September 25, 2023

What is a Performance Improvement Plan (PIP)?

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Key takeaways

  • A performance improvement plan (PIP) is a strategic document intended to help underperforming employees course-correct.
  • An effective PIP can improve employee performance by providing clear guidelines on how to succeed in their role.
  • Performance management software can help you identify performance issues early and minimize the need for PIPs through company-wide, continuous feedback.

What is a performance improvement plan?

A performance improvement plan (PIP), or a performance action plan, is a strategy companies use to help employees who are not meeting performance objectives. Usually, it involves crafting a document that lists role expectations, areas for improvement, and SMART goals to get employee performance back on track.

Too often companies use PIPs as a part of their progressive discipline processes or as a way to generate paperwork demonstrating the employee’s unsatisfactory performance before termination. Instead, PIPs should be a part of your wider learning and development initiatives.

If conducted successfully, PIPs can help employees feel more confident in their roles and learn to meet their work objectives satisfactorily and on time. In turn, productivity increases, contributing to your company’s overall business goals.

Learn why employee performance management is important and limit the need for PIPs.

How to implement a PIP in 6 steps

If you find yourself in a situation where an employee could benefit from a PIP, follow the steps below to implement a successful, goal-oriented plan. Remember that PIPs work best to help employees start meeting actionable goals, not to fix behavioral issues. Likewise, all similarly situated employees should have the opportunity to receive a PIP to avoid claims of unfair treatment or bias.

Performance improvement plan roadmap notes six major steps: Make PIPs part of your company culture, determine if a PIP is necessary, involve the employee, draft the plan, conduct regular check-ins and monitor progress, and review the outcome.
Source: TechnologyAdvice

1. Make PIPs part of your company culture

By including PIPs as part of your typical performance, learning, and development management processes, you can remove the perception of PIPs as a termination death knell. Instead, a company culture that embraces PIPs as normal signals to employees your commitment to continuing their professional development.

One way of doing this is by democratizing who receives PIPs, such as issuing PIPs equally to both traditionally high and low performers. This can help underperformers get up to speed while challenging or upskilling overachievers.

2. Determine if a PIP is necessary

You should only use PIPs as a genuine way to get an employee’s performance back on track, not as a way to create termination evidence. Before drafting your PIP action plan, ask yourself the following:

  • Is this a performance or behavioral issue?
  • Can the performance issue be fixed through actionable goals?
  • Do you want the employee to succeed in their PIP? 
  • Can you dedicate time and resources to helping the employee improve?
  • Have you counseled the employee about their performance and goals in the past?

PIPs should target specific performance issues with achievable, time-bound goals. PIPs also work best for recent performance issues, not ongoing issues that you have tried to counsel employees on in the past. And, if you can provide extra one-on-ones or training to the employee, they’ll be more likely to complete their PIP successfully.

3. Involve the employee

Do not make a PIP a one-sided affair by drafting a performance plan without the employee’s input. Instead, involving the employee in the PIP process demonstrates that you are committed to helping them improve.

Involving the employee in the PIP discussion also means you avoid creating the PIP in a vacuum. You can be transparent about the minimum acceptable benchmarks for their performance. At the same time, employees have a say in what goals they can realistically achieve.

Moreover, employees can be open and honest in areas they feel they need extra support so you can provide training, resources, or other accommodations for them to be successful.

4. Draft the plan

At a minimum, PIPs should include the following:

  • A breakdown of the areas in need of improvement.
  • The criteria that the employee should meet in their role.
  • Realistic goals for the employee to complete by a specific time.
  • What you can do to help the employee.
  • What happens after the PIP.

Explain in detail where the employee is not meeting expectations, and be sure to include relevant documentation. For example, if a customer service representative consistently receives customer complaints, include these complaints with explanations of how this impacts the business.

Make sure to discuss the problem’s root cause with the employee. In the case of the customer service representative, they may need more training on the product to troubleshoot customer issues better or on proper phone etiquette. You won’t know until you ask the employee.

