Every business leader knows the pain of dealing with performance issues. By the time it gets to formal warnings or terminations, the problem has usually been brewing for months, sometimes years. And here’s the kicker: in most cases, the signs were there early on.

The real art of people leadership is learning to spot a potential people problem before it transforms into a costly, time-consuming performance problem. Think of it like seeing the first crack in the car windscreen – fixing it early avoids the potential of the whole thing shattering causing untold damage!

Why people problems are everyone’s business

It’s tempting to think of people problems as someone else’s issue to manage but the truth is, many of us ignore the warning signs to the detriment of our business and other team members.

Left unchecked, small issues can quickly spiral into:

• Lost productivity - work slows down or errors increase.
  
  
• Damaged culture - one disengaged person can pull others down.
  
  
• Increased turnover - unhappy employees either leave or drive others away.
  
  
• Customer impact - unhappy team members often show it in their service.

And beyond the business costs, there’s also the human cost. Employees who are struggling often want help long before things get “formal.” Spotting those early cues is not just good business, it’s good leadership.

What to keep an eye out for

In general, the early signs of a people problem often whisper before they shout. Patterns worth keeping an eye on include:

• Shifts in personality - A once-chatty employee goes quiet, or someone who was steady becomes volatile.
  
  
• Declining quality of work - Small mistakes creeping in, missed deadlines, or longer-than-usual turnaround times.
  
  
• Withdrawal from the team - They stop joining team lunches, meetings, or conversations.
  
  
• Conflict bubbles – Subtle eye rolls in meetings, passive-aggressive emails, or complaints from co-workers.
  
  
• Attendance patterns – More sick days, frequent “car troubles” or missed trains or, conversely, turning up but clearly checked out.
  
  
• Personal presentation – Maybe clothes aren’t ironed, hair is all over the place, dress standards may have slipped – all can be signs that things may not be good with this person.

A recent experience we had with a client working in the construction space occurred when a reliable site supervisor suddenly became snappy and started missing safety checks. A quick conversation revealed he was dealing with exhaustion from being rostered six days straight across multiple weeks. Addressing workload early prevented burnout, significantly reduced the risks that came from not managing the safety checks and the supervisor was back to his usual amiable self.

Personal vs workplace issues

One of the trickiest parts of leadership is working out what’s driving the behaviour. Is the challenge coming from inside the business, or is it something personal they’re carrying in?

• Personal issues: Health concerns, relationship breakdowns, caring responsibilities, or financial stress can affect even your best performers. You can’t solve these for them, but you can show empathy, explore flexibility, and connect them with professional help (EAP, GP, or applicable support service)
  
  
• Workplace issues: If multiple employees are showing similar stress signs, the issue is probably systemic. Common culprits include poor communication, unclear roles, unrealistic targets, or toxic behaviour going unchecked.

A good leader doesn’t necessarily need to diagnose the exact issue, just recognise it and start a supportive conversation that will help determine what can be done to either resolve or support the employee.

Avoiding the awkward

No one wants to feel ambushed or accused. The goal of an early conversation is to open the door, not slam it shut.  As a leader, you need to adapt your approach to the situation at hand but a simple example that you can use is as follows:

• Choose the right moment - Not when they’re under pressure or rushing out the door. A calm, private chat is best.
  
  
• Lead with curiosity, not blame - “I’ve noticed a change in how things are going - can we talk about it?” is way better than “You’re letting the team down.”
  
  
• Use specific examples – Instead of “You’re not committed,” try “I’ve noticed three deadlines were missed this month - is there something getting in the way?”
  
  
• Listen to hear – As a general rule, the real story only comes out once someone feels heard.
  
  
• Balance empathy with expectations – Show understanding but be clear: performance still matters. Support doesn’t mean that accountability is out the window.

Handled well, these conversations can actually build trust and strengthen the relationship. Handled poorly, they push people further into disengagement.

Why early intervention pays off

Catching a people problem early isn’t just about keeping harmony - it has real financial and cultural impact.

Hard savings include

• Turnover costs: Replacing an employee can cost up to 1.5–2 times their annual salary. It’s not just recruitment costs, its bedding in a new employee and allowing the time for them to get up and running.
  
  
• Productivity: Disengaged employees can cost businesses in lost output, missed deadlines and not meeting client expectations.  And let’s not forget longer term opportunities and damage to your brand for negative interactions with employees who simply don’t care about your business.
  
  
• Absenteeism: Stress-related absenteeism in Australia costs businesses billions each year.

Soft savings may not be easily translated into dollar values, but they are equally as important when it comes to your business:

• Improved culture: Teams thrive when issues are resolved quickly.
  
  
• Stronger engagement: Employees feel valued when their leader notices and cares.
  
  
• Reputation boost: A supportive workplace becomes an employer of choice, making recruitment easier.

Think of it like servicing your car.  Routine attention and maintenance costs far less than waiting for the engine to seize up right when you need your vehicle the most!

Escalate or refer?

Sometimes the right call is to acknowledge your limits as a manager. You’re not expected to be a counsellor, doctor, or financial adviser – it’s not your place and could cause further issues if you involve yourself in a matter that is well outside your understanding and experience.

Escalate internally if the issue relates to workplace behaviour, bullying, or systemic challenges.

Refer externally if the problem is personal (mental health, medical, financial). Encourage use of EAPs, or gently suggest professional support.

Your role is to connect the dots, not carry the whole burden.

Act, don’t ignore

Performance problems rarely happen overnight. They’re usually the end result of a people issue that was left to fester. By tuning in to early signs, having courageous (but caring) conversations, and knowing when to support versus when to refer, you can protect both your people and your business.,

And here’s the kicker, addressing problems early isn’t just damage control. It’s also an opportunity to show your team that you care, which builds loyalty, trust, and stronger performance over the long term.

Need help managing employee issues before they turn into performance headaches? Get in touch with HR Staff n’ Stuff today to chat about how tailored HR support can protect your people and your bottom line.