How to Create a Performance Improvement Plan

Steve Kuhn
February 17, 2021

Managing a team of employees means keeping an eye on the performance of each player. When one or more aspects of an employee’s work needs to improve for one reason or another, it can be a difficult task to approach. Using a performance improvement plan (PIP) can create a tangible pathway to success for any struggling employee or any employee looking to move forward to another position.

As a human resources professional, you will be in charge of making sure the PIP is both ethical, supportive, and effective for all parties involved. That said, there are a few key elements to consider when designing a PIP both as a process for your department and in each unique circumstance. However, it is first important to know the basic purpose of a PIP and when to use one in your business.

What is a PIP?

In its most basic form, a PIP has 2 parts. First, it is a set of goals that define success in a particular role. In addition, there is a time frame in which the employee must meet those goals.

Typically, a PIP is used when an employee is struggling in one or more areas of performance within his or her position. If the performance is not satisfactory for the standards of the company, a PIP works to clarify expectations and helps the employee get back on track. There are also consequences in place if the employee is not able to meet the predefined goals on time.

While this may sound like a harsh ultimatum, the ultimate goal of a PIP is to make success more achievable for the employee through clarity and fairness.

Reasons for Using a PIP

PIPs are best used when the employee displays a quantitative deficiency in performance. In other words, you will want to be able to measure performance on an objective rubric or scale.

If an employee is not meeting productivity goals, has a tardiness problem, misses deadlines, or lacks a certain quality metric for their work, these are all situations which may benefit from a PIP.

Keep in mind that this type of plan works to correct a consistently evident problem. One-time issues or short-term lapses in performance may be better addressed in the form of meetings or feedback letters.

Ethical Use

It is commonly understood that a PIP is the last step before terminating an employee. A plan like this can provide useful documentation in a wrongful termination lawsuit, and for this reason it is often misused in some corporate policies. However, a PIP should not be used as a way to legally fire someone.

Instead, a PIP should signify how important an employee is to the company. If the company is willing to take steps to help the employee succeed, the plan should be presented in a supportive way, as an opportunity for development.

Although not common, a PIP can actually be used to help an employee achieve a promotion. This unique type of PIP would outline goals for the employee that will help him or her perform better in the target role.

Designing a PIP

Each performance improvement plan will vary based on the needs of your company and the individual employee. Because of this, designing a PIP can be difficult. While you will want to remain in accordance with any policies set in place by your HR department, it is good to have enough room to tailor the plan to the employee’s needs.

First, it is a good idea to meet with the employee about the performance issue and get feedback about what it would take to see improvement. If this seems to resolve things, there’s no need to move forward with a PIP. However, if it seems like a plan is necessary, this meeting can also help provide key information for the plan’s design.

Take into account any personal issues the employee may be facing which could affect job performance. How comfortable are they with the resources available to them? Do they understand job expectations? Are they motivated to succeed in this position?

If a PIP seems like a viable option, there are 5  key aspects that can maximize the chances for effectiveness.

1. Define Success

If you are already considering a PIP, you should already be familiar with the problem at hand. The first step in designing a PIP will be defining this problem as clearly as possible. Then, describe what it would look like for the employee to succeed instead.

Lay out any required metrics for the employee and define them as clearly as possible. Document all instances in which the employee did not meet these expectations and provide these as examples of the performance issue. Any data that can contrast the current performance with the required result will help the employee understand the gap that must be crossed.

2. Set Clear Goals for the Employee

Once success is defined, you will want to provide steps for the employee to improve. For instance, let’s say an employee is struggling with sales quotas. If the duration of the plan is 90 days, you might have sales goals that gradually increase each week until you expect the employee to meet the required quota.

The ideal goal will be presented as a measurable milestone for achievement. Define what it means to meet each goal in a way that can be objectively measured. Clear goals will also have a time limit. Consider how long it might take the employee to complete each action step and pace your goals accordingly.

Other performance issues will require more complex solutions, and you will want to identify any obstacles for the employee when setting these goals. Sometimes a lack of productivity or quality of work can stem from a variety of factors.

3. Indicate Resources for Success

Because a PIP is about helping the employee succeed in the given role, you will want to give them the best shot at achieving this. Provide support by helping the employee make use of the resources available to them.

Most team members will have software, handbooks, document libraries, other team members, and supervisors available for support. Be sure the employee is comfortable interacting with all of them and knows how to access or communicate with each one.

Part of the employee’s performance issue may also be due to a lack of proper training. When indicating key resources, you will also want to decide if the employee needs to be re-trained in a certain area and implement the proper sessions.

