People Leadership

Performance Improvement Plans: A Proven Strategy for Effective Performance Management 

April 5, 2024

What does performance improvement plan mean? 

In some workplaces, mentioning the words performance improvement plan can lead to rumours about terminations and that certain employees are getting “coached out.” That’s because performance improvement plans (PIPs for short) have been cast in a primarily negative light. This is often due their frequent use strictly as a way to document poor performance before terminating an employee, rather than as a coaching tool to help improve employee performance and maintain the employment relationship. However, when used correctly, a PIP can be an effective way to help an employee who is underperforming in the workplace. PIPs should never be exclusively used as the first step in a termination process. 

What is a performance improvement plan? 

PIPs should be viewed as agreements between the employee and management to work collaboratively to improve the employee’s performance. Clear Company reported that 92% of employees want feedback more often. Yet 77% of human resources leaders say annual reviews are not an accurate representation of employees’ work. It’s clear there’s a substantial gap between effective feedback and delivery. But it’s not that employees don’t want this feedback. While coaching and ongoing feedback from management can and should be used in the right settings, there are many benefits to taking a formal approach.

A good performance improvement plan provides a roadmap for intervention in the employee’s performance issues, addressing concerns, providing feedback, and setting goals. Those goals are used to determine whether an employee has successfully completed the PIP or whether at the end of the plan there is more that needs to be done. All employees deserve the chance to improve their performance before being terminated or receiving some type of discipline. It’s time to break down PIPs and discuss how they can help bring about the change that is needed.

How does a performance improvement plan work? What are the steps to prepare? 

Discuss poor performance before starting a PIP 

The first step in implementing a performance improvement plan is determining whether it is the right solution for the problem. Maybe there have been some changes in the company that directly affect the employee in question and they’re still adjusting. Maybe you’ve had an employee for several years who hasn’t been given the training needed to perform a new task and they’re struggling. In these cases, a PIP may not be what’s needed. If there have been some consistent problem areas, or a once-great employee has become an underperformer, consider a PIP. If you do implement a PIP, it shouldn’t be a surprise to the employee. No one’s going to take kindly to suddenly being put on a PIP when they believe everything is going smoothly.

Before even introducing the idea of the plan, you should be meeting with the employee. Discuss instances of poor performance when they arise, not weeks after. Communicating expectations gives the employee a chance to understand that their performance fell short. Explain what’s happening on their end. Perhaps they didn’t know something wasn’t to standard. If performance is lacking, let them know that there is an issue and give them an opportunity to fix it. While a PIP can serve as documentation if you eventually need to terminate an employee, a paper trail shouldn’t be the sole motivation.

Frame PIPs positively

Even with ongoing discussions about performance, being put on a PIP can still cause negative emotions, reducing morale. How a PIP is handled can help mitigate those feelings. Positively framing PIPs in a Performance Management Policy as a support for an employee’s performance can help lessen the resentment an employee might feel after being put on one. Having a company policy around the issue proactively lets employees know the potential actions that can be taken, while reassuring them that the primary goal is to help them improve, not get them out the door. 

Set attainable goals 

For a performance improvement plan to be effective, there must be a goal in mind. If something wasn’t being achieved by the employee, communicate not only that it needs to change, but how and when that change will occur. Don’t just tell an employee they’re on a PIP and that they need to fix the problem by an arbitrary deadline. Even if the goal is attainable, it can lead to a lot of confusion and frustration if it’s unspecific. Guide the employee and help them reach expectations. Poor performance in an employee who shows potential is typically an easier problem to solve than replacing them. 

To best achieve the goals you establish in the performance improvement plan, break them down into steps. What would success look like? What actions do you think might help remedy the situation? When should these goals be met?

Big changes take time, commitment, and a shared vision. Using an Employee Goal-Setting Template is a good way to establish desired outcomes and actions to reach goals. Working with the employee on setting achievable goals will help them engage in the plan, which will help with their success. Working with the employee also shows that you want them to and believe they can succeed. Using a Management Goal Assessment Form can also be of benefit to define, measure, and monitor goals. It also documents previous goal achievements.

Check in to review progress 

Once you’ve identified the problem and the potential solution, regular check-ins with the employee are the key to goal achievement. Meetings about performance aren’t always the most comfortable, especially when performance has been an issue. So prepare and hold these meetings properly. This isn’t a time to scold an employee—it’s a time to review progress by having an open discussion. Come prepared to the meeting by identifying successes and challenges in each problem area. The employee should make similar preparations and provide thoughts on the challenges they are facing.

Giving this feedback allows the employee to take ownership of their work and share their opinion. Ownership and engagement go hand in hand, in that employees who feel a sense of ownership for their work tend to be more engaged, and this engagement improves their chances of success. Mutual feedback may lead to a more effective performance improvement plan. Getting the employee’s feedback on how the plan is going can help identify proposed solutions that might not be working as well as they could so you can make changes that lead to a more effective plan. Always remember to document each performance meeting and what took place by sending out a Discussion Follow-Up Letter to the employee. 

Don’t hold it against them 

Performance improvement plans are just that: plans to improve performance. They document an employee’s performance, both positive and negative, and can serve as a tool in multiple ways. That being said, if an employee succeeds at a performance improvement plan and puts their ship back on course, celebrate that achievement. Don’t search for new things to justify any negative beliefs you may have held. If you look for problems, you will find them. But exaggerating lingering, insignificant issues will reduce morale and hurt working relationships. The best advice here is to focus on mindset. Don’t fret about whether the employee might relapse into poor performance someday; be proud they made it through now. The employee has demonstrated that they are tenacious, capable of change, and receptive to feedback. These are all great qualities to have in an employee! Be grateful for them, not resentful. 

How to create a performance improvement plan: Key takeaways to remember 

In the right circumstances, done with proper communication and feedback, PIPs can effectively bring about change in employee behaviour and performance. Their effectiveness as a tool depends on the angle you take when you approach them. If approached negatively and without care, the odds of success are lower. When approached with a positive attitude paired with a collaborative approach, employee performance is far more likely to improve. Slowly but surely, you can shift your perspective toward the positive side of PIPs. 

Transform employee performance with our trusted guidance

Performance management isn’t just a process; it’s the catalyst for a transformative culture where progress is a way of doing business. Our HR experts are here to help. If you need to revamp your performance management tools, book a free demo of our services at a time that’s convenient for you. 

If you want to learn the components of effective PIP planning and the necessary steps to prepare a successful PIP, download Your Performance Improvement Plan (PIP) Checklist. It includes a Performance Improvement Plan Form template that you can use to start creating and implementing effective PIPs that drive change today!