What to Do When a Manager Is Not Performing (HR Guide NZ)

A single manager accounts for at least 70 percent of the variance in employee engagement scores across business units, according to data from Gallup. When that manager is underperforming, the ripple effect does not just slow down a department; it can destabilise an entire organisation.

For HR leaders and business owners in New Zealand, realising that a direct report in a leadership position is missing the mark is a heavy burden. This is one of the most common challenges HR faces when dealing with an underperforming manager. You are no longer just dealing with a missed deadline or a technical error. You are dealing with the person responsible for the culture, output, and retention of a whole team. The feeling of frustration is often compounded by a sense of isolation. You hired this person to take a load off your shoulders, yet here you are, spending your evenings fixing their mistakes or smoothing over ruffled feathers within their team.

Managing an underperforming manager requires a different set of tools than managing a frontline employee. The stakes are higher, the legal landscape in New Zealand is specific, and the interpersonal dynamics are far more complex. This guide explores how to navigate this challenge while protecting your business and your people.

The Direct Answer: What to Do When a Manager Is Not Performing

When a manager is underperforming, the priority is to diagnose the root cause before taking formal action. In most cases, the issue is not capability alone but a combination of clarity, skill, and behaviour. A structured approach that includes diagnostic conversation, clear expectations, and targeted development such as structured management training programmes will resolve most performance issues without replacement. If the manager is unwilling or unable to improve, a formal performance process must follow.

Signs of an Underperforming Manager (What HR Should Look For)

A manager not performing rarely shows up as one dramatic failure. It usually appears as a pattern that spreads across delivery, culture, and retention. If you suspect you have an underperforming manager or a poor performing manager, look for these early signals. If you need a more detailed process view, our performance management training workshop covers practical steps for setting expectations and lifting follow-through.

1. Missing deadlines and stalled execution. Work drifts, decisions sit in limbo, and the team starts waiting for approvals that never come.
2. Poor team engagement. You see lower energy in meetings, less ownership, and more silence or side conversations because people stop believing action will follow.
3. High turnover or rising intent to leave. Good people start scanning for exits when leadership performance issues feel normalised and unaddressed.
4. Lack of direction. Priorities change weekly, expectations are unclear, and the team cannot explain what “good” looks like this month.

Treat these signs as diagnostic inputs. They help you move quickly from frustration to facts, which is critical when you need to address performance fairly and effectively.

The High Cost of Managerial Failure

Ignoring a manager who is struggling is a high-risk strategy. In the New Zealand context, the Employment Relations Act requires employers to act in good faith, but it also provides the framework for addressing performance issues. If left unchecked, a non-performing manager creates several distinct types of organisational debt.

First, there is the operational drag. Decisions are delayed, projects stall, and the manager becomes a bottleneck rather than a catalyst. This leads to a loss of momentum that can take months to recover. Second, there is the cultural erosion. When a team sees their leader failing to meet standards, their own commitment to excellence begins to fade. If the manager resorts to micromanagement to hide their own insecurities, the best talent will be the first to walk out the door.

Finally, there is the significant financial and legal risk. Recruiting a new manager in the current New Zealand market is expensive. Furthermore, if an underperformance process is handled poorly, the business faces the risk of a personal grievance claim. The cost of failure is not just the manager’s salary; it is the collective loss of productivity across their entire team and the potential legal fees that follow a messy exit.

The Performance Pivot Framework

To address these issues effectively, Aptitude Management New Zealand recommends using a structured approach called The Performance Pivot Framework. This repeatable process ensures that you meet your legal obligations of good faith while giving the manager every opportunity to succeed or, if necessary, providing the evidence required for a formal exit.

Phase 1: The Diagnostic Dialogue

Before jumping to conclusions or formal warnings, you must identify the root cause of the performance gap. Leadership performance is rarely about a lack of effort; it is often about a lack of clarity, resources, or specific leadership skills.

The Diagnostic Dialogue involves a private, informal conversation where you present objective facts rather than subjective feelings. Instead of saying, your team seems unhappy, you might say, I have noticed that three of your direct reports have missed their KPIs this month, and turnover in your department has increased by 15 percent.

The goal here is to determine if the manager can self-govern and identify their own shortcomings. Are they aware of the impact they are having? Do they have the tools they need? Sometimes, a manager is struggling because the business has shifted its strategy and they have not been equipped with the new skills required to lead in a different direction.

Phase 2: The Alignment Agreement

Once the gaps are identified, you must move from a casual conversation to a structured Alignment Agreement. This is not yet a formal Performance Improvement Plan (PIP), but it is the precursor. In this phase, you define exactly what success looks like.

This agreement must cover specific, measurable outcomes. If the issue is communication, the agreement might specify that the manager will hold weekly one-on-one meetings with all staff and provide a structured summary report. If the issue is strategic output, it might define specific project milestones.

During this stage, it is vital to offer support. This might include enrolling them in targeted management courses or providing a mentor. At Aptitude Management, we find that many managers benefit from learning how to provide better feedback themselves, which is why our giving employee feedback workshop is often a key part of a performance recovery plan.

