It is something you have to develop an intuition for.
There are two very different areas that you might find yourself in with performance management, employees that slow down, and ones that never speed up.
The first is an employee who was getting lots done and always could be counted on that becomes slower and less reliable. If you have developed trust with your employees then they will be more likely to share with you something going on that has changed or otherwise effected their work effectiveness. I have experienced situations where spouses have become quite ill and needed more attention, and people who have had their teenage kids take a hard turn down an unproductive, if not destructive path. If it is situational then you work with your employee to rebalance their needs, they may need to take some time off to find a new equilibrium or get things into a new normal. Give them the space, and let them find their new groove. If on the other hand it isn't a situational thing, perhaps they just don't like what they are doing any more or, as one of my reports discovered, they like doing something else better (in this case music), the right thing to do is to help them move on to that new activity. That can be really hard if they are hoping the can work part time on a full time salary while pursuing this new passion of theirs, at the end of the day you need people who are as committed to working for you as you are in managing them to be successful in their job.
The other situation is someone who is exhibits potential but keeps holding themselves back. Intel used "managing by objectives" and their mantra was if you met all of your objectives you probably had not set a high enough bar. The tool here is to talk with them about what needs to be done and when, push them out of their comfort zone, and then watch closely how that works out. Keep in mind that the goal isn't to get someone to work 60 hrs a week (this will burn them out), the goal is to work with them so that they can make as much of the time at work productive. I really only have seen this reliably in new college graduates. They have study skills but not "design" skills.
A session might be like this; Start by giving them a task and a deadline, ask them to identify as many different series of steps (plans) that they think will get them from today to done. Then ask them how they might recognize that a plan isn't working. Once they have that in their head they can go forward on the chosen route, and ideally let you know if they discover it was a dead end. If it was, talk about how it ended up becoming blocked and think about some ways you might test at the beginning if that was going to be the case. All of this hand holding at first is to train someone to think about solving problems where there isn't a "known solution" sitting in some grading manual somewhere. Engineers need to develop an intuition about the "design space" things can be pushed and things that can't, and how those freedoms or constraints are going to make it easier or harder to get done what they need to get done. These are the kinds of things you will end up talking with them about in your 1:1's.
Always remember, that because we're talking about people here and not machines, they all respond a bit differently, have different reasons for being there, and different definitions of success or failure. Your job as their manager is to translate things the company needs to get done, into requests that your team can deliver.