January 12, 2021
Performance Improvement Plans: Not Just One Step Closer to Termination

When people hear the term “performance improvement plan,” their minds immediately jump to visions of being fired.

We don’t want to sugarcoat it: This performance management tool can be viewed as a probationary period and ultimately result in termination if the employee cannot meet objectives or improve behavior.

When used correctly and with good intentions by the employer, a performance improvement plan (PIP) can also help struggling employees find success and get back on track. A PIP should not merely be used by managers who are fed up and looking for an easy route to firing a staff member.

PIPs often accompany disciplinary action, so developing an effective plan and addressing it with the employee in question can be delicate and unpleasant. That’s why we’ve answered the most frequently asked questions, including:

  • What is a performance improvement plan?
  • Why are PIPs important?
  • When is a PIP appropriate?
  • What should it include?
  • How should you conclude the plan?

Read on to learn more about how a PIP works.

What is a Performance Improvement Plan?

A PIP is often referred to as a performance action plan or corrective action plan. It can be used in various situations, from employees who are new to a role or unclear on performance expectations to those who frequently fail to meet expectations and may require a progressive discipline process.

This type of plan often comes after an initial corrective action, such as a written warning, has been given. Your human resources (HR) team should be involved in the process to:

  • Determine if a PIP is appropriate.
  • Work with the relevant manager to administer PIPs to prevent bias.
  • Provide continuous guidance to both the manager and employee throughout the plan.

Why are Performance Improvement Plans Important?

PIPs offer several benefits and have been shown to work. One case study looked at a newly promoted plant manager of a 150-person organization who was seriously failing in key deliverables for an important project. Despite communication and coaching, the manager showed no improvement.

Once a formal PIP was developed for the plant manager with 11 specific goals and a 90-day time frame, things began to turn around. He engaged his team to help hit the objectives, and they met them all.

This plan’s two essential elements were a supportive environment with positive reinforcement and a well-planned, measurable PIP.

As shown in the above example, when implemented effectively and appropriately, a corrective action plan (CAP):

  • Helps facilitate performance discussions.
  • Empowers employees to change their performance and behavior.
  • Provides employees with detailed feedback and specific areas of improvement.
  • Shows the employee that the company has empathy and offers opportunities for improvement.
  • Serves as legal and decision-making documentation and reduces the risk of litigation if termination occurs.

When is a PIP Appropriate?

A PIP should be used when there is a commitment to help the employee improve. It is NOT a tool for a frustrated manager to start the termination process—this sends the message to all of your employees that help and room for improvement are not available. That type of message is certainly not good for workplace productivity and morale.

When considering a PIP, assess if a structured plan with time-sensitive goals is the appropriate next step or would do more harm than good. Your HR team should ask the following questions to determine if a PIP is the right choice:

  • Is there evidence of a performance or behavioral issue? The manager should present a list of performance problems, with dates, specific data or detailed explanations, and any previous guidance given to the employee. Refer to the most recent performance review to see when the issue started.
  • Is the manager committed to helping the employee succeed, or are they focused on simply terminating the employee? Listen for signs that the manager is concerned about the employee and wants to help. If they are fed up with the employee and the entire situation, a PIP likely won’t help.
  • Is the issue suited to a structured improvement plan? For example, problems with sales goals, quality ratings, quantity objectives, and similar issues may be resolved via a goal-oriented program that helps identify why the deficiencies occur. However, a PIP may not effectively address behavioral problems such as poor attitude and insubordination.
  • Has the employee received the necessary training to succeed in the role or particular task? If the employee took a leave of absence or time off during which they missed training or informative meetings that were not provided to the employee later, they might simply require additional training.
  • Is the employee dealing with a known personal issue that is affecting their performance? Personal problems can lead to decreased performance, but employers can often accommodate this. If the reasonable time frame for accommodation has ended, a PIP could help an otherwise great employee get back into the swing of things.

What Should a PIP Include?

A PIP usually lasts 30, 60, or 90 days, depending on the issue and how long it would reasonably take to improve. If you’re wondering how to write a PIP, the key elements it should contain are:

  • Employee information
  • Relevant dates
  • Explanation of performance deficiencies
  • Description of expected performance
  • Description of actual performance
  • Description of consequences
  • Plan of action
  • Signature of the manager and the employee
  • Evaluation of plan of action and overall PIP

While the format of the corrective action plan will vary by company and position, the plan of action should generally include:

  • SMART (Specific, Measurable, Attainable, Relevant, and Time-bound) goals.
  • Guidance on how the manager will help the employee achieve these goals, such as additional training, resources, or coaching.
  • Schedule of progress meetings between the manager and employee (typically once a week, but may vary).
  • Clearly stated consequences for not meeting the PIP objectives, which may include demotion, transfer to a different position, or termination.

How Should You Conclude a PIP? 

When an employee meets all of the plan goals, it’s time to close the PIP officially. Recognize the employee’s success and allow them to continue employment with the clear understanding that continued good performance is expected.

Even if the employee falls short of the objectives within the given time frame, consider the circumstances. If they are showing improvement and commitment to continued good performance, give them more time to succeed. Also, keep in mind any extenuating circumstances outside of the employee’s control. 

If an employee is unable to improve or if their performance deteriorates, the plan should be closed. Now is the time to consider consequences, such as reassignment, demotion, or termination, depending on the circumstances.

Developing an effective performance action plan can be challenging and the conversations unpleasant. However, they are a critical part of performance management and can genuinely help improve employee performance and productivity. 

PIPs also show your entire team that your organization is open to helping team members improve while also protecting your company down the line in the unfortunate case of a termination. For assistance in creating a reliable performance improvement program, contact BlueLion today at info@bluelionllc.com or 603-818-4131.

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