Every business owner eventually asks the same question: is this misconduct or performance? Managing employee behaviour and performance comes with its own set of challenges, affecting productivity, trust, workplace culture and your ability to focus on other important business matters. So, what's the best way to manage these issues? The answer isn't always straightforward, but there are some guiding principles that can help.

Misconduct vs Performance: What's the Actual Issue?

You can usually categorise most employee issues as either behavioural or performance-related. Understanding the difference is important because it attracts different management approaches.

Behavioural issues or misconduct occur when an employee breaks workplace rules or fails to meet expected standards of conduct which could include alignment with your company values. Performance issues relate to an employee's ability to carry out their role and achieve the required outcomes.

Before taking action, ask yourself: Am I dealing with a behaviour problem or a performance problem? Answering this question early can save time, guide your decision-making, and help you choose the most effective way to address the issue.

How Do I Manage Misconduct?

There is no ‘one glove fits all’ approach to managing behavioural or misconduct issues. It really comes down to the specific circumstances and the seriousness of the unacceptable behaviour or conduct, as well as the person or people involved.

You might approach a behaviour issue in a similar way in terms of process. But how you handle it, the language you use, and the level of formality may also depend on the employee's personality. I have a saying ‘there’s no need to give a firm push when a gentle nudge will do the job’; however, likewise, if the person won’t respond to a gentle nudge or miss it completely, you may need a firm push.  

Dealing With Minor Behavioural Issues?

There’s no need to have a conversation – just tell the employee what you’ve noticed and confirm the expectation. It’s a simple statement that we often call a ‘shoulder tap’. Not a physical one of course, but in your mind, you’re just course correcting. No meeting, no discussion, just a simple correction. For example:

Sally, please be mindful of your language. We don’t swear here at XXX. OR

Peter, you just went out to the warehouse without wearing your hi vis vest. Please don’t do that again. It’s an important element of our safety.

Dealing With Less Serious Misconduct?

For this example, we’re going to use being late to work as the issue. The employee has been late on a couple of occasions over the last week.

1. Have the conversation early

Don't ignore the issue and hope it will resolve itself. Have a respectful conversation with the employee and explain what you've noticed. Clarify any workplace expectation or policy that applies and give them the opportunity to share their side of the story.

2. Listen to and consider their explanation

There may be a genuine reason behind the change in behaviour. For example, the employee may have recently taken over school drop-off duties because their partner has been unwell. Understanding the circumstances can help you respond appropriately.

3. Reaffirm expectations and look for practical solutions

If a temporary situation is causing the lateness, consider ways to support the employee while still meeting the business needs. For example, you might temporarily adjust their start and finish times. At the same time, it's important to be clear that ongoing lateness is not a long-term solution and that regular  time attendance expectations apply

4. Keep a record of the discussion

After the conversation, make a brief file note outlining what you discussed. Include the date, the issue raised, the employee's explanation, any policies or expectations discussed, and any agreed actions moving forward. Good documentation helps provide clarity and ensures there's a record if you need further discussions.

By addressing issues like this early, managers can often resolve concerns quickly and informally, while maintaining positive working relationships, preventing small issues from becoming larger ones and building trust.

What If the Issue Is of a More Serious Nature

Sometimes, the behaviour or conduct in question is far more serious and may require a formal disciplinary process.

For example, you may have two employees who become involved in a physical altercation at work, or you may have reason to believe an employee has stolen money from the cash register. In situations like these, it can be tempting to jump straight to a wanting to issue a written warning or you may even consider terminating an employee’s employment. While those outcomes may ultimately be justified, it is important not to rush to a conclusion.

Before you determine any disciplinary outcome, you need to ensure the process you take to get there is procedurally fair. This means gathering the relevant facts, conducting a proper investigation, and giving the employee an opportunity to respond to the concerns before you make any decision."

As mentioned earlier, you need to assess every behaviour and conduct issue on its own merit. The seriousness of the alleged conduct, the potential risks involved, and the available evidence will all influence how you manage the matter.

In some cases, it may be appropriate to suspend an employee while you carry out an investigation. For example, the employees involved in a physical altercation may pose an ongoing health and safety risk to others in the workplace. Similarly, for the employee that has potentially stolen, there may be concerns about further theft occurring while the investigation is underway.

Suspending an employee does not mean disciplinary action. It's rather a temporary measure to manage risk, protect the integrity of an investigation and ensure a safe workplace while you establish the facts. In the event that you do need to suspend an employee in ordinary circumstances you may still need to pay them.

In our two examples (physical altercation and theft), both have warranted suspension but for very different reasons.

Once you've managed any immediate risks, the focus shifts to understanding what happened and following a fair process to determine the facts and give the relevant employees an opportunity to speak up.

In general, the following steps should be followed:

1. Assess the circumstances

Every issue is different. Some situations may be relatively straightforward. In our example of employees getting into a physical altercation, you may have received a first-hand witness statement from employees, and you won't need further investigation. Other situations such as theft, may require further investigation before you can draw any conclusions. Taking the time to assess the circumstances will help determine the most appropriate next steps.

2. Investigate

If you need further information, conduct an investigation that is fair, thorough and impartial. This may involve reviewing CCTV footage, speaking with witnesses, or examining other relevant records and reports. Not every matter will require a formal investigation, but where the circumstances are unclear, a thorough investigation is often essential.

3. Clearly define the allegation

Before meeting with the employee, be clear about what conduct is you're alleging based on what you know. Allegations should be objective, specific and supported by relevant details. Include important information such as dates, times, locations, and any policies or workplace standards the employee may have breached. A well-constructed allegation is not accusatory but allows the employee to properly understand the concerns and provide a meaningful response.

