Small business owners need to get top performance from their employees on a daily basis or risk losing commerce and revenue. If an employee is performing poorly or is unsuited to his tasks, it may be time to demote or reassign him to a role for which he is better suited. Consider setting new goals with the employee following the demotion and strategizing ways to help him improve his performance in the future.

Begin documenting instances of poor performance, and the corrective steps you’ve taken to change the behavior, as soon as you become aware of the problem.

Schedule a private meeting with the employee to discuss the demotion. The end of the day is preferable, as it allows the employee the opportunity to go home and digest the information without having to struggle through the remainder of the workday.

Begin your discussion by noting your appreciation for the positive qualities the employee brings to the company. Highlight specific contributions or achievements that have benefited the company.

Move the discussion to the poor performance issues with a phrase such as, “Unfortunately, there are a number of areas where your performance is consistently lacking.”

Outline the specific problem behaviors the employee is exhibiting. Refer to your documented notes as necessary. Explain the negative impact the poor performance has on the business, and on colleagues. For example, “You have missed the newsletter publication deadline every month for the past six months. This puts added pressure on the graphics team and it costs up 25 percent more to print because of rush charges.”

Highlight the warnings the employee has been give regarding his poor performance, such as, “Twice we altered the editorial calendar to give you more time and both times you missed the deadline regardless. We discussed the problem in depth and you assured me you would manage your time better but that has failed to happen.”

Explain to the employee that you still believe he is a valuable asset to the company but is better suited for a less high-profile role. Outline the new responsibilities you are assigning to him and use the term “reassignment” rather than “demotion,” which has a negative connotation. You could say, “I would like to reassign you from your editorial oversight position to a copy editing position. I think you’ll be a great fit for this role and you won’t have the same level of pressure.”

Allow the employee the chance to respond. He may dispute or argue your points or decide he would rather quit than be demoted. He could also admit to his poor performance and thank you for the opportunity to continue with the company in a lesser role. Either way, give the employee the time to speak.

Outline changes to responsibilities and compensation levels that come with the demotion. If you feel the employee still has good potential, you may opt to offer him the chance to interview for elevated positions again in the future.


Be proactive in heading off poor performance issues by creating job descriptions that detail the expectations of each position in your company. In the event an employee is performing poorly in her role, counsel her with the job description and outline the duties she is expected to complete as part of the job. Conduct regular performance evaluations to let employees know what they need to improve performance. Consider providing ongoing professional development or training opportunities to help employees learn new skills and become better contributors to your business.