How To Deal With Difficult Employees: Tips for Small Business Owners

Every business owner eventually faces tough moments with employees. It might be missed deadlines, tension on the team or slipping motivation. Gallup reports that only 32% of U.S. employees felt engaged and 16% felt actively disengaged in 2024, and that lack of engagement often shows up as the very behaviors that make employees difficult to manage.

 

The most effective way to manage problems is to prevent them from taking place. Defining your culture, leading by example and focusing on employee motivation can help reduce conflicts before they become serious issues. That way, when challenges do arise, you already know how to deal with difficult employees from a position of strength.

 

Learning how to deal with difficult employees begins with recognizing the behavior. The most common situations involve undermining authority, ongoing poor performance or a consistently negative attitude.

 

An employee who undermines authority may question your leadership or disregard instructions, which can weaken your credibility. Sometimes the intent is constructive, but the timing or delivery creates friction. To address this, provide a clear channel for feedback and explain when final decisions must be respected. If the behavior continues, meet privately to discuss the impact on the team. Persistent undermining can also harm your business reputation if clients or customers see conflict spill over into daily operations.

 

A negative attitude can surface in many ways, from constant resistance to open rudeness. Left unchecked, it creates a toxic environment that lowers morale and affects the entire team. Focus conversations on specific actions rather than personality traits and explain how their behavior affects others. Consistently modeling respect and reinforcing positive conduct helps set the tone for the workplace.

 

For example, if one employee constantly complains or refuses assignments, others are forced to pick up the slack. That dynamic punishes those with a good attitude and rewards negativity. Addressing it early shows the team that positive behavior is valued and expected.

 

Some attitudes can also create a toxic workplace, where negativity spreads and affects everyone. Spotting those patterns early makes it easier to address them before they damage your culture.

 

Poor performance is one of the most common issues when dealing with difficult staff who consistently fall short of expectations. The cause might be a lack of skills, unclear direction or low motivation. Begin by clarifying the role and standards, then determine whether training or additional support could help. If performance does not improve, create an action plan and follow up regularly to track progress.

 

Managing difficult employees and disruptive behaviors is essential because they can create tension and slow productivity. While some may raise valid points, the behavior needs to be addressed so it doesn’t erode trust in your leadership.

 

Start by figuring out why the employee is undermining your authority. Sometimes it stems from the employee’s perspective on how decisions are made or communicated. Invite them to share their perspective and explain how you’ll use their input. Even if you don’t act on their suggestions, acknowledging their point of view and explaining why you will or won’t act on their detailed feedback can reduce frustration.

 

If the undermining continues, set a follow-up meeting to address the behavior directly.

If an employee ignores opportunities to share their perspective and instead undermines your instructions, it’s time for a conversation where you give direct feedback on how their actions affect the team. Ask why they haven’t spoken up, and if there’s a valid reason, work towards a solution. If they can’t provide one, or if the conversation turns hostile, it may be time to consider a replacement. Employees can disagree respectfully, but deliberate disrespect or open defiance should be addressed immediately.

Negativity in the workplace spreads quickly. One person’s complaints, sarcasm or refusal to cooperate can influence the entire team and drag down morale. Dealing with difficult employees early helps prevent negativity from becoming part of your culture.

 

Define the conduct you expect when employees interact with customers, clients, vendors and coworkers. Put those standards in writing and model them consistently yourself so there’s no confusion about what is acceptable.

 

When the problem persists, don’t label it as “attitude.” Instead, point to specific actions, including tone, body language or communication style and explain how they affect others. This keeps the discussion focused on solutions that employees can act on.

 

Most employees will adjust once they see the consequences of their actions. If not, continued negativity may outweigh their contributions. At that point, it’s reasonable to consider whether the role is still the right fit.

Once you’ve confirmed the employee understands what’s expected, the next step is to figure out why performance is slipping. Underperformance often comes down to either ability or motivation, and each requires a different response, so it’s essential to identify the cause.

 

Life outside of work can spill into the workplace. If an employee is distracted by health concerns, family matters or other personal issues, performance may decline even if they’re capable of the job. While you don’t need to know every detail, it helps to ask whether something outside of work is making it harder for them to focus. Temporary adjustments in workload or responsibilities may give them the time and space to resolve the issue and return to their usual level of productivity.

 

Boredom is another common driver of underperformance. An employee who feels their role has become repetitive may stop putting in effort, even though they can do more. Asking whether they’d like to take on new projects or responsibilities can reignite their interest. Giving employees ownership over a project or a chance to contribute new ideas often leads to renewed motivation and stronger engagement.

 

Even satisfied employees may lose energy if they can’t see a future for themselves at your business. Without growth opportunities, they may assume their role has no long-term potential and disengage. Creating clear pathways for advancement or offering professional development opportunities helps employees stay focused and gives them something to work toward.

 

Sometimes the effort required for a role feels out of balance with the reward. A base paycheck may cover expectations, but it may not encourage employees to go beyond the minimum. Incentive programs can bridge this gap. Scaling incentives work especially well because they reward progress at different levels. For example, an employee might earn a small bonus for hitting a baseline target and larger rewards as they exceed higher thresholds. This approach often keeps more employees motivated than competitive programs, which only reward the top performer and can discourage others once they fall behind.

 

If you’ve already explored training, incentives, added responsibilities or development opportunities and performance still hasn’t improved, letting troublesome employees go may be the best option. Document the steps you’ve taken to support them so you can show that you’ve made reasonable efforts. If your company has an HR department, involve them early to ensure the process is fair and compliant.

 

As a supervisor, how to deal with difficult employees often starts with setting the tone. When expectations are clear and modeled consistently, it’s easier to prevent difficult behaviors from taking hold in the first place. Employees are more likely to stay positive and productive when they see leaders embody the conduct they want to encourage.

 

Define the values that matter most to your business and reinforce them through daily actions. For example, if respect is a core value, show it in every interaction and outline what it looks like in practice — listening without interrupting, giving coworkers credit and treating customers with patience. Including these behaviors in your handbook or formal company policy gives employees a reference point and sets a consistent standard.

 

Prevention also starts before someone joins your team. Careful hiring decisions make it easier to avoid future conflicts and reduce the need to constantly figure out how to deal with difficult employees. Asking thoughtful interview questions about collaboration, accountability and problem-solving helps you build a team that fits.