4. Give the employee an opportunity to respond

One of the most important elements of procedural fairness is giving the employee an opportunity to tell their side of the story before you make any decisions on disciplinary or other actions you might consider. Their response may provide valuable context or uncover information that changes your understanding of the situation.

For example,  the employee who allegedly stole, may explain that money occasionally becomes lodged behind the cash register drawer. With that information, you can investigate further before reaching a conclusion. In fact, this exact scenario arose in a matter I managed, and we ultimately found the 'missing' cash at the back of the register.

5. Consider all the information

Once the employee has had an opportunity to respond, step back and consider all of the available information. This includes the evidence gathered, the employee's explanation, any relevant workplace policies, the surrounding circumstances, and any mitigating factors.

At this stage, you need to determine whether you can substantiate the allegation. In some situations, you may not have any witnesses or evidence and you may have only a ‘he said / she said’ situation. In all matters, you can make a decision on the balance of probabilities. Put simply, based on all the available information, what is the most likely version of events?

6. Determine the appropriate outcome

Only after you complete this process should you decide what action, if any, you need to take.

If you can't substantiate the allegation, disciplinary action may not be appropriate. However, the situation may still present an opportunity to improve workplace processes. In the example of the alleged stolen cash, while we didn't find any misconduct had occurred, the incident highlighted the importance of checking behind the cash drawer as part of end-of-day procedures.

Where you've substantiated misconduct, the appropriate outcome will depend on the seriousness of the conduct and the surrounding circumstances. Outcomes can range from coaching and retraining through to formal warnings or, in the most serious cases, termination of employment.

There is rarely a one-size-fits-all approach. The key is ensuring that any outcome is reasonable, proportionate and supported by the facts.

Here are a few practical tips for managing misconduct effectively:

• Have clear policies in place and ensure employees are aware of them. You can't expect people to meet standards you haven't told them about. Make sure your workplace policies are accessible, communicate them regularly, and apply them consistently.
  
• Provide employees with the right training. Clear training helps employees understand their responsibilities, workplace expectations, and acceptable standards of behaviour. It also reduces the likelihood of unintentional breaches occurring.
  
• Address issues early. Minor concerns rarely improve when they're ignored. Having an early conversation can often resolve an issue before it develops into a more serious problem requiring formal action.
  
• Create a culture where employees feel comfortable speaking up. When you encourage employees to raise concerns, managers gain greater visibility of potential issues and can address them before they escalate. Open communication is often one of the best risk management tools a business can have.
  
• When issues are more serious, follow a fair and structured process. Not every matter can be resolved informally. Where misconduct is significant or ongoing, it's important to take a more formal approach and follow procedural fairness throughout the process.

Ultimately, effective misconduct management is rarely a black-and-white approach. But when managed well, it helps create a safer, more productive workplace where everyone understands what's expected of them and where trust builds naturally.

How Do I Manage Poor Performance?

Managing performance is very different to managing misconduct. While misconduct focuses on an employee's behaviour, performance relates to their ability to meet the requirements and expectations of their role.

To effectively and proactively manage performance, it's important to have clear measures in place that help you identify when an employee is meeting expectations and when they may be falling short. For more on your obligations around managing performance, see the Fair Work Ombudsman's guidance on performance in the workplace. These measures might include key performance indicators (KPIs), client feedback, quality of work, productivity measures, or even day-to-day observations.

As with most employee issues, the earlier you address performance concerns, the easier they are to resolve. Taking a proactive approach not only helps prevent issues from escalating but also helps build trust and ensures employees know what's expected of them.

The first question to ask yourself when dealing with an underperformance issue, is:

Is this a skill issue or a willingness issue?

How can you tell?

Well, if the employee has demonstrated the ability to perform the task or meet the expectations in the past – they have the skill, so it can only be a willingness issue. (We've written more on telling the two apart here.) They know how, but for some reason, are not willing to perform the way you require. This is an employee issue to fix. You may start with a ‘gentle nudge’ when you see the performance slipping, or if not caught early enough, you may need to introduce a performance Improvement Plan (PIP) to get the employee back on track.

A PIP is a structured process that clearly identifies areas where performance is falling short, sets specific and measurable improvement goals, and establishes a timeframe for achieving those goals. It should also include regular check-in meetings to review progress, provide ongoing support, and ensure expectations remain clear. Importantly, a PIP also outlines the potential consequences if the required level of improvement is not achieved within the agreed timeframe – and yes this may include disciplinary action!

If it’s a skill issue, then the employee needs more training. That’s the manager’s issue to fix. Go back to the drawing board and ensure the employee understands the task or performance standard, can demonstrate doing it correctly and fully understands the expectations. Once the skill or knowledge has been demonstrated – the only reason for them to not do it is because they’re not willing to do so. So – we start a performance management process. 

To prevent performance issues from cropping up, regardless of whether they are skill or willingness issues, there are proactive things a leader can do:

• Provide the right training and resources so employees have the skills and tools they need to perform their role successfully.
• Provide job clarity so employees are aware of responsibilities, expectations and accountabilities.
• Provide regular constructive feedback or coaching
• Provide positive feedback regularly – and don’t just focus on congratulating or providing positive feedback on outcomes; always encourage effort as well
• Set clear performance expectations that are specific, measurable, achievable and relevant.
• Conduct regular 1:1’s to discuss progress, achievements and areas for improvement.

Whether you're managing misconduct vs performance, addressing issues early is always the best approach. It’s also important to remember that different issues and different people require different approaches. It can be tricky and overwhelming at times when navigating this sort of stuff but that is where our team is here to help!

If you would like any support managing a specific issue OR if you would like to undertake some leadership training on this topic to upskill your managers, we’re always here to help.