If an employee is consistently underperforming or breaching code of conduct or performance requirements in some other way, a performance improvement plan or “PIP” is one alternative to terminating their contract. Here, you create a sort of probationary phase, during which expectations of change are clearly communicated to the employee, a deadline is set, and change is monitored and managed. Performance improvement plans are usually designed to help employees reach their full potential, especially if they’ve performed at a higher level in the past, if they’re a new hire, or if they’ve moved from one position to another.
In short, a performance improvement plan is an alternative to immediately firing an employee – which gives them the chance to improve. If they succeed and stay with the company, you’ll have reduced costs over making a new hire, have invested in making an employee more loyal, and invested in the morally preferable action of helping someone to succeed first rather than looking for someone else.
When to use a performance improvement plan (PIP)
Performance improvement plans should be a last effort and an alternative to firing or letting someone go. That means they should be a response to a pattern of problematic behavior – which has been replicated over time. In addition, a PIP should never be the first response to poor behavior. If you haven’t given an employee verbal and written warnings that their behavior or performance isn’t meeting standards, you should do so before implementing a PIP.
In addition, Performance Improvement Plans are a good fit when:
- Employees are feeling unfulfilled in their role
- Employees have transitioned from one role to a new one that no longer suits them as well
- When employees want to be more upwardly mobile than they show performance for
- When sales or customer service people miss quotas several quarters in a row but show promise
- Employees engage in behavior that might not meet desired goals for preparation, planning, communication, etc.
- Work keeps failing to meet desired standards of quality
- Employees don’t track work or deliverables despite process requiring they do so
- Employees don’t follow process
- People leave early or arrive late (consistently)
- Responsibilities are being missed, ignored, or consistently turned in late (without the employee being overloaded/overworked)
In each of these scenarios, people can and do improve if given the chance. Not everyone will. However, giving the option to improve rather than firing them can help you to create a more positive employee relationship – while turning around performance for that person.
How to write a PIP?
A good performance improvement plan uses SMART Guidelines. That means:
Writing a PIP means:
- Sharing why the employee is receiving the PIP, E.g., “You are receiving this plan based on (concerns about your performance), (your expressed desire for a promotion),(the recent/upcoming removal of your old role), etc.
- What has to be remediated. In most cases, this will be concerns about performance. Be specific and link problems to business results. E.g., “we have received 12 complains about your communication from clients, which decreases our client relationship, actively hurting the business” or “you are unable to properly navigate SAP S/4HANA,” etc.
- What does the employee have to achieve to “improve”. List this in measurable and specific goals. E.g., “Come into work on time and leave on time every day for 6 months”, or “complete a course in email communication and pass an assessment, followed by no more than 1 complaint about communication over the next 6 months”. “Complete our sales training course, even if you’ve already completed it, and then increase sales to meet minimum quota over the next two quarters”.
- A timeline for improvements. Make this specific. In some cases, it makes sense to set hard lines. E.g., “failure to meet these expectations over the next 60 days will result in immediate termination”. In other cases, it’s important to ensure the employee has time and resources to change the behavior, learn a skill, or improve performance. For longer-term goals, you might also want to set steps, such as a small amount of improvement per quarter. You can then have clear goalposts with which to check up on progress.
- You also want to ensure that the PIP includes specific penalties for failure, where applicable. E.g., no paid vacation, no benefits, or termination of employment.
How to introduce a PIP
Once you’ve written a performance improvement plan, the next step is to introduce it to the employee. If you’ve given verbal and written warnings, it shouldn’t be too much of a surprise. At the same time, it’s important to introduce the PIP in a clear and honest fashion.
It’s also important to be kind, to be empathetic, and to discuss reasons for performance and what the person might need to raise performance when putting the PIP into motion. Try to start a discussion about performance. Try to create a discussion where the employee can share where they are struggling, offer insight into why, and hopefully get guidance and help in resolving that. Over the long-term, that’s a lot more realistic than simply handing an employee expectation to change. After all, if they could just do it, they often would.
When writing the PIP, it’s also important to ensure that the employee and their manager sign the form on every page. If they refuse to sign or refuse to follow the plan, the next step is usually to terminate the contract.
Following up on progress
It’s important to monitor the employee to ensure they are following through on the goals. However, it’s important that they have some part in this. Sitting down with your employee to discuss goals, how they will be achieved, and when you should check up on those targets is important. That also puts the employee more in control of themselves.
- Schedule check-ins, where the employee can self-report progress, discuss goals, and ask for help. Once a month is reasonable.
- Have honest talks. Some employees will start looking for a new job when they receive a PIP.
- Make the employee do the work to show their progress and present results once the PIP concludes.
Performance improvement plans don’t’ always work. In fact, there’s a 70-40% chance that it won’t. Monitoring employee performance is important. You want to be able to react when they succeed or fail. And, you shouldn’t’ be blindsided if your employee fails to meet targets. You also shouldn’t fail to react. If the employee meets set targets, recognizing that is important. If they fail to meet targets, it’s also important to follow up based on the expectations set in the PIP. If that means terminating their contract, you can do so. If they’ve made some progress but not enough, it may be harder to make that call. However, you can always try to give them another chance but with more help.
Eventually, a PIP is a last effort to help a struggling employee. It might also be an attempt to improve someone into leadership. Or, it might be about retraining your workforce after changing roles. In any case, it usually means the employee is not meeting the standards of performance they want to meet your or their goals. And a PIP can help them to recognize and achieve that, with specific and measurable goals.