How to Build a Better Performance Improvement Plan (PIP) Process

Companies that make bad hires pay the price. Placing someone in a role they’re not fit for can cost your company hundreds of thousands of dollars, stemming from costs of training, negative impacts on your entire team’s morale or their need to pick up the slack, lost customers, and more.

Savvy HR pros know to act fast to remedy a poor hire, likely involving a change of role for the employee or a graceful transition out of the company.

Unfortunately, this same perspective to cut one’s losses before they amplify often comes into play when previously satisfactory employees begin to underperform. Since they are not new to the team, their manager puts them on a performance improvement plan (PIP) as a way to quickly document their performance shortcomings and start building the documentation for a termination.

But the thing is, if you’re primarily using your PIPs as a way to document poor employee performance as the final step before firing someone, you’re doing it wrong!

A well-thought-out PIP, combined with 1:1 coaching, has the opportunity to turn an under-performing employee into one of your company’s best assets and avoid the costs of turnover.

What Ineffective PIPs Aren’t Getting Right

PIPs have a terrible reputation amongst employees, but PIPs are not intrinsically evil. The issue is how many managers approach the PIP process.

Misguided managers view PIPs as a necessary step to justify a termination (and provide the legal safety net HR requires), instead of using a PIP as a legitimate tool to help get a team member back on the right track. They focus on building a laundry list of things they dislike about the employee, often highlighting “issues” that do not lend themselves to a structured goal and measurement process. For example, noting that an employee “asks too many questions,” and “should be more proactive with driving strategy” while also requiring that they builds more consensus around their decision-making. Or, a more malicious approach, placing on an employee on a PIP because they are leading a team and you want to use them as a scapegoat for the team’s shortcomings.

Approaching a PIP in this manner makes it unlikely the manager will identify performance or behavior issues the employee can improve. For an employee on the receiving end of such a PIP, the lack of concrete goals that can be measured is demotivating, and worse, can be demoralizing and create a self-fulfilling prophecy where their fear causes them to make unnecessary mistakes.

Some instances where a PIP is not the right approach include:

• A veteran employee has never received official performance feedback, and then is placed on a PIP after years with the company
• New personal matters have arisen that can explain the performance deficiencies, and the employee has not been given a reasonable amount of time to recover
• Your company direction has changed, and the employee’s skills are no longer aligned with their new job description, and the company has not provided training opportunities
• Legal issues are involved, such as workplace harassment, violence, or unethical business practices—these issues need to be the focus of a workplace investigation

7 Elements to Include for a More Effective PIP

A clearly-written PIP serves as a roadmap for the employee and any other involved team members, with a stated goal of bringing the performance up to the expected levels. Your PIP should include the following:

1. Background/Description of Substandard Performance: Explain why the PIP is being implemented, with specific examples of where the employee fell short, alongside examples of expected performance levels.
2. KPIs and Measurement Tools: Establish how success will be defined, including what KPIs will be monitored, and establishing an objective way to measure the results.
3. SMART Goals to Achieve Acceptable Performance: Give the employee specific, measurable, attainable, relevant, and timely goals that will address their performance issues. Ensure that the goals are realistically achievable in the time frame allotted. Otherwise, the PIP becomes unattainable.
4. Roles/Responsibilities: Detail how the employee, manager, and any other stakeholders will partner in this process. This can include that the manager will hold regular check-in meetings; the company will provide access to additional training or resources and any other factors that impact the employee’s ability to succeed.
5. Timeline: State when the PIP begins, set dates for checkups with the employee, and provide the desired PIP completion date.
6. Consequences for Incomplete Performance Improvement: Should the employee fail to meet the requirements of the PIP, state the next course of action (possible termination).
7. Signed Agreement of Acceptance by All Parties. After reviewing the PIP and its elements with the employee, HR, the employee, and the manager should sign off on it, indicating that all parties are in agreement with, and have a clear understanding of, the PIP and its elements.

There are a variety of templates available online, including this one from Smartsheet that can get you started. The key is to be as detailed as possible with your examples and in communicating what needs to be achieved during the PIP.

Have members of your HR team review the final PIP to perform a bias check on the document and ensure the employee has a fair chance at success.

Setting the Employee Up for Success with Their PIP

PIPs require a significant time investment on the part of the manager and the employee. Just developing the plan then leaving the employee on their own is not setting them up for success.

From the start of the PIP, there are a few key ways you can set your employee up for success:

• Encourage feedback when first discussing the PIP with the employee, and be open to making changes. Having an open dialogue can reveal new details to the situation or help to address any confusion.
• Provide any training or tools promptly.
• Hold your check-in meetings on time. These are critical to monitor progress, and by missing meetings, it insinuates that you do not value the employee’s potential for recovery.
• Recognize and document all progress toward the goals. Positive reinforcement of progress will show that you recognize the effort that the employee is making, and can help them feel encouraged to continue striving for success.
• Be flexible to extending the timeline. While this may not be appropriate in every situation, if an employee shows great strides but comes just short of success, or if new factors arise that impede their progress, be willing to extend the PIP timeline.

Use PIPs to Show You Value Your Team

Not all employees will be able or willing to complete a PIP, but by following the guidance above, you’re giving every employee a chance for success.

By approaching your PIPs with the right intention and care, it shows your team that you value their professional growth and are invested in them. This will help foster a greater sense of trust and respect in your organization and build a loyal workforce ready to continually improve.

At Emtrain, we are experts in HR matters and have a variety of performance management resources to help you structure a successful PIP process. If you need more hands-on help to set your team up for success, send us a message.