Performance Improvement Plans: A Tool for Success

What is PIP?

A Performance Improvement Plan (PIP), also known as a Performance Action Plan, is a formal document used in human resources (HR) to address and improve an employee’s performance that is not meeting expectations.

It is a formal document that details changes an employee must make to keep their job. PIPs usually outline a list of performance goals employees must meet in a specified timeframe — generally within 30, 60, or 90 days. For example, an employee who has a problem meeting deadlines, therefore causing delays in other departments, may receive a PIP that outlines a helpful, step-by-step process to meet those set deadlines.

On receiving the PIP, the employee has a specified time, generally from one to three months, to meet the objectives. Achieving them can help the employee improve performance, or failing them can result in demotion, transfer and even termination.

The intention of PIP is often a good one: it’s supposed to help struggling employees in their own improvement process.
But data says otherwise. In fact, PIPs often fail to deliver the desired improvement; an estimated 90% of PIPs result in the employee leaving the company.

However, used correctly, PIPs can be a way to avoid unnecessary turnover. To be successful, a PIP needs to be sensitively designed as a collaborative and transparent process.

Pros and cons of PIP

Pros of performance improvement plans:

• They allow for timely action when performance deteriorates — the employee knows there’s an issue as soon as it arises.
• They offer structure and direction to a struggling employee, so they aren’t left wondering what they need to do to improve their performance.
• When executed correctly, a PIP can help the employee feel more motivated and productive at work.
• They can empower employees to take ownership of their progress.
• They can help the employee to feel that they are being treated fairly.

Cons of performance improvement plans:

• They can divert attention away from routine tasks.
• The employee may focus exclusively on the issues mentioned in the PIP and neglect their day-to-day role.
• Some employees may feel demotivated or unduly stressed by the PIP.
• They can lead to difficult conversations, which not every manager is prepared to handle.
• Many employees see them as a precursor to dismissal.
• They take a lot of time and effort from HR professionals, employees, and their managers.

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What does a performance improvement plan include?

• Employee information: Name, department, job title, and date.
• Performance concerns: Specific areas where performance is not meeting expectations, with examples.
• Performance goals: SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound) for improvement in each area of concern.
• Action plan: Specific steps the employee will take to achieve the goals, including deadlines and resources.
• Monitoring and evaluation: Schedule for regular meetings with the manager to discuss progress and make adjustments to the plan as needed.
• Consequences: Potential consequences of not meeting the goals, such as further disciplinary action or termination.

How to create an effective performance improvement plan?

A PIP should include an element of self-reflection for the leader writing it, too. Before creating a PIP, leaders should check that their own actions haven’t inadvertently led to this moment.

“Pay close attention to the issues or thoughts raised by each employee as they discuss their PIP,”.

“Do not disregard what they say. This not only prevents them from becoming distracted and frustrated with the entire process, but it also uncovers whether a PIP is deserved.”

Instead of a monologue, a PIP discussion should be a dialogue between the manager and the employee, with ample opportunities for 360-degree-reviews of both parties. The employee may well have useful feedback for how their manager could provide more support or clearer guidance.

Make sure that the PIP doesn’t come as a surprise to the employee. Just like other performance management tools, like one-to-ones or end-of-year reviews, PIPs only work as part of a program of ongoing feedback:

Meaningful feedback with clear objectives should always have been provided before administering a PIP.”

When it comes to creating a helpful PIP, remember the 3 Cs: collaboration, clarity, and compassion.

Collaboration

A PIP should be viewed as an opportunity to collaborate effectively.

To resolve performance issues, you need to understand their root cause. involve the employee in the process:

• Invite them to collaborate in designing a series of performance goals that they see as reasonable.
• Ask for their feedback on the PIP at each stage, to make sure that they find it helpful, not stressful.
• The goal is not to pressure the employee into leaving–it is to help them improve their performance and become a valuable contributor to the team.

Clarity

The goals and timelines of each PIP should be crystal clear, as well as any criteria the employee needs to meet along the way. As leaders, we need to remember that we hired, onboarded, and invested in our employees.

Compassion

When discussing the PIP, remember that employees may feel worried about the implications. Take a compassionate approach:

• Apply positive feedback principles, such as pointing out things they’re doing well;
• Reassure the employee that you believe they can turn their performance around;
• Use the right phrases to help frame your responses in a compassionate way.

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