How to Create a Performance Improvement Plan (with Template)

If an employee has recurring performance issues, you may want to work with them on a performance improvement plan (PIP). Sometimes referred to as a performance action plan, employers often use this strategy to help underperforming employees understand the actions they need to take to meet goals and remain in good standing with the company.
 

Using a PIP instead of terminating or demoting an employee can lead to a better company culture and employee morale, minimize employee turnover to save you time and money and give employees a chance to learn, grow and improve.
 

Below, you’ll find tips on when and how to implement a PIP, including what you should consider including in the plan and how to monitor its impact. Plus, a performance improvement plan template and sample you can use to create your own.
 

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What is a performance improvement plan?

While some employees may see a performance improvement plan as the first step in the termination process, these plans give employees a blueprint to help turn things around and perform at the level you expect.
 

A PIP typically states the employee’s performance issue(s) (e.g., work quality, behavior-related concerns, low productivity, issues meeting quotas or deadlines) and details a list of goals for them to reach by certain deadlines — usually 30, 60 or 90 days.
 

If an employee doesn’t meet the requirements according to the specific timeline outlined in the plan, you may need to take further disciplinary action.
 

Related: Employment Discipline: Effective Tactics to Try
 

When is it time to administer a PIP?

When an employee receives a PIP, it should not come as a surprise. Often by this point, their direct supervisor will have had at least one documented conversation about performance issues, perhaps during a recent performance review.
 

If you’re not sure whether you should prepare a PIP, ask yourself the following questions:
 

  • Does the employee have habitual performance problems? In most cases, a PIP shouldn’t be used for a one-time issue. If an employee makes a mistake, their direct supervisor should have a documented conversation to discuss their concern and give the employee an opportunity to make corrections. However, if the issue continues to occur, it may be time for a PIP.
  • Can the issues be corrected with an action plan? Issues with work quality, meeting goals and completing work on time are all examples of behaviors you can work to correct through a PIP.
  • Have you made all reasonable accommodations to help get the employee on track? Is the employee’s poor performance due to a lack of training or a known personal issue? If so, be sure you’ve taken the necessary steps to provide the resources they need. If you’ve made these accommodations and the issue persists, a PIP may be the course-correcting action they need to improve.

What to include in a performance improvement plan

Here are a few elements you should consider when writing a PIP:
 

  1. Describe why the PIP is needed: Write a statement describing the organization’s performance expectations and how underperforming can impact the business.
  2. Identify the problem(s): List the performance issue(s) with examples and evidence to back up your statements.
  3. Create measurable objectives: Include an explanation of how the employee should correct their performance, including any resources the employer will provide (e.g., training, mentoring, regular meetings with their supervisor).
  4. Come up with a schedule: Add a timeline and end-date by which these issues must be corrected.
  5. State the consequences: Outline potential consequences and disciplinary action for failing to meet the outlined expectations.

Performance improvement plan template

Here is a performance improvement plan template you can adapt to create your own:
 

[Employee name]
[Employee role/title]
[Employee department]
[Date]
 

Reason for Improvement Plan
 

The purpose of this performance improvement plan (PIP) is to define issues in your work performance, clarify expectations of the role and give you an opportunity to address these concerns and remain in good standing at [Company name].
 

Performance Improvement Plan
 

As discussed with your supervisor, this document serves to provide you with a plan to correct your performance in the following areas:
 

  • Issue #1: You are expected to [company expectation].
    • [Explanation of how the employee failed to meet this expectation]
  • Issue #2: You are expected to [company expectation].
    • [Explanation of how the employee failed to meet this expectation]
  • Issue #3: You are expected to [company expectation].
    • [Explanation of how the employee failed to meet this expectation]

Action Items to Correct Performance
 

To correct performance, you must complete the following activities within [timeline (e.g., 30, 60, 90 days)]:
 

  • [Specific improvement goal]
  • [Specific improvement goal]
  • [Specific improvement goal]
  • [Specific improvement goal]

By following this action plan, we are confident you will be able to improve performance and meet the expectations of [Company name].
 

