What is a performance improvement plan (PIP)?

A performance improvement plan (PIP) is a formal document designed to help an employee improve their job performance. It outlines specific areas where improvement is needed, sets measurable goals, and provides a timeline for achieving these goals.

PIPs enable employees to identify their weaknesses and negative behavioral patterns while providing guidelines for improvement to achieve specific performance standards.

What is the main purpose of a performance improvement plan (PIP)?

The primary purpose of a PIP is to address and rectify performance issues. It serves as a structured approach to help employees meet the company's performance standards. By providing clear expectations, regular feedback, and support, a PIP aims to improve employee performance and productivity.

Is a performance improvement plan a disciplinary action?

PIPs are not meant to discipline employees but can serve as formal support for underperforming employees.

What are the key components of an effective PIP?

An effective PIP includes:

1. Clear objectives: Specific, measurable, attainable, relevant, and time-bound (SMART) goals
2. Actionable steps: Detailed actions that the employee must take to improve
3. Support resources: Training programs, mentorship, or tools that can assist the employee
4. Regular feedback: Scheduled meetings to review progress and provide feedback
5. Consequences: Clear information on what will happen if performance does not improve

When should you implement a PIP?

Due to the mixed reactions a PIP is likely to elicit, treat it carefully. Of course, not every employee or negative performance will require one. But some situations do call for PIPs.

Here's when employees may need personal improvement plans.

When your company is pivoting

Significant organizational changes may make perfect sense to you. But many employees will likely resist them.

Introducing performance improvement plans may work as the company pivots, especially if they involve several people.

Tip: You could frame each PIP as redefining the company roles and ensuring that each employee is ready to handle the changes.

Doing so will make employees less defensive and more likely to participate in the transformation while improving their skills.

When there's a dramatic shift in role requirements

Introducing new technology is problematic because it can completely change how everyone works. The great news is that 69% of managers who considered their digital transformations successful offered training before and after going live.

When a company embraces a new form of technology or experiences a technological breakthrough, that is the right time to introduce PIPs.

Tip: You can redefine roles and areas of focus, create a development and growth plan, continuously provide feedback, and monitor the employees' progress.

When the employee's performance is really low

When an employee's performance deteriorates to such an extent that the company can't ignore it any longer, you must use a PIP to offer that employee the last chance to make things right and save their jobs.

How long should an performance improvement plan last?

A performance improvement plan (PIP) typically lasts between 30 to 90 days, depending on the nature of the performance issues and the role. Here's a breakdown of how to determine the appropriate duration:

1. Severity of performance issues: If the performance issues are minor or focused on specific areas, a 30-day PIP may suffice. For more significant concerns or multiple areas of underperformance, a 60- or 90-day plan might be more appropriate
2. Complexity of the role: Employees in more complex roles that require specialized skills may need a longer timeframe to improve performance and meet expectations. For these roles, a 60- to 90-day plan is usually recommended
3. Type of improvement needed: If the performance issues involve skill gaps that require training, a longer PIP may be necessary to give the employee time to develop the required competencies
4. Company policy: Some organizations have standard guidelines for how long a PIP should last, typically within the 30- to 90-day range

What are the pros of using PIPs?

Below are some of the primary benefits of implementing employee performance improvement plans.

Improves company culture

Company culture is the way organizations do things. It includes informal behaviors and attitudes, as well as structured systems. PIPs enhance accountability, pushing everyone to work and meet the company's objectives. As a result, employees will have no issues learning new skills to do their job well. And that, in turn, will drive up productivity.

Improves employee performance

Since a PIP lays out a plan for addressing an employee's struggles, it will help them improve their skills at a personal level. A well-trained employee will be more capable of doing their job and performing better, so you won't have to replace them.

Also, investing in employees pays in the long term. They will be available if you need to fill vacant positions that arise when some retire or quit.

More effective than relying on annual reviews

Typically, PIPs last from 30 to 90 days. This allows you to provide feedback to employees more frequently, enabling them to obtain more information about their growth and implement any suggestions faster.

Saves time and money

When an employee routinely falls short of expectations and doesn't change, you may have no choice but to fire them. But laying off employees means hiring and training more people to take those positions without knowing whether they will perform.

It's no wonder that the loss of an employee can cost your company 150 to 200% of their annual salary.

You will need to spend money on advertising the vacancy, screening and interviewing applicants, and onboarding them. At the same time, overall team productivity will suffer until filling the position and even beyond until onboarding is complete.

