Harry,
The case doesnot seem to be a grievance rather it pertains to performance appraisal. When an employee's performance goes down it can be due to reasons both internal and external. A discontent worker will not produce result and factors outside the organisation, say family problems, also creates a lot of tension resulting in reduction in productivity. HE can be an individual or one of the members of a division/ functional area where something wrong had happend during the last fixation or appraisal. Study the matter in detail and act on it.
Couseling is a tool to identify the weakness and dissatisfaction. Be frank to talk to him and suggest means to improve performance.
Regards,
Madhu.T.K