Employees receive feedback on performance. Without feedback an employee cannot change or even know that change is required. Feedback does not cost the owner anything, and it is the single most powerful tool available for improving poor performance. Employees are rewarded for good performance. However, if the owner doesn't know what good performance is, there is no way to reward it.
Employees are familiar with company policies.
Too often policies are in the owner's head and are not written down and distributed to employees. This creates numerous problems for both the owner and employees. There is only one solution. Policies must be written and owners must make certain that employees understand them. There is a concise policy manual.