Performance management and difficult conversations

Most team members want to do good work, and most performance problems have causes that a project manager can help fix: unclear expectations, missing skills, poor tools, overload or personal difficulties. Sometimes, though, a team member's performance or behavior does not improve despite support, and the project manager must address it directly. These conversations are among the hardest parts of leadership. Avoided, they damage the project and the rest of the team, who see poor performance tolerated. Handled badly, they damage the person and the relationship. This lesson covers how to set expectations, give feedback, diagnose performance problems, hold difficult conversations and work within the organizational and legal framework, especially in a matrix where the project manager may not be the person's line manager.

Performance starts with expectations

People cannot meet expectations they do not know. Before judging performance, check that expectations were clear: the role and responsibilities (the RACI from lesson 4), the quality standard (for example the definition of done), the deadlines and the behavioral norms in the team charter. Many apparent performance problems turn out to be misunderstandings about what was expected.

Good expectations are specific and observable. "Be more proactive" is hard to act on; "flag any task likely to slip by more than a day at the next stand-up" is clear. For knowledge work, expectations often cover both results (what is delivered) and behaviors (how it is delivered, such as collaboration and communication).

Feedback as a continuous practice

Feedback works best as a regular, two-way habit rather than an annual event. Frequent, small pieces of feedback, both positive and constructive, keep people on course and make occasional difficult messages less shocking. A common guideline is to give far more positive than corrective feedback, not as a formula but because recognizing what works shows people what to repeat.

Several models help structure feedback so it is specific and free of blame.

Feedback should flow in all directions. Project managers should ask for feedback on their own leadership ("What should I do more of, or less of?") and act on it visibly. Retrospectives provide a team-level feedback loop, and some teams use peer feedback or 360-degree reviews to give people a fuller picture.

Diagnosing performance problems

When performance falls short, resist the urge to conclude that the person is lazy or incompetent. Diagnose first. A widely used approach asks whether the problem is one of ability (can they do it?), motivation (do they want to?) or environment (does the situation allow them to?). Thomas Gilbert's behavior engineering model makes a similar point: most performance problems stem from the environment, such as information, resources and incentives, rather than from the individual.

Holding a difficult conversation

Difficult conversations are those where stakes are high, opinions differ and emotions run strong, the definition used by the authors of Crucial Conversations. On projects they include telling someone their work is not good enough, addressing behavior that is upsetting the team, or telling a person they are being moved off the project. A structured approach makes them more likely to go well.

• Prepare: get the facts, decide the outcome you want, consider the other person's perspective and choose a private setting and time. Do not do it by email.
• Open clearly: state the purpose early. Long small talk before bad news increases anxiety.
• Describe the facts: use SBI or a similar model. Stick to observable behavior and results.
• Listen: ask for their perspective and genuinely consider it. You may learn something that changes your view.
• Agree the problem and a plan: what will change, what support you will provide, how progress will be measured and when you will meet again.
• Document: write a short summary of what was agreed and share it, especially if the issue may need escalation later.
• Follow up: recognize improvement promptly; if there is none, move to the next step.

Some conversations are about behavior rather than results: a team member who belittles colleagues, ignores agreed processes or behaves unprofessionally with stakeholders. The same structure applies, but be clear that the behavior must change. If the behavior could amount to harassment, discrimination or a safety or ethics breach, follow organizational policy immediately and involve human resources (lessons 4 and 8).

Performance management in a matrix

In functional and matrix organizations, team members usually report to a functional manager who conducts their formal performance reviews, decides pay and handles discipline. The project manager's role is to provide input and to manage performance on the project. Good practice includes agreeing at the start how the project manager will contribute to reviews; sending regular, balanced written feedback to functional managers, both positive and constructive; raising serious concerns early rather than surprising the functional manager at review time; and never threatening consequences you have no authority to impose.

In a projectized organization, or where contractors report to the project manager, the project manager may have more direct authority. Even then, involve human resources early on any formal performance process, because organizations have procedures that protect both the employee and the employer.

Employees and contractors

Project teams often mix employees and independent contractors. The distinction matters for how you manage performance. With employees, you manage the person, using feedback, coaching and the organization's performance processes. With independent contractors, you generally manage the deliverables under the contract: performance problems are addressed through the contract terms, the statement of work and the contract administrator, not through employee performance processes. Treating a contractor like an employee, for example by controlling their hours and methods in detail, can create legal risk that the person is legally an employee.

In the United States, worker classification depends on which law applies. The IRS uses a common-law test grouped into behavioral control, financial control and the relationship of the parties; the Department of Labor applies an economic-reality test under the Fair Labor Standards Act, the agency stopped applying its 2024 rule in enforcement in 2025 and in March 2026 proposed rescinding it in favor of a test closer to its 2021 rule, which emphasized control over the work and the opportunity for profit or loss (check the current status); and some states, such as California, use a stricter ABC test. Project managers should follow procurement and human resources guidance rather than make their own determinations.

Team metrics and individual performance

Agile teams track metrics such as velocity (the amount of work completed per iteration), cycle time and throughput. These are useful for planning and for spotting team-level problems: a sudden drop in velocity may signal impediments, illness, unclear stories or low morale. They are dangerous when used to judge individuals. Velocity is a team measure based on relative estimates that the team itself makes, so comparing it across teams or using it to rank people distorts it. Goodhart's law applies: when a measure becomes a target, it ceases to be a good measure. People will inflate estimates or avoid helping others to protect their numbers.

Releasing someone from the project

Occasionally the right answer is to move someone off the project: the skills do not match, the relationship with the team has broken down, or performance has not improved despite support. Do this respectfully and in coordination with the functional manager or human resources. Focus on fit rather than blame where honest, arrange knowledge transfer, explain the change to the team without sharing confidential details and make sure the person's contributions are acknowledged. How a project manager handles a release is watched closely by everyone else on the team.