Three words that can strike fear into the heart of any employee: performance improvement plan. Performance improvement plans (PIP) give underperforming employees a chance to succeed. But often they’re seen as a red flag — and the first step towards being fired.
A formal document that helps to track and guide work performance, PIPs identify specific areas where employees need to take corrective action. 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.
In many ways, PIPs can be seen as a coaching skill and opportunity. Sure, it’s formally documented as part of performance management. But it’s a tool to help coach the employee to succeed. And building solid coaching skills in conjunction with a PIP can be a good way to help unlock peak performance in your workforce.
A PIP needs to hone in on skill sets, personal issues, and outline attainable employee progress. In this article, we’ll explore:
- What a performance improvement plan (PIP) is
- The benefits and challenges of using a PIP to deal with an employee performance issue
- What an effective performance improvement should include
- How to create a PIP that will actually work
What exactly is a performance improvement plan?
A performance improvement plan (PIP) is a tool to help underperforming employees improve their performance. An effective performance improvement plan should:
- Document existing performance concerns
- Encourage constructive dialogue
- Offer solutions to any identified issues
- Support underachieving employees with actionable steps
- Give the employee a clear understanding of how to improve their performance
- Foster a positive work culture and minimize staff turnover
- Outline additional training an employee might need to improve work performance
“The goal of a personal improvement plan (PIP) is to find out what problems a team member may be having and help them solve them,” says Christiaan Huynen, CEO and founder at DesignBro.
“Having planned conversations with your team members about their successes, challenges, action plans, deadlines, and the tools or resources they need to get the job done is a simple but powerful way to help anyone do their job better.”
The pros and cons of performance improvement plans
PIPs can be effective, but they aren’t always the best solution for poor performance. Here’s what to bear in mind when deciding whether to use a 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
What does a performance improvement plan include?
Ready to create an effective PIP that actually works? Here’s what you’ll want to include:
- Evaluation
- Goals
- Timelines
- Resources and training
- Meeting dates or regular check-ins
- Plans for the next steps
Evaluation
A PIP should include an assessment of the employee’s current performance, as well as how they performed in the past. Tracking performance over time can help pinpoint when and why performance started to be an issue. At this point it’s very important to communicate openly and clearly — in case an easy fix can be identified.
Goals
To work, a PIP needs clear goals. “Don't set ambiguous, impractical targets,” said David Bitton, co-founder and CMO at DoorLoop. “Goals should always be explicit and measurable, so that employees know what they should strive toward.”
Using the SMART principle of setting Specific, Accurate, Relevant, and Time-Bound goals is a great start. Make sure these goals are discussed and agreed collaboratively.
One example of a goal for an employee struggling with burnout could be to attend one coaching session per month for three months. For someone struggling with time management, you could set a goal for them to clock in on time every day for the duration of the PIP.
It’s also important to state any disciplinary action that may occur if goals aren’t met.
Timelines
Establish when each goal should be achieved. This will depend on the individual goal and each employee’s situation, but the format of the 30-60-90 day plans you use for onboarding new employees can be a useful starting point. It’s a good idea to include milestones and checkpoints within the period covered by the PIP, to keep the employee on target.
Resources and training
List any additional resources, training or coaching that you will offer to help the employee meet their PIP goals. Employees shouldn’t be expected to complete a PIP without this kind of support. Leaders also need to consider where the budget for these resources will come from.
Meeting dates
Regular meetings should be a PIP cornerstone. In addition to one-on-one meetings at the start, middle, and end of a PIP, short weekly check-ins are useful. Real-time feedback should also be added in throughout, from both leaders and employees.
Plans for next steps
For PIPs to work well, transparency is vital. List what will happen after the PIP is completed — both positive and negative outcomes:
- If all PIP goals are met, will the employee go back to regular performance reviews?
- What kind of feedback will you provide?
- What will happen if an employee fails to meet each of their goals?
While it’s hard to discuss possibilities like demotion and dismissal, if those are potential outcomes, they need to be stated, too.
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,” says Bitton. “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:
“This process should never be the first time a person is receiving feedback on their performance,” said Josh Saterman, CEO and founder at Saterman Connect. “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.
BetterUp data shows that, since the pandemic, the ability of leaders to build relationships with their teams has become a key differentiator for team performance. To resolve performance issues, you need to understand their root cause. “The first step is to spend time getting to know your employee better,” recommends Nikki Pak, founder of Winning in Work.
“Today's world has so much going on, like increases in the cost of living, the aftermath of COVID-19, and geopolitical unrest. Mix that with learning new ways of working and a lot of it being remote, for some employees this has been too much.”
To make sure that the PIP doesn’t add undue pressure onto employees already at risk of burnout, 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.
Leaders should also involve other departments. “It goes without saying that involving legal, human resources, and other leaders is a critical element in the PIP process,” says Saterman.
“Leaders may have all the best intentions, but there's always room for other experts to guide and partner with them to ensure they’re delivering the most impactful experience for the employee who is going through the PIP process.”
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. In best practice scenarios, what the PIP process brings to light is that through communication, healthy feedback, and clear expectations, people can be successful,” comments Saterman.
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.
What to avoid when writing a performance improvement plan
When you’re writing your PIP, make sure to avoid:
Ambiguous targets
If an employee doesn’t know how or when they’re supposed to meet their goals, that’s when a PIP can become a major demotivator.
Bias
When creating and implementing a PIP for their direct reports within their teams, leaders need to avoid biases. When in comes to writing a PIP, the most common biases you should watch out for include:
- The “horn effect”— whatever an employee does is viewed as negative
- “Just-like-me” bias — the manager only evaluates employees positively if their personality and work approach is similar to that of the manager
Unrealistic time frames
Setting an unrealistic time frame for attaining specific goals can be demotivating. It also sets your employees up for failure. Think of ways you can make their goals attainable in a reasonable stretch of time.
A well-designed PIP can be an opportunity for growth
PIPs may have a poor reputation, but if designed and implemented correctly, they can genuinely help an employee turn their performance around. If used effectively as part of a comprehensive performance management strategy, PIPs can help employees understand exactly where their performance is lacking, get a clear sense of how to improve their work and set tangible goals so they can take ownership of their own improvement.
“Ultimately, a PIP can help us create a stronger connection, where leaders support employees’ development,” said Saterman. “When done right, the ripple effect is that this person is now adding even more value to the company. This ultimately supports leaders, other colleagues, clients, and the company itself.”
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