How to Discipline Employees and Correct Performance Problems

Transparent, well documented and fairly applied workplace rules can protect a small business from a lawsuit lodged by a terminated employee. And, while it may not be pleasant or easy, when small business owners provide employees with critical but hard-to-hear performance information they are often rewarded with increased productivity and engagement, according to the "Harvard Business Review." Finally, it is cheaper to redirect an employee than to hire a new one.


Document company rules and the disciplinary sequence. Communicate these rules to all employees, and use multiple channels such as postings on a company website, a printed copy of an employee handbook or flyers posted in lunchrooms to ensure that all employees have access to the information.


Conduct regular performance reviews with employees and detail expectations by providing measurable and achievable goals. Explain both the rewards for meeting the goals and the consequences for failing to reach the targets.


Communicate a verbal warning privately and quickly to an employee who violates a company rule. Document the infraction with the employee's name, date and time and place a copy in the employee's personnel file.


Provide a written warning to an employee who violates the same rule a second time. Like the verbal warning, the notice should be delivered privately and shortly after the infraction. A copy of the written warning should be placed in the employee's personnel file.


Proceed with disciplinary action upon the third violation of the same company rule. The action taken will depend on the disciplinary consequences created by the company and communicated to employees. The consequences should reflect the infraction but could include retraining, probation, demotion, loss of hours or termination.