Phase 3: The Momentum Monitor

The final phase of the framework is a period of intense, scheduled observation. You cannot set an Alignment Agreement and then walk away. You must meet weekly to review progress. This provides the manager with the guardrails they need to stay on track and gives you the documentation necessary if the situation does not improve.

If the manager shows improvement, the meetings can become less frequent. If they do not, you have a clear, documented trail of support and expectations that will be essential if you need to move into a formal disciplinary process under New Zealand law.

Case Study: The Silent Silo in Christchurch

A medium-sized engineering firm in Christchurch faced a crisis when their Operations Manager, David, began to underperform. David was well-liked, but his department had become a silo. Information was not flowing to other parts of the business, and several junior staff had raised concerns about a lack of direction.

The Managing Director used The Performance Pivot Framework. During the Diagnostic Dialogue, it became clear that David felt overwhelmed by the rapid growth of the company and had retreated into technical tasks he felt comfortable with, resulting in a hands-off approach to leadership that his team perceived as a lack of care.

Through the Alignment Agreement, David was tasked with improving team communication and delegating technical tasks. The company supported him by sending him to a performance management training workshop in Christchurch.

The Momentum Monitor phase lasted three months. With the new tools David acquired, he was able to restructure his weekly routines and rebuild trust with his team. By the end of the period, the department’s output had increased by 20 percent, and David reported feeling more confident in his role than ever before.

Navigating the Legal Landscape in NZ

In New Zealand, the concept of procedural fairness is paramount. Even if a manager is clearly failing, you cannot simply dismiss them. You must follow a process that is fair and reasonable in all circumstances.

This includes:

1. Investigating the issues thoroughly.
2. Raising the concerns with the manager and giving them a real opportunity to respond.
3. Considering their explanations with an open mind.
4. Providing them with a reasonable opportunity and support to improve.

If you reach the point where a formal PIP is required, ensure that it is detailed and that the consequences of failing to meet the standards are clearly explained. You might also consider whether a change in role is a viable option, though this must be handled with extreme care to avoid claims of constructive dismissal.

When Training Works vs When It Won’t

Training can be a practical reset for leadership performance issues, but only when the underlying conditions are right. Use this as a decision filter before you invest time, money, and political capital.

Training works when:

1. Willingness is present. The manager owns their impact, engages in feedback, and can self-govern rather than defend or deflect.
2. The issue is skill or clarity. The manager needs stronger routines, clearer expectations, better communication tools, or more capability in core leadership mechanics.

Training won’t work when:

1. There is behavioural resistance. The manager refuses accountability, blames others, or performs “compliance” without real change.
2. There is values misalignment. Their behaviours consistently conflict with your organisation’s standards, even after expectations are made explicit.

If this pattern is showing up across multiple teams, it is rarely an isolated performance issue. It is a systemic leadership capability gap that requires structured development, not individual correction.

Strengthening the Leadership Pipeline

Sometimes, the best way to handle an underperforming manager is to prevent the situation from occurring in the first place. This involves ongoing professional development that keeps leadership skills sharp.

For organisations in Auckland or Wellington, accessing local workshops can provide a much-needed reset for a management team. Whether it is a communication with DISC workshop to improve interpersonal dynamics or resilience training for managers to help them handle high-pressure environments, proactive training is always more cost-effective than reactive performance management.

At Aptitude Management, we advocate for a 3-Phase Learning Transfer framework. This ensures that when a manager attends a course, the learning does not end when they leave the room. By providing support Before, During, and After the training, we help ensure that new behaviours are integrated into their daily work, significantly reducing the likelihood of performance dips.

If you are repeatedly dealing with a manager not performing across different teams or appointments, start by mapping expectations and capability, then apply a structured leadership development pathway to lift performance quickly and consistently.

When Improvement Does Not Happen

Despite your best efforts and the provision of support, there will be times when a manager simply cannot meet the required standard. In these cases, the focus must shift to a dignified and legally compliant exit.

Throughout this process, maintain your professional tone and adhere to the values of your organisation. When a manager exits, the remaining team will be watching closely to see how the situation was handled. A fair, firm, and transparent process will help maintain the morale of the rest of the staff and protect your employer brand.

Addressing leadership performance at this level is never simple, but by using a structured framework and focusing on objective outcomes, you can transform a difficult situation into an opportunity for organisational growth.

Trainer’s Perspective

From a training perspective, manager underperformance is rarely about a lack of desire to do a good job. Most often, it is a result of a manager losing their way in a changing environment or never having been taught the specific mechanics of leadership. When we work with organisations to remediate performance issues, we focus heavily on the 3-Phase Learning Transfer framework. This ensures that the manager has the support they need to actually implement change back in the office. It is one thing to know what to do; it is quite another to do it when the pressure is on. Our goal is always to bridge that gap and turn a struggling leader into a high-performing asset for the business.

The Aptitude Team

Aptitude Management New Zealand is a leading provider of professional development and management training. We specialise in helping organisations across New Zealand build capable, confident leaders through high-impact workshops and proprietary learning transfer strategies. Our mission is to provide managers with the practical tools they need to excel in the modern workplace.