If you are unable to meet [expectation] by [deadline], you will be subject to disciplinary action up to, and including termination.
 

[SIGNATURES]


Performance improvement plan sample

Here is an example of a PIP that uses the performance improvement plan template above.
 

John Smith
Account Executive
Sales
July 5, 2020
 

Reason for Improvement Plan
 

The purpose of this performance improvement plan (PIP) is to define issues in your work performance, clarify expectations of the role and give you an opportunity to address these concerns and remain in good standing at ABC Company.
 

Performance Improvement Plan
 

This document serves to provide you with a plan to correct performance in the following areas:
 

  • Issue #1: You are expected to meet a minimum of 80% of the quarterly quota.
    • You failed to meet your minimum sales quota for Q2 2020.
  • Issue #2: You are expected to maintain a quarterly customer retention rate of 50%.
    • You failed to meet the minimum customer retention goal for Q2 2020.

Action Items to Correct Performance
 

To correct performance, you must complete the following activities within 60 days:
 

  • Commit to a minimum of three hours of phone time, in office, per day
  • Secure no fewer than five lead appointments per week
  • Share your weekly lead list with your immediate supervisor every Monday by 9 a.m.
  • Secure a minimum of two in-person visits with existing clients per quarter
  • Meet with your immediate supervisor every Friday at 9 a.m. to discuss lead list, completed appointments and pending deals
  • Complete the ABC Tier 2 sales modules to become certified by July 30, 2020
  • Ask your immediate supervisor for mentorship and assistance as needed

By following this action plan, we are confident you will be able to improve performance and meet the expectations of ABC Company.
 

If you are unable to meet 80% of your Q3 quota and meet a customer retention rate of 50% by September 1, 2020, you will be subject to disciplinary action up to, and including termination.
 

[SIGNATURES]


Reviewing the performance plan

After drafting the performance plan, it’s important to review it before discussing it with the employee. If you have an HR representative, work with them to create a PIP; if not, ask your manager for feedback. Keep in mind that for a performance plan to be successful, it needs to be fair and designed to help the employee, rather than serve as a tool of punishment.
 

When reviewing the performance plan, check for several important things:
 

  • Ensure that the plan does not have any non-performance related bias against the employee.
  • Ensure that the objectives are fair and that the timeframe is reasonable.
  • Ensure that the employee has been given the proper tools and training to improve.

Implementing the performance improvement plan

After drafting the performance improvement plan, consider following these steps to implement it:
 

  • Meet with the employee to discuss the PIP. Since performance improvement plans can be a sensitive subject, hold a one-on-one meeting with the employee to discuss it.
  • Communicate the goals and timeline to the employee. During the meeting, lay out the goals and timeline to the employee. This will give them targets to work toward.
  • Give the employee an opportunity to ask questions and receive clarification. The performance improvement plan should be a joint effort. Clarify any questions the employee may have so they understand what your expectations are and how they can meet them.

Monitoring the PIP’s impact

Track your employee’s progress toward meeting the goals outlined in the PIP. Schedule follow-up meetings to monitor their efforts and check in regularly to address any new questions or concerns. This can help employees feel motivated and supported.
 

At the end of the PIP’s timeframe, schedule a final meeting to discuss the outcome. If the employee has met the goals, the performance plan was successful for the company and the employee. However, if they failed to meet your expectations, consider implementing a second PIP if they made an exceptional effort, or carrying out disciplinary action according to your company policies.
 

Related: How to Conduct an Employee Evaluation
 


For employees, getting a performance improvement plan can be difficult — especially if they’re highly engaged and dedicated to their role. Remember to assure employees that you want to help them improve and are willing to offer the help and guidance they need to meet expectations and motivate them to succeed in their role.
 

While a PIP isn’t a guarantee an employee will improve, providing a step-by-step action plan will ensure you’ve made every effort to get them on the right track — helping you build a strong company culture, boost morale and save time and money in the long run.
 

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