4. Schedule Feedback Meetings

It is also important to have meetings for the supervisor to provide feedback about the employee’s progress. You will first want to decide how often the employee will need to receive this feedback. Identify any key deadlines that may coincide well with progress reports and supportive discussion.

Scheduling these meetings at regular intervals ahead of time will help reinforce any new habits and provide deadlines for improvement when the plan is implemented.

During these meetings, healthy, productive communication between the supervisor and the employee is essential. Design a set of discussion topics and questions about the issues at hand for quick reference during meetings. This will focus the conversation for each meeting toward the overall goal and limit and non-supportive conversation.

5. Outline Consequences

Consequences are a key part of creating accountability within a company. In designing a PIP, it is important to clearly state the consequences, should the employee’s performance not improve. While the consequence of a PIP is often termination, you may otherwise choose to move the employee to another position or lower the employee’s pay.

Provide specific details that determine the outcomes of success (continued employment) and failure (termination or other). Be firm when presenting the consequences. The employee must know what is at stake, and this will illustrate how important it is to have a high-performing team.

6. HR Review

Once the plan is complete, human resources should review the plan to be sure the goals are attainable and fair. Assess the time limit placed on the employee to be sure it is reasonable to achieve these goals. Overall, a human resources professional should be the final stamp of approval that the plan is an ethical solution to the problem.

This also means deciding if the plan is required in the first place. Consider the relationship between the employee and the supervisor in charge of the plan. Is the supervisor mature enough to handle this type of situation? Are there any issues in the relationship which could cause the plan to fail or put the employee at a disadvantage?

Implementing the PIP

Great plans always look better on paper, and it is the same with any PIP. All the goals and resources outlined in the plan document may seem clear at first. However, you will always want to account for human complications and other variables along the way.

Because each situation is different, be sure to account for the employee’s individual needs. Consider anything that might stand in the way of improvement which is outside of his or her control. Being flexible as the plan is carried out can help create a supportive environment and allow the employee the proper room to grow.

Meeting with the Employee

Once you have the PIP documented and approved by Human Resources, you will need to have an initial meeting to introduce the finalized plan to the employee. The document should be discussed in detail so that the employee can understand it. At the end of the meeting, the document should be signed by both the employer, employee and any other parties involved as an agreement to proceed.

This first meeting will be crucial to the overall perception of PIP to take place. Remember to frame the PIP as an opportunity for the employee to grow and a sign that they are valued. Present the strengths that make the employee worth the effort to keep on staff. Instill confidence in the fact that success can be achieved and support is available.

Documentation of Feedback

During scheduled feedback meetings, documentation will remain important. Document how the employee reacts to any critical feedback. Continuous detailed documentation of improvement, any relevant data for performance metrics, and any employee concerns should be compiled and referred to throughout the plan.

It is also a good idea to let the employee drive the majority of the meeting. This provides agency to improve performance and puts the goals in his or her hands. Make discussion topics and feedback accessible so that the employee feels supported and encouraged. Provide resources for the employee to track his or her own progress.

Completion of the Performance Improvement Plan

Once the PIP is completed, you will also want to have a follow-up meeting. The main purpose of this meeting is to discuss whether or not the employee achieved success. However, the employee should already be acquainted with these results. Still, it is good to conclude the PIP process by formally closing the plan.

If the employee succeeds, congratulate him or her on their achievement, provide access to the results in the form of a document. While positive support is important in this final stage, be sure to encourage the employee in any habits that have since been developed during this process. Ensure them that continuous good performance is expected in their role.

If the employee fails or does not meet expectations, follow through on the outlined consequences. Otherwise, the standard of accountability you have worked to create will be lost. Future measures may become ineffective in achieving these kinds of goals which can affect the performance of the team as a whole.

However, you may also use your best judgement. If the employee appears to have achieved some level of success or demonstrates a genuine desire to succeed, you may decide to extend the timeframe of the plan.

Again, it is important to remain flexible. However, any extensions should be severely limited. At some point, the PIP must conclude with a final result.

Final Thoughts

Using a performance improvement plan can be a great way to develop and maintain a culture of accountability and create value within your team. While much of the PIP relies on the people involved and the execution, a great design from the start can provide a framework for tangible success.

However, this design process can be difficult, especially if some policies are already in place with your company. If you need help with designing a PIP that meets your needs, Criterion can help you work that out. Whether you are seeking advice to make the best decisions or you are looking to better manage your team with a uniquely designed HCM software, there are options available. Schedule a demo today.

Steve Kuhn
Chief Sales Officer
Senior Sales Professional with 20+ years of strong executive experience, selling software solutions and building relationships in Enterprise and Mid-Market.

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