Frequently Asked Questions
What is performance management?
Performance management is a structured process used to identify, assess, and improve an employee’s job performance. It involves setting clear expectations, providing regular feedback, addressing underperformance, and supporting professional development.
Why is performance management important?
Performance management ensures that employees are working effectively and meeting expectations aligned with business goals. Done well, it promotes productivity, clarity, engagement, and accountability.
For small businesses, where each role is critical, managing performance proactively helps prevent costly issues like high turnover, legal claims, and workplace culture problems. It also supports employee development and growth, which contributes to long-term success.
When should I begin formal performance management?
- Informal feedback and coaching have not led to improvement.
- The performance issues are ongoing, significant, or impacting team or business outcomes.
- Documented expectations have not been met despite reasonable support.
What is a Performance Improvement Plan (PIP)?
- The areas of underperformance
- Specific performance goals or KPIs
- Required actions and support
- A timeframe for review
- Consequences if improvement is not achieved
How do I communicate a PIP without demotivating the employee?
Start with a supportive tone and frame the PIP as an opportunity, not a punishment. Emphasise that the goal is to help the employee succeed and that support will be provided throughout the process. Be specific about what success looks like, and avoid language that feels accusatory or threatening. Ensure the conversation remains constructive, respectful, and focused on solutions.
Can I terminate an employee if their performance doesn’t improve during the PIP?
- The PIP has been fairly implemented and finalised
- The employee has been given a genuine opportunity to improve
- Procedural fairness has been followed (e.g. opportunity to respond, right to a support person)
How much documentation do I need to keep?
- Meeting notes
- Copies of the signed PIP
- Emails and feedback records
- Evidence of training or support provided
Can I use informal check-ins as documentation?
Yes, but they should still be recorded. Notes from informal discussions can be valuable if kept contemporaneous and objective. Use them to track coaching, feedback, and agreed actions, especially if they’re part of a pattern. However, informal notes should not replace formal documentation in serious or ongoing cases — think of them as complementary.
Do I need to offer a support person during meetings?
While not mandatory under legislation for all performance discussions, it is considered best practice- particularly when a disciplinary or termination outcome is possible. Not offering a support person may be viewed as procedurally unfair.
What legal risks exist if I handle performance management poorly?
- Unfair dismissal claims
- General protections (adverse action) claims
- Workers’ compensation claims for stress-related illness
Reputational harm
What should I avoid saying during a performance meeting?
Avoid emotionally charged or vague statements like “you always” or “you never.” Don’t speculate or make assumptions about intent or personal circumstances. Never issue threats or make off-the-cuff remarks about termination. Stick to factual, documented behaviour or performance issues, and focus on how they impact the business. Always allow the employee a chance to respond.
Can I performance manage someone during a probationary period?
Yes. Probation does not negate your obligation to manage performance fairly. While the unfair dismissal provisions under the Fair Work Act may not apply to employees with less than 6 months’ service (or 12 months for small businesses), procedural fairness should still be applied to mitigate other legal risks.
What if the employee lodges a complaint during performance management?
Raising a grievance or complaint does not prevent an employer from continuing a fair performance management process. However, the complaint should be addressed in parallel and with care to ensure there is no perception of retaliation or adverse treatment, which could give rise to a general protections claim.
How do I balance performance expectations with mental health concerns?
- Consider reasonable adjustments
- Pause the process if clinically advised
- Seek medical advice (with consent) if needed
- Document support provided
What role does performance management play in employee engagement?
When done well, performance management builds trust, transparency, and motivation. Employees are more likely to feel valued and supported when expectations are clear and feedback is consistent. Addressing performance concerns early also reduces tension and resentment within teams. In contrast, poor or inconsistent performance management can drive disengagement and turnover.
Key Takeaways
Performance management is essential for maintaining accountability, productivity, and team morale in small businesses.
A well-structured Performance Improvement Plan (PIP) can help underperforming employees get back on track — and protect your business from legal risk.
Documentation, fairness, and timely action are critical for compliance with Australian workplace laws.
Even during probation, or when mental health concerns arise, performance must be handled sensitively and lawfully.
Supportive, clear communication is key — performance management doesn’t have to be confrontational.
How Strategic HR Australia Can Help
- Performance Improvement Plan (PIP) templates tailored to your business
- Guidance through procedural fairness and legal obligations
- Documentation support to ensure defensibility in the event of a claim
- Advice and coaching on how to conduct performance discussions professionally
- Risk minimisation strategies for difficult or high-risk cases
Support with mental health-sensitive cases
