I have to sign stuff every month basically agreeing to what our store is supposed to meet for sales and whatnot. It doesn't do anything to affect how I work but yes it will help you out if it comes to the point of firing someone. Like everyone said, documentation is key.
At my job, at the first incident we must sign something saying we agree not to do it again (ex. showing up late). Second time, we write a letter saying we won't do it again. Third, we can be fired. The write-ups, especially the second one can definitely make someone think twice about their actions, especially if they've been there for 10+ years and aren't just job hopping. And again, this will help you if/when you fire them.
As frenchblueC2 said, let them know what's up. I'd try to do it in a nice way. People are easily offended and straight up telling them they're doing a crappy job usually won't get you far. Just stress that rules need to be followed and goals must be met, and that employees will be replaced that don't do right.
