Summary: A Performance Improvement Plan (PIP) is a structured approach to deal with issues with employee performance in their role.
Performance Improvement Plan (PIP)
Many companies make the mistake of using a PIP to retrench underperforming employees; however, understanding what a performance plan is and how to correctly implement it can provide transformative results for your business.
Definition
A Performance Improvement Plan, or PIP, is a document or template that describes the steps employers should take to improve the performance of their employees. A PIP can help individual employees achieve their professional goals, and it defines the objectives that employees should meet within a specific period of time. If the employee does not meet these job requirements, the employer can act through disciplinary measures, including dismissal.
It is important to note that a PIP is not used as a disciplinary measure. Every PIP is tailored to the skills and capabilities of individual employees and based on the input from managers and supervisors who work closely with staff members.
Purpose
The purpose of a PIP is to establish clear expectations for employees concerning their job roles. This includes helping employees to understand and successfully apply their skills and abilities. The PIP aims to address gaps and deficiencies in individual job performance.
Companies often rely on a Performance Improvement Plan to identify employees who aren’t satisfying performance standards; however, when used correctly, this tool is most effective in guiding and supporting employees to improve productivity. HR will work with managers to discuss whether a PIP is necessary, and if implemented, they will assist management and the employee throughout the process.
When Should You Implement a PIP?
Knowing when to implement a PIP can help businesses identify consistent patterns of an employee’s underperformance and whether dismissal is warranted.
1. Addressing Consistent Underperformance
A Performance Improvement Plan should be used to address concerns or inconsistencies in employee performance. The plan provides a clearer picture of an employee’s work history and whether they have a pattern of underperformance in their job role.
These plans are implemented when you have a valuable employee but have noticed recent changes in their quality or consistency of work. HR may apply a PIP for new employees on probation where extra time is needed to assess whether the individual has the specific skillset for the job.
A PIP is a complex and time-consuming tool and should be applied when you have a valuable employee, and the problem can be resolved.
2. As a Last Resort
A PIP is often seen as a last resort to inform the employee of their problematic performance and to get them aligned with their job roles and company standards. An employee should always be given the opportunity to improve productivity prior to receiving a PIP. A private and professional discussion will create awareness as to where they’re going wrong and how they can meet the required standards.
How to Create an Effective PIP
The following best practices can help you create an effective PIP:
1. Clear, Measurable Goals
To successfully apply a PIP, it must have realistic and achievable goals that are easy to measure. Start by creating the goal, followed by the steps to attain it. You can adopt the SMART method, which involves setting specific, measurable, attainable, relevant, and timely goals.
Goals will differ between employees depending on their roles and responsibilities and should be clearly communicated and understood by all.
2. Timeline for Improvement
The goals that are created for the employee should have a timeline, providing them the opportunity to plan and prepare for change. Will the plan take 30 or 60 days to complete? The timeline should be reasonable concerning how long it will take to reach the objectives and manage the assigned workload.
3. Employee Involvement
Employees who are involved in the PIP from the beginning are invested in the outcome and are more likely to satisfy the performance objectives in the stipulated time frame.
You can achieve this by describing the expectations of a job role and then pinpointing areas within that role that need to be improved. Ask the employee what they need to achieve these performance objectives and make them feel motivated to perform at their best.
Managing the PIP Process
Overseeing every step or stage of the PIP process can support a successful outcome. When management and employees know what is expected of them, it makes the execution of the plan easier and smoother. The PIP process can be managed in the following ways:
1. Regular Check-ins
HR must stay on top of employee progress by communicating with management. Managers who work closely with the employee must check in with them to ensure they’re coping and remaining on track. The frequency of check-ins should be defined in the PIP.
2. Documentation
An employee’s progress must be documented throughout the PIP process. Documenting an employee’s performance can help the company assess the effectiveness of the program and whether the plan needs to be amended.
3. Supportive Approach
HR and management must be clear about the types of support that employees need to achieve the goals as set out in the PIP. Staff should receive the necessary training, resources, and professional guidance to achieve individual and company goals.
Outcomes of a PIP
Planning for the steps that come after the successful implementation of a PIP is just as important as executing the plan itself. Considerations for the outcomes of a PIP are as follows:
1. Successful Completion
An employee who has achieved their milestones should be celebrated. Going through a Performance Improvement Plan can be a stressful experience, and valuable workers who do their best and achieve defined goals must be encouraged to continue to perform at their very best. In some instances, employers may consider these individuals for a future promotion if their work standard remains consistent.
2. Termination or Further Action
If an employee fails to meet the requirements of the PIP, they are generally issued with disciplinary measures such as being demoted or reassigned. A PIP doesn’t always mean that an individual will be dismissed if they cannot reach the objectives of the plan. Discussing the outcome with the employee can provide insight into why they have underperformed. If the issue is a repeat offense and has been discussed with them, along with the consequences of failing to meet the objectives, then termination is the next step.
3. Impact on Morale
Once an employee has completed a PIP, it should be discussed in a private and positive manner. The individual shouldn’t feel punished or negatively criticized for undergoing this process but rather encouraged for meeting their objectives. Employers can reward employees for small achievements throughout the PIP process, including positive feedback to help boost employee morale.
Common Mistakes to Avoid When Implementing a PIP
For employees to improve upon their performance, they require support, resources, and clear communication from management and HR. You can prevent the most common PIP mistakes in the following ways:
1. Vague Objectives
If employees are unsure of what is required of them, they will not be equipped to deliver the desired level of performance. Vague objectives are confusing for employees and management as they are difficult to assess and measure.
2. Lack of Follow-up
Most employees agree that they need feedback in order to excel in their job. When you implement a PIP, constructive feedback or follow-ups should be provided to employees to let them know how they’re progressing, which serves as a motivating factor.
Legal Considerations
Following due process when implementing a PIP can prevent costly and legal consequences, as discussed below:
1. Documenting the Process
If a PIP is not correctly drafted and implemented, the company could be accused of discrimination or breach of contract. Every step of the process must be carefully assessed and discussed with the employee. This includes the creation of performance objectives and documenting the progress of the employee for the duration of the plan. The purpose is to protect the company against accusations of discrimination or breach of contract.
2. Compliance with Labor Laws
To avoid potential legal risks, employers must create Performance Improvement Plans that are clearly defined and include measurable goals that are aligned with the employee’s job role and responsibilities. A poorly drafted PIP can lead to unfair labor practices in which the plan does not adhere to labor laws. Employees can pursue legal disputes in these instances.
Conclusion
A Performance Improvement Plan, or PIP, is an effective tool companies use to address an employee’s underperformance. The PIP details the steps an employee must take to achieve clearly defined objectives in relation to their job role. For the company, crafting a PIP is not a simple process and requires establishing measurable goals that are discussed with the employee. The legal implications of administering a PIP must be considered to ensure that the company adheres to labor laws and protects employees from discrimination, defamation, and breach of contract. PIPs are not tools for punishment or immediate termination, but instead, they can foster accountability and motivate employees when implemented correctly.
Authors:
Marcel is an experienced journalist and Public Relations expert with an honours degree in Journalism and bylines with a range of major brands.