It is important to first figure out the cause of the under performance of the employee. It would be ideal to set up a meeting with the employee to figure out if there is something going on personally that is causing their lacking performance. If that is the case, they should be given the appropriate time off. it is also important to see if there is anything in the workplace that is causing them to underperform.  However if that is not the case, the employee should be properly trained and be reminded of their responsibilities and tasks and what their expectations are. By doing so, the employee is made aware of their lacking performance and what goals they should be achieving as an integral part of the company.   

Underperformance can be linked to many things - many of times being extrinsic issues (toxic work environment, distracting personal issues, etc.) rather than an intrinsic want to just "skate by" at work. It's important for a manager to assess what is causing this underperformance through a performance evaluation meeting. It's critical that the manager comes off compassionate and caring to the employee and come up with a plan to better their performance. Setting goals, finding resources, and inspiring the employee are three of many ways a manager can frame the conversation. Additionally, it is important to schedule follow up meetings that you can continue the dialogue with the employee and assess progress. After some time it would give the manager a better understanding of whether they can continue having the employee on the team or to let them go.

Firing low-performing employees should not always be solution for managing underperformance. There are methods to improve employee performance and firing employees can lower morale. Some strategies that I've seen companies do include performance evaluations to assess employee strength and weaknesses. They set goals for them and provide feedback on areas for improvement. Another strategy is training and development. Work experience may be limited in improving the employee's skillset, so a company may offer training and development programs to help employees acquire new skills, knowledge and capabilities. These may help them perform their job better but also will allow the company to be flexible with the employee. Perhaps the employee if trained in a different position would actually excel. This might be a cheaper alternative than rehiring an employee. An undervalued strategy is counseling and support. Project managers often need to be empathetic to raise the morale of the team and enhance productivity. If an employee feels they are constantly treated with disrespect and disregard for their circumstances, they may feel disposable or mistreated and therefore would likely perform worse. It's best to treatment employees like humans who can provide quality work if they are motivated to.