Back in the world of each incidence costing me actual, real money . . . I would offer exactly ONE warning in writing outlining the specific expectations for performance over the next 6 months. This gets kinda of “zen” based on quality of the employee and my base trust level (marginal employees get less slack and a short time to get better fast . . . while high-performing ones get a little more chance to recover.) Any failure to meet those expectations are grounds for harsh disciplinary action including suspension up to immediate termination without further warning being required. Allow for a a written response by employee, get a signature and have a witness sign it. (if they bring in a response later, I will staple it to the original). Keep a copy under lock and key. I put a time cap on the probation, because mistakes can occasionally happen, and a 6-month window is enough for me to establish trust, or decide it ain’t worth the effort.
At that 6 months I would set up a performance review and cover all the improvements and failures to improve on the items in the written warning I issued.
Periodically along that 6 months, I would give a written performance report advising progress, excellences, and needs to improve. If you truly want to recover the employee and re-establish buy in, then this is a good way to bring them along . . . and to let them know you are watching their performance. This is a tool for accomplishing your goal of documenting performance for whichever way this turns.
See, if you document efforts to retrain and recover the employee, then you get lots of credibility amongst other employees and legal entities who get involved. PUT A THEFT POLICY IN WRITING IN YOUR EMPLOYEE HANDBOOK. Say that it is grounds for immediate termination without need for warnings.
