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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 succeed in their role and remain in good standing with the company

Below, you’ll find tips on when and how to implement a PIP and what you should consider including in the plan, 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?

A performance improvement plan refers to a formal tool that identifies an employee’s performance deficiencies and opportunities for improvement within their role. A PIP typically states the employee’s performance issues, such as productivity or skills gaps, and details a list of goals for them to reach by certain deadlines—usually 30, 60 or 90 days.

These plans help employees address failures and achieve outcomes such as overall improved performance, addressing skills gaps or resolving behavioral issues, although they may result in termination or other consequences if the employee doesn’t meet the PIP’s goals within specified timelines. PIPs are commonly used for underperforming employees but can also provide promotion-seeking employees with actionable benchmarks.

Related: Employee Disciplinary Action: Effective Tactics to Try

Benefits of PIPs

Implementing PIPs can provide mutual benefits to your business and its employees, including:

  • Positive company culture: Helps employees address their weaknesses and fosters a workplace culture of positivity, support and employee value.
  • Professional growth: PIPs help employees to grow in their roles and provide more valuable contributions to your business, building an overall more talented workforce.
  • Reduced turnover: Rather than dismissing underperforming employees with other valuable traits, PIPs help employees address skills gaps and saves time and resources used on hiring and onboarding new employees.

When is it time to administer a PIP?

PIPs generally follow a series of verbal and documented communications regarding employee performance issues and typically address issues relating to quantifiable performance standards.

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

  • Does the employee have habitual performance problems? PIPs usually shouldn’t be used for a one-time issue. If an employee makes a mistake, their supervisor should have a documented conversation to discuss concerns and give the employee an opportunity to make corrections. If the issue continues, 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? If the employee’s low performance is due to a lack of training or other external factors, take 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.

Related: How to Improve Company Culture: A Guide to Fixing Common Problems

Elements of 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 issues with examples and evidence to demonstrate your statements.
  3. Create measurable objectives: Explain how the employee should correct their performance and include any resources the employer will provide, such as training, mentoring or regular meetings with their supervisor.
  4. Come up with a schedule: Add a timeline and deadline by which these issues should be corrected.
  5. State the consequences: Outline potential consequences and disciplinary action for failing to meet PIP 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]

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 example

Here is an example of a PIP that using the above performance improvement plan template: 

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
  • Secure a minimum of two in-person visits with existing clients per quarter
  • Complete the ABC Tier 2 sales modules
  • 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]

Creating a performance improvement plan

Reviewing the performance plan

Review the PIP draft, preferably with an HR representative, before discussing it with the employee. Remember, a successful PIP should be designed to help the employee rather than serve as a tool of punishment.

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

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

Implementing the PIP

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

  • Meet with the employee to discuss the PIP: Since conversations around PIPs can be delicate, meet personally 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 to 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 employee progress

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 to help employees feel motivated and supported.

At the end of the PIP’s timeframe, schedule a final meeting to discuss the outcome. If they failed to meet your expectations, consider implementing a second PIP or carrying out disciplinary action according to your company policies. 

Related: How to Conduct an Employee Evaluation

Frequently asked questions about performance improvement plans

What are areas of improvement for employees?

Depending on their role and your business needs, there are many areas employees can improve in. These may include:

  • Communication
  • Customer service
  • Organization and time management
  • Conflict resolution
  • Sales
  • Leadership

What are the disadvantages of performance improvement plans?

Although PIPs are directed at improving employee performance, conversations with your employees about underperformance can be complicated and sensitive. Some employees may consider PIPs as a precursor to dismissal.

Depending on training, mentoring or other needs, PIPs can also be demanding on your business’s time and resources.

What happens after a performance improvement plan?

If an employee is unable to improve their performance as per the standards of the PIP, you may need to dismiss them from your company or recommend that their role may not be the best fit and consider alternatives. A successful PIP may result in continued employment, salary increases or promotions.

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