Therefore, using a PIP to train and develop existing talent will save time and money. Plus, since the talent is already available, you can watch the employees grow their careers and promote them from within. It's a win-win situation for everyone concerned.

How can a PIP be used to improve team performance?

A PIP can enhance team performance by:

• Identifying weak links: Addressing individual performance issues that may be affecting team dynamics
• Setting benchmarks: Establishing clear performance standards that serve as benchmarks for the entire team
• Encouraging accountability: Promoting a culture of accountability and continuous improvement
• Providing support: Ensuring that team members receive the necessary resources and support to succeed

What are the cons of PIPs?

But PIPs are not all sunshine and rainbows. Many employees might panic when receiving a PIP, wrongly interpreting it as a prequel to their termination.

Lowering employee morale

The average employee may consider following a PIP a personal attack on their capabilities. So, it may lower their morale, make them more disengaged in the workplace, and cause trouble.

Increasing employee turnover

When employees consider a performance improvement plan a warning or disciplinary action, they will likely become disengaged and begin searching for another job.

Tip: It is your responsibility to communicate clearly and to convince employees that PIPs are a tool to help them. At the same time, however, you do need to be clear with your performance expectations.

How to create a performance improvement plan?

What does a good performance improvement plan look like? Here's a guide on creating an effective plan for your employees.

1. Determine acceptable performance

Start by defining what acceptable performance is for the employee and the position they occupy.

What does success look like for someone in a particular position? For example, if your employee is a salesperson, you need to specify the average sales expected per week, month, or year.

On the other hand, for a manager, some of the issues that may arise could relate to:

• Whether they treat their juniors well
• The overall team performance under their watch
• Whether they lead by example, etc.

2. Investigate the root causes of unsatisfactory performance

When an employee's performance significantly drops, there could be a good reason why that person is no longer as productive as they should or used to be.

For example, your employee could have just adopted a child, been undergoing a divorce, or have a severe illness.

Tip: Understanding the problem's root cause lets you determine the best action to take to improve their performance.

3. Create measurable objectives

Your objectives should be measurable. They should also be specific to employee roles and personal situations.

Tip: So, use specific, measurable, attainable, relevant, and time-bound (SMART) goals.

For example, you could state that the employee should generate sales worth $200,000 of farm machinery within three months.

Remember, if your goals are unrealistic and unquantifiable, it will be difficult for someone to achieve them. So, start by researching each role and understanding how it contributes to company goals. And factor in the company's existing resources and support systems.

Complementary resource: Check out these inspiring examples of developmental goals and ways to achieve them.

4. Communicate clearly with the employees

Making the employee understand that a PIP is neither a disciplinary action nor a preamble to firing is vital. Employees shouldn't feel threatened when you place them under supervision.

Tip: Ensure that your employees view PIPs as a tool to help them overcome deficiencies and enable them to perform at their best.

5. Place emphasis on positivity

You should be as positive as possible at every stage of the performance improvement plan.

Tip: Even when discussing a negative action, avoid attacking the person you review.

6. Draft an action plan

Your performance improvement strategy must include an action plan with some essential elements:

• Smart goals, as previously discussed.
• Milestones that employees can achieve and celebrate. Achieving milestones will allow employees to feel a sense of achievement, rendering the whole process more positive.
• A timeline including each milestone until the employee achieves 100% of the set objectives. A performance improvement plan cannot go on forever.
• A check-in schedule so you can offer relevant feedback and refine focus areas.
• All available resources. For example, will they need to undertake online courses, or will the company provide peer and customer reviews? Alternatively, will someone offer one-on-one mentorship to guide the employee through the ropes?

Free template: Performance Improvement Plan Template (Word)

7. Ensure that the employee understands performance expectations and possible repercussions

You must explain how the company will help employees achieve the set PIP objectives. That means clearly communicating the company's expectations and the possible repercussions when they fail to achieve them.

Tip: Remember, the clearer you are about the company's expectations, the better off you will be if there's legal scrutiny later.

What are some tips for effective PIPs?

The success or failure of your performance improvement plans will largely depend on how you structure and implement them. Below are seven tips for effective PIPs.

Be direct and specific when communicating the results of the performance analysis

You should clearly explain to every employee under review what their issues are. You also need to shed light on any specific patterns of behavior that need tackling.

Tip: Include the previous performance reviews and peer feedback so they understand what they should work on.

