Lisa says that employees undergoing a PIP often either improve their performance or decide to leave the organisation.

She also explains that employers need to follow the appropriate disciplinary process if an employee fails to meet the standards required by the plan.

During the webinar’s question session, Lisa refers to HRtoolkit’s first written warning with Performance Improvement Plan letter as a resource available on the website.

Managing Employees Humanely in Small Businesses

A formal performance management process can be particularly disruptive in a small team.

Lisa illustrates this by comparing the impact of one underperforming employee in a team of five with the same situation in a workforce of 500.

When a small business has limited staff, ongoing performance problems can place considerable pressure on everyone else.

She encourages employers to consider both the needs of the business and the circumstances of the individual.

In some situations, an employee may be struggling with personal difficulties or may simply not be suited to the role.

Lisa discusses negotiated exits as a possible alternative in certain circumstances, while emphasising the need for extreme caution and professional advice because of the potential legal risks.

She also makes clear that redundancy should not be used simply because an employer is dissatisfied with an employee. There must be a genuine business reason for the role to be redundant.

Finding a Fair Way Forward

Managing problem employees requires more than identifying behaviour that needs to change.

Employers must understand the issue, examine their own assumptions, communicate expectations and respond consistently when those expectations are not met.

Lisa summarises her approach by encouraging employers to define the problem, check whether it is genuinely an issue, explain what needs to change and reinforce expectations when performance begins to slip.

Where informal management does not resolve the concern, a formal process may be necessary.

For small businesses, the objective is to address problems fairly while considering the wellbeing of the employee, the wider team and the business.

HR Resources for Managing Employee Performance

HRtoolkit provides practical resources to help New Zealand employers manage employee performance and workplace conduct.

Explore the Staff Performance Toolkit and Disciplinary Procedures Toolkit for documents and guidance relating to the processes discussed in this video.

About the Presenter

Lisa Mackay | Managing Director, HRtoolkit Ltd

Lisa Mackay holds a Postgraduate Diploma in Human Resource Management and has over 30 years of experience working in HR with small businesses.

As Managing Director of HRtoolkit Ltd, she provides practical HR guidance and support to New Zealand employers, helping them navigate employee management, workplace challenges and employment processes.

This article is based on Lisa Mackay’s HRtoolkit training video and reflects the guidance shared during the session.