Define the employee’s expectations in the role, including what success looks like. For example, using the customer service representative from earlier, perhaps they need to receive a customer satisfaction score of three or higher on a 1-5 scale in a three-month lookback period.

The PIP should clarify what the employee should be working toward in their position so they can continue to succeed, even past the PIP.

You should work with the employee to develop performance goals to meet by the end of their PIP. These goals may differ slightly from their role expectations, depending on the employee’s current performance.

For instance, if the customer service representative’s current customer satisfaction score is two, the goal of the PIP may be to raise it to 2.5 within the next three months. However, after the conclusion of the PIP, the expectation is that the score will continue to increase to a minimum of three without backsliding.

The best goals are SMART: specific, measurable, achievable, relevant, and time-bound. In other words, the goals should:

  • Relate to the work that the employee performs every day.
  • Identify the actions the employee should take to be successful.
  • Be easily trackable and specific to the employee.
  • Include deadlines, such as 30, 60, or 90 days.

Include how you will be helping the employee succeed in their PIP. Some of the ways you can assist the employee include:

  • Offering additional training in specific areas of struggle, including budgeting for necessary training courses.
  • Granting access to productivity tools or other resources to increase their work efficiency or focus.
  • Assigning mentors, coaches, or coworkers as resources outside the employee’s manager or human resources (HR) department.

Remember to work with the employee to see what things you can do that will benefit them the most, and don’t assume offering the same assistance will work with every employee.

The employee PIP should include language outlining what will happen after the deadline. For instance, if the employee completes everything in their PIP, you might note the goals you hope they will continue to achieve.

Or, if they do not meet the goals as anticipated, you may proceed with demotion, transfer, or possible termination. The PIP should be explicit with the consequences so there are no surprises.

Drafting an employee PIP does not have to take a long time. Your current HR software or performance management software may already have PIP workflows to expedite the process. intelliHR, for example, includes a PIP template you can customize to your needs. You can even update the PIP to track progress goals, record a timeline of events, and tie it to future employee performance.

The intelliHR platform displays a dashboard for managing an employee's PIP, including notes about time spent and overall cost.
intelliHR’s customizable PIP template allows you to collaborate among multiple stakeholders and tie problem areas to relevant company policies and procedures. Source: intelliHR

5. Conduct regular check-ins and monitor progress

Determine a regular performance check-in cadence with the employee to monitor their PIP progress. Ideally, these meetings should happen weekly to keep the employee on track and assist them with any roadblocks.

6. Review the outcome

Once the PIP hits the deadline, review the PIP and determine how well the employee did. Ask yourself:

  • Did both you and the employee make a concerted effort to improve performance?
  • Did the employee hit all required targets?
  • Were there any issues with hitting these targets? If so, are there explainable reasons why not?

If the answer to these questions is “yes,” you can close the PIP. The worker can continue their employment as long as they meet their role expectations.

If the answer to these questions is no, close the PIP and continue with the next steps. This may include a PIP extension, reassignment, demotion, a last-chance agreement, or termination. If you extend the deadline of the PIP, make sure it is because the employee demonstrated their commitment to improving their performance or because the goals were too unrealistic upon review.

What are some alternatives to a PIP?

PIPs are not always the answer to all performance-related issues. Jennifer Preston, an HR consultant with Flex HR, even notes some drawbacks with PIPs, such as increasing tensions between managers and employees or creating divisiveness.

Before implementing a PIP, try the following strategies to motivate employees and improve workplace performance:

  • Outside training courses: These courses can be beneficial if you lack in-house training or your employee needs a new, safe environment to practice their skills.
  • Mentorship programs: Consider pairing your employee with an internal mentor to troubleshoot problems in a low-stakes environment; employees can even find mentors for free through vendors like Pushfar.
  • Continuous feedback cycles: These cycles give employees immediate feedback so that they can fix any performance issues early without waiting for formal performance reviews; most performance management software, like PerformYard, accommodate continuous feedback workflows.

