Performance Improvement Plans: When and How to Implement Them

Employers use performance improvement plans (PIPs), or performance action plans, to address employees’ performance deficiencies, such as not meeting goals or deadlines. The goal is always to improve performance, but outcomes vary and can include overall performance improvement; the recognition of a skills or training gap; or actions such as transferring, demoting, or terminating the employee.

Crafting a PIP creates a paper trail that shows a commitment to helping the employee improve their performance, casting the employer in a positive light.

HR’s role includes:

• Determining whether a PIP is needed.
• Administering the PIP in conjunction with the manager to prevent bias toward the employee.
• Providing ongoing guidance to the manager and employee throughout the PIP.

Step 1: Determine Appropriateness

The PIP should signal a commitment to helping the employee improve—not a way for a frustrated manager to start the termination process. HR needs to assess if a PIP with time-sensitive goals is the appropriate next step by considering:

• Is there a performance or behavioral issue that can be substantiated? Ask the manager to create a list of performance deficiencies that includes specific data or detailed explanations as well as previous guidance given to the employee. Review the most recent performance appraisal to see if the issue is new or ongoing. Consider whether the worker’s manager has taken steps to prevent the need for a PIP.  
• Is the manager committed to helping the employee succeed? Listen carefully to determine whether the manager wants to help the employee or is no longer able to manage the situation. There is little point in a PIP if the manager doesn't want the employee to succeed.
• How likely is it that a PIP will fix the issue? Quantitative problems such as sales goals or quality ratings may be well suited to a PIP that helps identify why the deficiencies are occurring, but insubordinate and insolent behaviors are not as easily addressed by a PIP.
• Has the employee received proper training to succeed at the task? If the employee legitimately missed training or informative meetings that were not later made available, additional training may be warranted before a PIP is put in place.
• Is a personal issue possibly affecting performance? When personal difficulties strike, employes may exhibit a dip in performance that employers can often accommodate. If a reasonable time frame for accommodation has ended, a PIP may help a capable employee get back on track.

Step 2: Draft a Plan

Once the need for a PIP is established, ask the manager to draft a plan for HR’s review. It should include:

• Acceptable performance levels and how the employee’s current performance is lacking. Provide specifics regarding unacceptable performance. Attach the job description and any relevant employer policies to clarify expectations.

• Specific and measurable objectives that are achievable, relevant, and time-bound. PIPs typically last 30, 60, or 90 days, depending on what it would reasonably take to improve the issue.

Examples:

• Guidance on management’s actions to assist the employee in achieving these goals, such as additional resources, training, or coaching.
• Detail on how frequently the manager and employee will meet to discuss progress. This often is once a week but may vary, depending on circumstances.
• The PIP could note that the company may determine at its own discretion to end the PIP early if the employee clearly cannot or is otherwise refusing to meet the goals of the PIP.
• Clearly stated consequences for not meeting the objectives, including demotion, transfer to a different position, or termination.
• Examples: 
  • In May, June, and July, Jane Smith’s quality errors must not exceed 3%, and she must produce at least 150 units each month.
  • During this 90-day performance evaluation, John Smith must have perfect attendance, except for approved medical or family absences. He must clock in and be ready for work by the start of each scheduled shift, return from all scheduled breaks on time, and remain at work for his entire shift.

Employers may choose a letter format or use a standard form when creating a PIP. See two samples below:

Performance Improvement: Action Plan (PIP #1)

Performance Improvement: Action Plan (PIP #2)

Step 3: Review

HR professionals must ensure that the plan is attainable, fair, and consistent across the organization. In reviewing the PIP, focus on removing any bias against the employee:

• Is the performance issue clearly stated and well substantiated?
  
• Are the objectives fair and the time frames reasonable? For example, is a salesperson given a sales goal that far surpasses the projected sales of the clients assigned?
  
• Is the employee given the proper tools and training needed? If it’s a relatively new employee, was adequate onboarding in place to help the employee become acclimated? If HR has a role in making those provisions, that process should start immediately.

Step 4: Implement the Plan

The manager should meet with the employee to inform them of the need for the PIP and discuss expectations. (It helps if the manager conveys their own commitment to the plan and to the employee’s success.)

Make sure the manager knows they should encourage the employee to ask questions; this feedback could help identify areas of confusion and foster the employee’s ownership of the plan. Be open to the employee’s input because the perspective of an employee who is worth the time and effort of a PIP may result in a more effective plan.

After discussing the PIP, the manager may modify it based on the employee’s feedback. Once HR has reviewed any changes, the manager and employee should sign the final plan that is then forwarded to HR for approval.

If the employee is unable to commit to the PIP process at this point, the employer will need to determine whether termination, demotion, or another appropriate action should be taken.

Step 5: Monitor Plan Progression

HR should emphasize to the manager that all progress meetings should be scheduled and occur on time. Canceling meetings or being late conveys a manager’s lack of commitment.

HR typically would not sit in on the meetings, although it can if the manager is new or inexperienced in conducting a PIP. HR may also opt to sit in if there is a concern that behavior could escalate during the meeting. HR also might choose to attend an initial and/or final PIP meeting if a third party is needed to later corroborate what was said at the meeting in court, should litigation later arise. HR should have a consistent practice on whether it attends such meetings for this reason.

Ensure managers know they should discuss and document progress to identify why improvements have or have not been made. Coach managers on how to conduct these meetings; employees should be encouraged to take the lead by reporting how they think they are doing, sharing realizations they have made, or suggesting what else they need to succeed. If gaps in training or required tools become apparent, provide those as soon as possible.

The manager should recognize successful progress throughout the PIP period to motivate the employee’s continued improvement.

Step 6: Conclude the Plan

There are generally three scenarios:

The employee successfully meets the PIP’s objectives—possibly before the plan’s expiration date. At this point, the employer, in concert with HR, should formally close the PIP, recognize the employee’s success, and allow the employee to continue employment. HR and the manager must be sure the employee understands that continued good performance is expected.

The employee is committed to improvement but falls short of the objectives within the established time. HR could advise extending the plan a bit to provide more time to achieve success. If the objectives of the plan were found, in retrospect, to be unrealistic or not fully within the employee’s control, the plan may conclude successfully based on the improvements achieved.

The employee doesn’t improve or their performance worsens. Close the PIP and consider a possible reassignment, demotion, or termination, based on the specific circumstances.