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5 Major Ways Underperforming Employees Impact Your Business


If you ask a business owner what they seek to find in an employee, many times, their answer will be “someone who goes above and beyond the expectation.” Never will you hear a business owner say they are looking for an employee who underperforms. However, at some point or another, every entrepreneur, business owner, and manager will need to address an underperforming employee.

With everything you’ve got to take care of in your business, it is tempting to let the employee slide. Especially, if their work is not disruptive to your business. However, the reality is the employee’s performance cause some sizable damage to your business in the long run. 

Underperforming employees will hurt every aspect of your business operations. You must stay vigilant and do your part to keep your team engaged, even though some employees may still fall through the cracks. In this article, we will look at 5 major ways underperforming employees impact your business.

5 ways underperforming employees will impact your business:

  • Reduced productivity
  • Loss of Sales Opportunities
  • Hurt Customer Satisfaction
  • Can Lower Team Morale
  • Damage Your Brand

1. Reduced Productivity

In a thriving business environment, productive employees will produce the output required by their company. Most settings want employees to attempt to achieve above and beyond what they are needed to. This shows the employee is engaged in the interests of the business. The underperforming employees are the individuals who are not meeting the specific outputs required. These employees will leave work unfinished or submitted late. Also, they usually aren’t relied on to complete a particular caliber of work. Reduced productivity is one of the top hurdles to be overcome when addressing business issues. 

Employees who can’t pull their weight affect the entire team’s morale. Not only that, but they also destroy the growth of the company. If work goes unfinished or deadlines are missed, the company will suffer and take hits in financial growth. On a large scale, a decrease in per-person productivity also affects the country’s GDP and economic growth. If you are experiencing reduced productivity, it will start a chain reaction of many other failures.


2. Loss of Sales Opportunities

When employees are not engaged, they tend to do the bare minimum. This means that they do not look for new sales opportunities, or go above and beyond when dealing with customers. This apathetic approach to business will no doubt cost your company sales.

It is essential as an employer to help foster these positive attitudes and make sure rewards for seeking and receiving sales are worth the while. When it is all said and done, the employees who underperform and sit in the background will cause your business to lose revenues.

Underperforming employees are the kings of not taking advantage of an opportunity. In vice versa, your successful employees will learn and seek out opportunities for sales. Their positive outlook at the workplace will translate into money made.

3. Hurts Customer Satisfaction

The customer is always right, a sentence that has haunted us for decades. Haunting or not, it is the truth. Customer loyalty and satisfaction are the core of a brand. Floundering employees will hurt the businesses’ productivity, and this will, in turn, hurt the customers. This may manifest in customers getting deliverables late or reduced quality. All workings of the business ultimately affect the customer.

And on the other hand, an underperforming employee who is not invested in the company’s growth may refuse to go the extra mile for a client. This will also dramatically affect the customer’s viewpoint of the business. If you notice your customer satisfaction rates are low, conducting surveys or tests with your employees to determine how they handle customer situations is an option. One can also use video or audio recordings to perform quality control of customer interactions.


4. Lower Team Morale

As aforementioned, a lack of productivity can also affect a team’s morale. When one team member is not pulling their weight, the other team members need to take on their share of the work. While this may be necessary at times due to absences, vacations, or other situations, this should not be the norm. The members of your team that are doing their jobs well may become frustrated with doing more work than they can handle. They also may grow to resent you for not taking appropriate action to correct the situation.

Another way an underperforming employee can lower morale is by way of a negative attitude. Employees who don’t share a vision with their employer and seem disinterested will shed this energy onto their coworkers. It is terrible if just one employee is underperforming, let alone an entire team. 

If slacking-off culture is not reprimanded, the results will reflect that. Instead, it is wise to make strict deadlines and enforce them. Holding a realistic yet distinct standard is an excellent way to keep employees engaged and striving to reach goals. You want your employees to feel excited about the company’s journey. Not moping around and maybe finishing their paperwork by 5.


5. Damage to Your Brand

A brand’s image takes years to build and can be destroyed in a few days. It is the most valuable asset for a business, yet equally as fragile. It is in your utmost interest to protect that image. Consumers will need interactions with your brand to be positive and satisfying to build trust. For example, in 2005, Chipotle rose to fame with their build-your-own quick-service Mexican American-style food. Their brand took a fatal hit in 2015 when a slew of restaurants experienced an E-coli and norovirus outbreak. A few headlines forever changed the image of Chipotle. Many factors contributed to the issues at Chipotle; could underperforming employees be one of them? 

Chipotle believes that the meat they received was contaminated and stated that the food was improperly handled by employees, further spreading the contagion. Fewer people may have gotten sick if the employees dealt with the meat to protocol and used proper sanitizing guidelines. More proof that underperforming employees will affect the livelihood of every facet of the business, especially your brand.

What to Do When an Employee is Underperforming

Underperforming employees is an issue all leaders need to take seriously. So, what can be done to help the underperforming employee? First, it’s important to remember that every employee has the potential to improve. Their improvement will inevitably contribute to the success of the company. It’s important to take action as early as possible so you can keep your business growing strong.

You then want to meet with the employee to discuss their performance. Present to them what you have been observing. But, you also want to be open to hearing their responses. The reason for their underperformance may be something that has little to do with the job. Be sensitive to what they are going through in order to help them feel heard. 

From there, you may want to create a plan of action. This may include:

  • Identify the specific areas of performance that need improvement.
  • Develop specific, measurable, and achievable goals for the employee to work towards.
  • Set up regular check-ins and follow-ups.

During this process, do what you can to motivate your underperforming employee. This will ensure that they can continue improving without losing momentum. For more on some strategies that will help, check out our article What to Do When an Employee is Underperforming.



There are many ways to handle employees who are struggling with their work. In the case of Chipotle, not just the employees can be blamed, but management should also take accountability. Management must take notice and hold their employees to a specific standard. Employees who do not meet your criteria must be reassessed, trained, or reprimanded to improve work performance. In the worst-case scenario, it may be time to let them go.

Elicia Ronto on Linkedin
Elicia Ronto
Team Writer: Elicia Ronto, is a 30 year-old self-employed safety coordinator and part-time freelance writer. In October 2022, she graduated with her bachelors degree in business administration. Elicia is also a mother to a rambunctious 3 year-old girl and spends any extra time she has cleaning, reading, hitting the gym, or going on small weekend trips. Her goal is to someday pursue freelancing full time.

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Find Your Way · Grow Your Business · Leading Your Team · Productivity · Sales · Your Mindset

Team Writer: Elicia Ronto, is a 30 year-old self-employed safety coordinator and part-time freelance writer. In October 2022, she graduated with her bachelors degree in business administration. Elicia is also a mother to a rambunctious 3 year-old girl and spends any extra time she has cleaning, reading, hitting the gym, or going on small weekend trips. Her goal is to someday pursue freelancing full time.

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