Why Employees Underperform — It’s Not Always Their Fault

“If you think your underperformers are the problem, look closer — it might be you.”

When conducting a Topgrading or any rigorous talent assessment, leaders often focus on categorising people — from awesome to unacceptable performers.

That can bring clarity. But it can also create blind spots.

What if the issue isn’t the person?
Or at least, not only the person?

Performance happens in context — within systems, teams, processes, and cultures. A so-called “C player” in one organisation may be an “A player” in another.

If you diagnose underperformance without examining the environment, you’re not assessing talent — you’re guessing.

1. The Topgrading Trap — Focusing Solely on the Individual

Topgrading is a powerful method for evaluating and retaining high performers. But its lens is often person-centric: past performance, competencies, and fit.

The reality? Performance never happens in a vacuum.

A brilliant employee in a broken system will look average.
An average employee in a strong system can thrive.

How to respond:

• Use Topgrading as a starting point, not the whole picture.
• Review team dynamics, structures, and clarity of accountability.
• Calibrate assessments across departments to spot systemic blockers.

Takeaway: Topgrading reveals who’s struggling; context reveals why.

2. It’s the Manager — Leadership as a Multiplier or Divider

Gallup’s research is clear: 70% of the variance in engagement is driven by the manager.

In other words, poor leadership can turn top performers into disengaged underachievers.

When diagnosing underperformance, ask:

• Does the manager provide clarity and feedback?
• Do they coach for strengths or manage for compliance?
• Does the team feel psychologically safe?

Sometimes, what looks like an employee problem is actually a leadership capability problem. 

How to respond:

• Train managers in coaching and strengths-based leadership.
• Use 360 feedback to surface blind spots.
• Make leadership development non-negotiable in performance management.

Takeaway: People don’t quit companies — they disengage from managers.

3. Process Deficiency — When People Are Failing Systems, Not the Other Way Around

Even the best people will fail inside broken processes.

If expectations aren’t documented, roles unclear, or SOPs outdated, underperformance becomes inevitable. 

Ask yourself:

• Are workflows clear, current, and standardised?
• Do people have the tools and training they need?
• Is accountability clear, or does work “fall through the cracks”?

How to respond:

• Map key workflows and identify friction points.
• Co-create or update SOPs with the team.
• Use dashboards or checklists to enable self-management.

Takeaway: High-functioning systems turn average performers into stars.

4. Culture — The Silent Saboteur of Potential

Culture is the invisible operating system of performance.

When it’s toxic or misaligned, even talented people disengage.

Watch for signs:
🚩 Fear-driven behaviour or “cover your back” politics.
🚩 Information hoarding instead of collaboration.
🚩 Passive resistance to change.

How to respond:

• Conduct regular pulse checks or culture surveys.
• Reinforce collaboration and psychological safety visibly.
• Recognise and reward values-aligned behaviour, not just output. 

Takeaway: Culture doesn’t just eat strategy — it quietly digests potential.

5. Right Person, Wrong Role — The Fit Problem

Sometimes the issue isn’t capability — it’s alignment.

Great people fail when placed in roles that don’t match their strengths or cognitive style. 

Ask:

• Does the role leverage their top three strengths?
• Is the work energising or draining?
• Could a lateral move unlock their potential?

How to respond:

• Use tools like CliftonStrengths or Working Genius to assess natural preferences.
• Redesign roles where possible to align with strengths.
• Encourage lateral movement, not just promotion.

Takeaway: Misalignment masquerades as underperformance.

From Blame to Diagnosis — The Leadership Mindset Shift

In performance reviews, it’s easy to point fingers at individuals. But lasting improvement comes from moving beyond blame to diagnosis.

When you examine people, leadership, systems, culture, and fit, you stop treating symptoms — and start solving root causes.

Topgrading remains a valuable tool. But combined with a systemic lens, it becomes a performance diagnostic powerhouse — revealing not just who is underperforming, but why.

Before you label someone a “low performer,” ask yourself: What else could be true?

At Strategy & Execution Advisors, we help leadership teams uncover the hidden causes of underperformance — and build the systems, culture, and leadership capability to unlock talent.

Contact tedb@strategyandexecution.com.au for a confidential conversation about strengthening your talent strategy.

Diagnose performance — don’t just judge it.

TED BONEL, SCALING UP PRACTITIONER – STRATEGY & EXECUTION BUSINESS ADVISORS

Are you looking to scale your business and execute strategy with clarity and impact? I help CEOs and founders turn big ideas into real-world results, guiding small to mid-market companies through tailored strategic insights that drive growth.

My expertise lies in simplifying complexity – bridging high-level strategic frameworks with the practical realities of running a business. Unlike many consultants who focus solely on theory or execution, I specialise in both—translating strategy into actionable, transformative steps that deliver lasting results.

Contact me at tedb@strategyandexecution.com.au to schedule a free 30-minute discovery meeting.

ABOUT STRATEGY & EXECUTION

For over 20 years, Strategy & Execution has supported leaders and organisations in developing and executing winning strategies. We provide expert facilitation, executive education, and hands-on consulting to help businesses refine their strategic direction and implement it effectively.

Using proven methodologies like Scaling Up, E-Myth Mastery, Outthinker, and more, we challenge conventional thinking and equip organisations with the tools to accelerate growth. Our approach is dynamic—combining deep business experience with practical execution. We don’t just advise; we roll up our sleeves and work alongside you to make strategy happen.

If you’re preparing for a strategy development or execution challenge and are committed to creating real value, we’d love to hear from you. Learn more about our work or upcoming workshops