When & when not to implement a Performance Improvement Plan (PIP)

Performance Improvement Plan

This article includes an editable Performance Improvement Plan template and an accompanying instructions document for your managers.    

Don't want to read the entire article?  Fair enough.  We've highlighted the template in yellow so you can scan and access it quickly.

What's a Performance Improvement Plan (PIP)

Standard Definition: A performance improvement plan is a structured formal plan that outlines an employee’s performance issue and specific steps for improvement that typically lasts 30-90 days.

Business Definition: A performance improvement plan is a formal plan you put into place when you’re experiencing a fixable performance issue with a valued employee. The key words here are valued and fixable.

One of the most difficult tasks of a manager is dealing with an employee whose performance isn’t cutting it.  However, letting poor performance go unchecked has negative consequences that ripple right through your company.  Not only are the people who work with the individual affected, but it sends a message to other employees that you’re not serious about maintaining consistent, high performance standards.

When a manager approaches me to implement a performance improvement plan, going through the pros and cons usually sheds a light of reasonableness on a muddy topic.  

Advantages of a PIP

  • Reassures other employees that they will be provided with feedback, a fair process, support, and an opportunity to improve -- rather than being involuntarily terminated without warning. 
  • Empowers employees by allowing them to take ownership for their performance/behavior and demonstrate their commitment to improve and correct the problem areas.
  • In some cases, the employee becomes a stronger performer.
  • With an authentic documented process for improvement, the risk of litigation is decreased if the employee’s performance doesn’t improve and termination occurs

Disadvantages of a PIP

  • Usually requires a significant amount of effort when done properly
  • It distracts from the regular work flow
  • It’s inevitably uncomfortable for both manager and employee during and after the performance improvement plan conversation
  • A PIP's effectiveness is dependent on a number of variables. It's not uncommon for PIPs to be unsuccessful 
  • Once an employee is put on a performance improvement plan, there’s a risk that the individual interprets it as the first step in inevitable termination or is unable to absorb the feedback as anything but antagonistic. In these cases, the employee may become toxic, resign or in a worst case scenario, go on extended sick leave.

When a performance improvement plan makes sense

  • When a labor agreement dictates it as a must-have process when there’s a performance issue
  • When you haven’t structured your employee handbook to allow you flexibility or discretion in how you will deal with a performance issue.  If you say that your policy is to implement a performance improvement plan when performance issues arise, employees will believe you and expect it
  • When the employee is a ‘keeper’ and most other areas of performance meet expectations
  • When the employee has historically been a good performer and the performance issue is a recent anomaly
  • When the employee is going through personal challenges, and the window for accommodation is closing
  • During probationary period, if the new hire is a keeper but additional time is needed to assess a fit or skill set

When to rethink a performance improvement plan

  • When an employee has to work with a new manager with for example, higher performance standards, there may be situations when the performance issue is related to fit or personal traits that are usually very difficult to turn around.
  • When an employee has been with you for a significant period of time, has historically been a mediocre-at-best performer or their skills have been allowed to get stale, and has never been provided with feedback or training.  Coming in at year 8 with a performance improvement plan is unreasonable and a long shot for success.  At this point, management needs to take responsibility for the silent airwaves of the past and eat the costs of avoiding corrective action (we call that the Severance Jar).   If the plan is for the employee to remain on board, it requires a longer term approach and is best dealt with in annual performance reviews, feedback, support and training goals.   
  • When a manager’s sole intention is to create a paper trail where the only end goal is to terminate the employee. A performance improvement plan is to be used when there is a genuine interest and belief that the employee’s performance will improve.
  • When there’s evidence that a performance issue has a low likelihood of correction
  • When your department or company’s direction has changed and the employee’s competencies are significantly misaligned with the new job requirements.
  • When there’s a serious incident such as theft, violence or gross insubordination.

It starts with a conversation

Under no circumstances is a PIP implemented without an initial conversation.  An employee should never go into a meeting where they're presented with and expected to sign a performance improvement plan form.  But that's a separate topic for another article.  

  Sample Performance Improvement Plan Form 

Last word

Initiating a Performance Improvement Plan is a serious undertaking.  It means the employee will lose their job if they don’t meet the goals and standards in it.  Be prepared for this outcome before you start, and work closely with someone who has both the company & employee's best interests in mind. 

Ariane Laird Vancouver

Ariane Laird is CEO & Founder of ConnectsUs HR, a company that provides tools & resources to quickly set up a Human Resources department.  
You can contact her directly from the Inquiry Type drop down menu.