Free downloadable PIP template

Use this PIP form template to get started on crafting a personalized PIP for your employees:

Performance improvement plans FAQ

The HR department’s role in PIPs includes the following:

  • Determining if PIPs are appropriate for particular performance issues.
  • Ensuring PIPs are implemented fairly among employees in similar situations and roles.
  • Drafting PIPs with the help of the employee and the manager.
  • Providing training and other support to employees on PIPs.
  • Monitoring the effectiveness of PIPs through goal tracking and check-ins.
  • Following up on PIP outcomes, such as creating transfer documentation.

PIPs typically range between 30, 60, or 90 days. This gives employees time to understand their work expectations while emulating actual work demands. You are unlikely to see significant changes in an employee’s performance by extending PIPs past 90 days since you lose the sense of urgency with longer deadlines.

Successful PIPs set clear employee expectations, give them extra help, and save time and money by preventing turnover.

Sets clear expectations

PIPs clarify what objectives employees are being judged by and provide actionable goals to demonstrate their contributions to the company. PIPs can also help you move to a results-only work environment for a more objective look at employee performance.

Gives poor performers extra help

Struggling employees may feel uncomfortable asking for help. A PIP is an opportunity for HR teams and managers to demonstrate their willingness to help employees in their roles. Plus, by making PIPs a part of your company’s learning and development (L&D) culture, employees are more likely to open up about their struggles and be willing to participate in PIPs.

Saves time and money

According to 2022 SHRM research, hiring a new employee can cost almost $4,700. Thus, keeping an existing employee can be much less expensive and time-consuming in the short term than investing in a replacement. By using a PIP, you can reduce turnover, prevent productivity delays, and avoid spending time and money on finding and training new talent.

PIPs are not right for every situation or every company. They can easily demotivate employees, lead them to look for other work, and take HR and managers away from other high priorities.

Demotivates employees

PIPs can make affected employees feel inadequate or singled out. This is especially true if PIPs are not a typical aspect of performance management at your company. As a result, PIPs can have the opposite effect, such as demotivating employees or even making them quit.

Some employers want PIPs to create this very outcome, but it is not good practice. Using PIPs in this way can tarnish your reputation by indicating to your employees that you don’t care about their professional success.

Leads employees to look for other work

Like above, employees on PIPs may feel like they have little choice but to look for other work. As a result, employees could quit before completing their PIP, forcing you to look for a replacement, especially if they’re in a critical position.

Requires time and effort

PIPs take significant time and effort to implement since they require collaboration from multiple stakeholders, formal documentation, research into historical data, goal tracking, and check-ins. This means PIPs take HR teams and managers away from other primary duties, potentially lowering productivity.

  • Other methods fail. Try a PIP after performance reviews, feedback cycles, or other disciplinary processes have not worked.
  • SMART goals can help. A PIP is an excellent strategy if you can break the performance issue down into trackable goals.
  • Training availability. If you have additional L&D courses or resources to help the employee in specific problem areas, a PIP can help you administer and track their effectiveness.
  • Unclear work expectations. PIPs make the main objectives of employee positions transparent, allowing them to focus on the areas of their job that are most important to the company’s success.

  • Paper trail creation. You should document performance issues for employees as they occur; PIPs should not act as a way to legitimize termination when you lack proper documentation.
  • Personal issues. If a manager and employee do not get along for personal reasons, a PIP will not help resolve differences.
  • Behavioral issues. PIPs cannot always correct behavioral problems, such as a generally poor attitude, since they are difficult to quantify and track effectively.
  • Serious incidents. Some incidents, such as sexual harassment, violence, or theft, are severe enough to warrant immediate termination instead of other disciplinary or performance measures like PIPs.

Check out our Performance Management Software Guide for a complete list of options to help you start drafting PIPs.

Jessica Dennis Avatar

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