One way to say, “You’re doing a bad job,” but nicely.

I heard a story about a part-time employee, who, in his usual mode, was lazy in his work, and his results were substandard and untrustworthy. He was capable enough as he was a university student in a tough academic field. As I listened to this story, frustration was clear as she told me, “This [guy] works as slowly and poorly as possible; he’s driving everyone nuts. We’re a small company and can’t afford good help. Worse, he’s related to someone here in the office, so we can’t say anything…” Here’s the thing: you cannot afford not to say something. What a dumb drain on the company finances and morale!
It’s easier than you think to begin a tough conversation. Think carefully about the way that particular person needs to hear things and when they are likely to be receptive. Ask if they would be willing to hear something difficult from you. If so, you might begin with, “I think you’re better than this. You’re doing an important job; I’m concerned that you haven’t been doing it as well as we need; perhaps there is some information that we’ve missed giving to you. So, what do you need to know...?”
When you’re coming from a place of true helpfulness you can say anything to anyone provided you soften and monitor your tone of voice.