Draft a preliminary schedule for check-in and feedback sessions. Also, communicate how you will measure the employee's progress. For example, you could use team reviews and feedback surveys.

Have a positive and constructive attitude

Give customized constructive criticism when developing the employee's skills by offering praise for things done correctly while clearly stating the areas the employee still needs to improve.

Tip: Remember to criticize the action, not the person. This will help you prevent demoralization and defensiveness.

In addition, you should offer realistic and practical solutions for fixing the employee's problems. Also, avoid micromanaging the employee, so they can have room to work on the challenges they face.

Embrace two-way communication

Solving employee problems requires the participation of all stakeholders, including the employee whose performance is under review. So, listen to them and ask for their side of the story and suggestions on what to do.

Tip: People are more likely to embrace change when they can proactively address their issues. Since they have first-hand information about their problems, they could offer insights you can include in the action plan.

Be upfront about expectations and repercussions

We cannot stress enough how important it is to share your expectations for performance and improvement. The more specific you can be, the better.

Tips

1. Let employees know what you expect from them after they access the available resources. For example, what are the expectations of performance output after training?
2. Be as factual as possible when communicating your expectations so that they don't take things personally, but understand the gravity of their situation.
3. Remember to clearly state the outcomes if they don't meet the objectives, including termination, transfer to a different department, and demotion.

Document the conversations as check-in meetings take place

PIPs can come back and haunt you. For that reason, you need to document the discussions during check-in meetings.

Tip: Any meeting notes will be an excellent reference point for you and the employee under your supervision.

Evaluate the plan's progression

Without feedback, performance improvement plans won't work.

So, use 360-degree performance reviews to distribute the burden of providing criticism across the board and from top to bottom. Therefore, managers, colleagues, and even customers will offer feedback.

You can conduct 360-degree performance reviews via one-on-one check-in meetings where you will have personal discussions with the employee. Also, you can include surveys and peer and performance reviews.

Tip: Every part should offer feedback independently to prevent bias.

You can then work with the employee to refine the focus areas based on the feedback. And once they complete one stage of the improvement plan by improving their behavior, productivity, and skills, they can progress to the next.

Reward success at the end of the plan

Effective recognition and rewards programs increase the average employee's performance by 11.1%. So, rewarding success at the end of the plan is something you cannot skip.

Of course, one of the most significant rewards at the end of the PIP period is the freedom the employee gets from scrutiny from their supervisor.

But there is more you could offer them in terms of rewards.

Tip: Consider giving public and private recognition of the excellent work done, a free lunch, paid trips with their peers, gift cards, handwritten thank-you notes, etc.

How can the success of a PIP be measured?

Organizations can measure the success of a performance improvement plan through:

• Achievement of goals: Assess whether the employee has met the performance goals outlined in the PIP
• Improvement in metrics: Monitor improvements in key performance indicators (KPIs) related to the employee’s role
• Feedback from peers: Gather feedback from colleagues and supervisors on the employee’s performance
• Sustainability: Evaluate whether the performance improvements are sustained over time

What are some performance improvement plan examples?

Here are some performance improvement plan examples worth emulating.

Improving customer service

If you want an employee to improve their customer service, provide mechanisms for customer feedback. These could be surveys, online reviews, or testimonials.

In addition, train employees and empower them to be empathetic and proactively find solutions to the customers' problems.

And it never hurts to introduce technological tools that help everyone work more efficiently.

For example, a data center may create a PIP for a customer service representative who has received multiple customer complaints. Customers were unhappy with the solutions provided to their product problems and with rude behavior, so you need to address these issues.

The PIP will include:

• A refresher course on product details and client handling.
• A goal of getting at least four positive customer testimonials within 60 days.

Improving productivity

When employees are not producing as much work as they should on any given day or week, having them follow a performance improvement plan may be helpful.

For example, suppose you run a content marketing and B2B SaaS SEO agency. One of your best writers begins to lag significantly. Instead of writing the standard 15,000 words weekly, they only submit 5,000. Yet, you require more productivity. So, you ask the employee what's wrong, and they tell you they just adopted a baby and are struggling to cope.

In deference to the writer's additional responsibilities as a new parent, you could set a 10,000-word limit per week, order them to submit 2,000 words of work to the supervising editor by the end of each day, and schedule a bi-weekly check-in for at least three months.

If the writer succeeds, they get to keep their job. But if they fail, you may need to let them go or demote them to lower-paying work.

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