The Performance Problem You Think You Have Is Almost Certainly a Management Problem You’re Not Seeing.

There is a conversation that happens in every mid-market business with the same predictable rhythm. A line manager approaches HR with a performance concern. The employee is not meeting expectations. The situation has been going on for months. The manager wants to start a formal capability process. HR provides the framework: set clear objectives, hold review meetings, document the gap, allow reasonable time to improve, and if improvement does not materialise, proceed to a formal hearing.

The process runs. The employee either improves under the pressure of formal scrutiny, which raises the question of why they were not managed properly before, or they do not improve, are dismissed, and are replaced at a cost of £15,000 to £40,000 in recruitment, onboarding, and lost productivity. In either case, the underlying cause of the performance problem is never examined, because the process is designed to address the symptom and nobody asks whether the diagnosis was correct in the first place.

At Esbee, before we support a capability process, we run a diagnostic. The questions are simple. The answers are frequently uncomfortable.

The Diagnostic Nobody Runs

Before any performance management process begins, four questions should be answered with genuine honesty. Were the objectives clear, specific, measurable, and agreed with the employee? Was the support, training, and resource provision adequate for the employee to meet those objectives? Has the line manager been trained to manage performance, or are they operating on instinct and whatever they absorbed from their own manager? And is the role itself realistic, or is one person being asked to do what should be two roles, or a role that requires skills that were never specified at recruitment?

If any of these questions produces an answer that is anything less than a confident yes, the capability process is addressing the wrong target. The employee may well be underperforming, but the underperformance may be a rational response to an environment in which success was not genuinely possible: unclear goals, inadequate support, incompetent management, or an impossible job design.

This is not an academic distinction. It is the difference between a capability process that succeeds at tribunal and one that fails. Under the Employment Rights Act 1996, an employer must demonstrate that a dismissal for capability was fair, and the band of reasonable responses test asks whether the employer took reasonable steps before concluding that the employee’s performance was inadequate. An employer that cannot demonstrate clear objectives, adequate support, and competent management has not taken reasonable steps. The dismissal will be unfair, and the process that was supposed to manage the employee out will instead have managed the employer into a compensation award.

Before starting a capability process, check whether the objectives were clear, the support was adequate, and the management was competent. If any of these fail, you’re solving the wrong problem.

The Manager Who Has Never Been Trained to Manage

The most common root cause of performance problems in mid-market businesses is not the employee. It is the manager. Specifically, it is the manager who was promoted because they were the best individual contributor in their team, who received no training in management, and who is now responsible for the performance of people they have never been equipped to lead.

This person sets objectives that are vague because they have never been taught to write a specific, measurable objective. They give feedback that is infrequent, inconsistent, and either so gentle that it fails to register or so blunt that it damages the relationship. They avoid difficult conversations because nobody has ever taught them how to have one. They tolerate underperformance for months because addressing it feels confrontational, and then they escalate to HR in frustration, expecting the formal process to do what they have been unable to do informally.

The performance management process then runs against an employee who has received inadequate management for an extended period and is now, for the first time, being told with any clarity what is expected of them. Some employees respond to this sudden clarity by improving rapidly, which tells you everything about what was missing before. Others fail to improve because the gap between their capability and the role requirements is genuine, but by this point the employer’s ability to demonstrate that reasonable steps were taken is fatally compromised by the months of inadequate management that preceded the formal process.

Esbee’s training programmes address this directly, because the most cost-effective intervention in performance management is not a better formal process. It is better day-to-day management. A manager who can set clear objectives, give regular feedback, have difficult conversations with confidence, and escalate proportionately when performance does not improve will resolve most performance issues long before they reach the formal process. The ones that do reach the formal process will be genuinely defensible, because the manager has already taken the reasonable steps the tribunal expects.

The Role Design Nobody Questioned

There is a specific pattern that Esbee’s management consultancy team encounters with notable frequency: a role that was designed, often informally, for a previous phase of the business, that has been stretched to accommodate additional responsibilities as the business has grown, and that is now genuinely impossible for a single person to perform to the standard required.

The employee in this role is underperforming. Of course they are. They are doing three jobs, none of which was ever properly defined, with resources and support calibrated for the smaller, simpler role the position used to be. The performance management process identifies the gap between expectations and output, but it does not interrogate whether the expectations are realistic. The employee is managed out. A replacement is hired. The replacement encounters the same impossible role design and begins the same trajectory toward underperformance.

The cost of this cycle is not just the cost of two capability processes and two recruitment exercises. It is the cost of the management time consumed, the organisational disruption caused, the morale impact on the team that has now watched two people fail in the same role, and the continued absence of a properly designed role structure that would allow someone to succeed. The performance problem was never a people problem. It was a structural problem that expressed itself through people, and until the structure is fixed, the people will continue to fail.

The Performance Review Theatre

Annual performance reviews in most mid-market businesses are an exercise in mutual discomfort that generates minimal value. The manager fills in a form. The employee fills in a form. They sit in a room for thirty to sixty minutes, discuss the forms, and the manager assigns a rating that is calibrated less to actual performance and more to the manager’s desire to avoid a difficult conversation.

The result is a performance record that tells the business nothing useful. High performers receive the same rating as adequate performers because the manager does not want to create expectations of promotion or pay increase. Underperformers receive a rating that understates the problem because the manager does not want to trigger a formal process. The documentation is a work of fiction that, in the event of a capability dismissal, will be examined by a tribunal and found to contradict the employer’s position entirely.

A tribunal presented with two years of performance reviews rating the employee as “meets expectations” and a subsequent dismissal for performance will draw the obvious inference: either the reviews were inaccurate, which means the employer’s performance management was inadequate, or the performance was in fact adequate, which means the dismissal was unfair. Either way, the employer’s case is compromised by its own documentation.

The alternative is not more elaborate review processes. It is honest, continuous management. Regular conversations about performance, documented in real time, that capture what is actually happening rather than what the annual review form requires to be recorded. This produces a performance record that reflects reality, supports fair decision-making, and survives judicial scrutiny because it was produced as a genuine management tool rather than a compliance exercise.

The Uncomfortable Conclusion

Most capability processes are solving the wrong problem. The employee is underperforming, and the instinct is to manage the employee. But the cause of the underperformance is frequently not the employee. It is the objectives that were never clearly set, the management that was never competently provided, the support that was never adequately resourced, or the role that was never realistically designed.

A capability process that fails to address these root causes will either succeed in removing an employee who would have thrived under better management, costing the business a capable person and the expense of their replacement, or fail at tribunal because the employer cannot demonstrate the reasonable steps that the law requires.

The cost-effective intervention is not a better formal process. It is better management: clearer objectives, earlier feedback, trained managers, realistic roles, and honest documentation. The formal process exists for the cases that remain after all of these have been addressed. In most businesses, those cases are considerably fewer than the current volume of capability processes would suggest.

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If you’re about to start a performance process, or if a pattern of underperformance suggests the problem runs deeper than the individual, talk to us. Our HR services and training teams work with businesses on both the immediate case and the management capability that prevents it recurring.