Give it to them straight. Explain the gap between their performance and what you expect, giving specific details ('Your client proposals lack detail and contain incorrect pricing' rather than 'your work is slapdash'). Then describe the impact of their performance. 'We had to honour your pricing and lost £6,000' should jolt even the most apathetic individual into action.
Check they understand. Nodding along is not enough. Ask them to explain what they will do differently in future.
Make a plan. Criticism usually causes despondency or panic. Get your reports fired up by deciding on priorities, setting goals and agreeing milestones. If you think they're overloaded, delegate some of their work. If it's skills they're lacking, organise training. Book fortnightly meetings to discuss their progress.
Have hope. Explain how much faith you have in the person and why ('I watched you turn around the struggling team. You can turn this around, too'). Got doubts? Keep them to yourself.
Avoid assumptions. Underperformance can just as easily be down to a system or process as an individual. Ask why your report thinks he or she's underperforming. Use neutral language ('what's been getting in the way for you?'), listen without judgement and if the problem lies elsewhere, be ready to fix it.
Share your vision. Reposition the underperformer's role ('vital to our client interactions' rather than 'boring admin') and discuss ways to incorporate more of what he or she enjoys.
Be there. Struggling employees need support, so praise improvement and give constructive support when things go awry.