As a manager, sometimes you have to take an unpopular stance when dealing with a popular person. Be sure that you have documented her performance, discussed it with her, and given her the opportunity and support to improve it.
If you have done so, only to find that she continues to believe that popularity is more important than productivity, then it is time to make a managerial decision. And, this decision should not be based on her popularity, nor on the impact that the decision will have on your popularity.
However, before taking this action, one unique aspect of this situation is that employees who do not carry their weight are typically regarded with disdain rather than adoration. Her popularity indicates that she must have some rather compelling people skills. This raises the question of whether she is simply in the wrong position.
Many companies today are trying to fit jobs to people, rather than fitting people into jobs. If there is a more people-oriented position in your firm, perhaps she would fare better in it. At the same time, if there is no appropriate internal option for her, then it is time for the external option.
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