What is a performance improvement plan? Purpose, best practices, and examples

What is a performance improvement plan?

In simple terms, an employee performance improvement plan identifies issues with a worker’s performance and outlines steps to improve them. It also sets reasonable criteria for evaluating progress and a timeline for meeting performance goals.

Employers provide PIPs to underperforming employees to encourage them to improve their performance. This form of constructive feedback can lead to a positive outcome for both employers and their team members.

Why do you need a performance improvement plan?

Workers don’t always realize that their performance isn’t up to par. By alerting them to the issue, you clarify workplace expectations and allow them to change and increase their skills.

Done well, a PIP can serve as a source of encouragement and feedback, even if the news isn’t all good. According to a McKinsey study, over 75% of workers feel motivated when an employer shares their thoughts about an employee’s performance. Going the extra mile with training or educational opportunities may be just what a worker needs to reset and grow.

Another benefit of PIPs is strengthened relationships. While the initial PIP conversation may feel a little awkward, it sets the stage for regular feedback between a manager and their employee. Ongoing communication and candid conversations may also solidify bonds.

Over time, employers may notice higher productivity around the workplace. That’s a good thing. A buzzing workforce signals high engagement and interest in meeting organizational goals.

How to implement a successful PIP

A PIP is different from a standard performance review. By nature, PIPs highlight the negative aspects of a worker’s job efforts, which may put some employees on the defensive. It’s important to follow an objective PIP process that encourages employees to get on top of their game.

1. Identify performance issues

Employers may overlook an employee’s occasional tardiness or workplace mistake. However, if those issues occur daily, it’s likely time to act.

Start by evaluating how a worker’s performance levels aren’t up to snuff. Do they regularly forget to handle a basic task? Did they recently botch a few significant projects? Are they constantly absent for unknown reasons? Those are all situations that warrant a PIP.

Outline the specifics in a list. You’ll use them as a starting point for the plan.

2. Set actionable goals

Consider what solid performance looks like for the employee’s role. What reasonable standards can you set for them to work toward? Include those goals in the PIP.

Any objectives included in a PIP should be achievable. Unreachable goals may discourage employees, especially if their performance already lags behind their peers.

3. Create a detailed improvement plan

Draft the PIP so it clearly explains the employee’s performance issues and how you expect them to improve. In the plan, list specific milestones and goals to work toward. You can also include target deadlines.

Change often takes time. For example, a worker’s unfamiliarity with a software program keeps leading to mistakes. Overcoming this learning barrier won’t happen overnight. You may set weekly learning milestones that supplement the larger objective of mastering the program.

4. Consistent monitoring and feedback

A PIP starts with a frank conversation about an employee’s work. But if you want to see improvements, don’t stop there. Find time to regularly meet with the worker and discuss their ongoing efforts. If possible, use a few relevant and essential HR metrics to objectively track their performance.

A cycle of regular feedback encourages employees to stay on track with the PIP. It also demonstrates your commitment to seeing them through a rough career patch. The PIP may be just what the employee needs to realize their full potential and capabilities.

Best practices for developing PIPs

Part of being an effective leader is learning how to conduct performance reviews. Whether you are preparing your employees for a year-end review or implementing a PIP, incorporate these best practices for a successful outcome:

• Use transparent communication: Avoid any generalizations in a PIP. Be specific about your concerns and clearly define how employees can improve their performance.
• Set clear timelines: Establishing deadlines holds employees accountable for meeting performance objectives. Therefore, they’ll know how long they have to meet your expectations.
• Provide necessary support mechanisms: Without training or education, some employees may not be able to meet certain performance goals. Make sure that the PIP includes support functions to help them overcome knowledge limitations.
• Encourage employee input and participation: Allow room for employee participation which may identify solutions you hadn’t considered.

Examples of effective PIPs

Here’s a look at two viable performance improvement plan examples:

The tardy worker

Your organization’s office hours are 8:00 am to 5:00 pm. However, one of your workers consistently arrives after 8:30 AM. Even worse, they don’t attempt to make up the missing hours during their lunch break or after closing time.

You set up a PIP to address the issue. The objective is to conform the employee’s work hours to the office schedule. You can measure their adherence using the office timekeeping system.

During the PIP meeting, the employee explains the reason for their tardiness — a lengthy hour-long commute that often involves traffic accidents. They agree to leave their home earlier in the morning and promise to stay late on any days they don’t make it to work by 8 AM. You closely evaluate their adherence to the plan over the next month and have them attend weekly check in meetings for encouragement and feedback.

The error-prone employee

A company accountant consistently makes errors on the books. One of their mistakes was caught in the last company audit, resulting in a restatement of the organization’s financial reports. You establish a PIP with the worker. Most of their errors stem from a lack of knowledge of how to use the company accounting system. To improve their performance, you decide to pair them with a more experienced team member for weekly training.

You anticipate that it will take two months to increase and hone their skills. In the meantime, you carefully review all entries they make and point out any errors. Continuous training and feedback pay off. Within six months the employee is one of your top workers.