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What Is a Performance Improvement Plan (PIP)?

When employees have recurring performance issues, employers can create a performance improvement plan (PIP) for them. These are formal documents that specify the problems that need addressing, contain a clear list of goals that the employee needs to achieve and set out a timeline for reaching those goals.

Applied correctly and with the right timing, a performance improvement plan can be a powerful tool for an employer.

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Where to start with a performance improvement plan

To define PIP, a performance improvement plan helps facilitate a productive conversation between an employee and their supervisor, setting up a structured approach to helping an employee improve their work results.

The first step you need to take as an employer is to carefully analyze all the factors that may have led to an employee underperforming. Eliminate all possible external factors, such as unclear job requirements, ambiguous professional standards or incompatibilities with management. If you still conclude that the employee needs to significantly improve job performance, then a PIP is warranted.

A PIP can be effective in situations where the employee is having trouble meeting quantity objectives, sales targets and quality standards. Issues, such as employee discipline, are less likely to be resolved with a performance improvement plan.

How to define your PIP

Once you have decided to place an employee on a performance improvement plan, there are several steps to help them improve.

1. Have a discussion with the employee

Talk with the employee to ensure they understand the situation and explain the specific performance metrics they need to work on. Frame the PIP as a positive tool, with a focus on how it will help the employee grow.

2. Create a set of achievable goals

Next, create a list of goals that the employee can realistically achieve. The most effective way of doing this is by setting an end goal and then figuring out the steps they need to take to get to that point.

The set of goals varies depending on the employee’s work responsibilities and can be created with the assistance of their direct supervisor. Each goal needs to have a clear start and end date, allowing the employee to plan accordingly.

3. Identify the resources and supports that you’ll provide

Shoring up an employee’s confidence and clarity about what they’re supposed to be doing is one of the surest ways to make the PIP process successful. Provide additional training, consultation and positive reinforcement.

If they need to acquire new skills or shore up some particular part of their skillset, give them the space and time to do that. Specify these resources and supports in the PIP itself.

4. Clarify the consequences of different outcomes

If failing to meet the targets set in their PIP might lead to demotion, reassignment or even dismissal, it’s important to be upfront about this. That being said, it’s just as important not to dwell only on negatives and punishments.

Make it clear that once the PIP comes to a successful conclusion, it will be time to move forward into a positive future, and the employee won’t be under a microscope or have any reason to view the work environment as hostile. Reward success and cheer on your employee to become the best possible version of themselves.

5. Communicate with the employee along the way

Keep the employee focused on their targets by constantly communicating with them about their progress. Schedule regular meetings with the employee and their direct supervisor to find out what challenges they face on their way to achieving their set goals.

Make that meeting schedule an explicit part of the PIP document. This will allow you to provide them with the mental and professional support they need to move forward, as well as any training resources that might be helpful.

6. Review the outcome

After the PIP deadline has passed, you’ll need to have a discussion with their supervisor. They’re in direct daily contact with the employee and can provide more detailed information about their progression.

Review the employee’s performance, and after coming to a conclusion regarding their improvement, you can invite the employee to a discussion where you can ask them about the process and communicate the outcome.

Related:How to Conduct an Employee Evaluation

Tips for successful performance improvement plans

Here are some tips to help you implement an effective performance improvement plan:

Give plenty of advance warning before issuing a PIP

Before telling an employee that they’ll be facing a performance improvement plan, it’s important to let them know in advance that they’re not meeting the standards that are required of them.

The PIP should be seen as a last resort to get an employee back within acceptable standards. You should first have a discussion where you explain that they need to improve their performance, giving them the chance to find ways to improve on their own.

Be direct and specific about their performance analysis

When discussing the employee’s performance, use clear metrics, such as sales numbers or quantity standards. Defining the performance issues in specific and objective terms makes it easier for the employee to understand and acknowledge what needs to improve.

Be as positive as possible. Let them know that you value them as an employee and believe they can grow and improve, as opposed to focusing on their shortcomings alone.

Clarify the expected results

Being clear about the expected results is usually just as important as being clear about the initial shortcomings. The employee needs to know exactly what they have to do to get back to acceptable standards if they want to continue their career at the company.

Measure the expected results using the same metrics as the initial performance analysis, as this will make it easier for you and the employee to track progress.

Related:How to Manage Employees

What a PIP form should include

A performance improvement plan form should include fields for the following information:

  • The employee’s name
  • Their title
  • Their department
  • The date the plan was issued
  • Specific performance metrics that need to be improved
  • Goals and activities needed to improve performance (with target dates included)
  • The final target date for completing the PIP
  • Expected results (preferably with defined measurables)
  • A schedule of progress review meetings (with fields for stating the outcomes of progress reviews)
  • Final review and results

The form should provide clear points to ratify that the employee and their supervisor have agreed to start the PIP process, with employee and supervisor signatures and dates.

Performance improvement plan FAQs

Here are some of the most frequently asked questions regarding performance improvement plans:

How long should a performance improvement plan last?

A PIP’s duration greatly depends on several internal factors, such as the company’s size and profile, the employee’s job complexity and how far off they are from the company’s standards. Typical performance improvement plan durations are 30, 60 and 90 days.

When would you use a performance improvement plan?

A PIP should be used in any situation where you’re experiencing fixable issues with a valued employee and where you have a genuine interest and belief in an employee’s ability to improve.

It should be clear throughout the process that the PIP reflects faith in the employee, not the lack of faith, and that it’s not just a box the company is checking off to avoid future claims of unfair dismissal.

Is a performance improvement plan considered to be disciplinary action?

The PIP is seen more as a tool for improvement than as a disciplinary step. It’s an opportunity for an employer to address employee performance concerns and to work on ways of improving overall employee performance in the future.

What are the advantages of using a performance improvement plan?

A performance improvement plan makes it clear to your workforce that they’re expected to measure up to certain standards. It reassures them that a fair process with feedback and measurable goals will be the company’s response to any issues, instead of employees simply getting terminated without warning.

PIPs can empower employees to take ownership of improving their outcomes and can actually lead to their becoming stronger performers.

What are the disadvantages of performance improvement plans?

Implementing a PIP requires a significant amount of time and effort when it’s done properly. It can distract from your regular workflow, and a PIP actually resulting in successful performance improvement is far from guaranteed.

The entire conversation around a PIP is unavoidably going to be uncomfortable for both manager and employee, and if the employee sees it as the first step toward inevitable termination or can’t view the feedback as anything other than antagonism, they may become hostile, resign or take extended sick leave.

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