How to Create a Performance Improvement Plan That Works

Performance Improvement Plans are metaphorical death sentences in the workplace. Many managers and employees view Performance Improvement Plans as a formality before termination. It’s that process HR forces upon us so we have our liabilities covered and are technically abiding by the discipline process in our employee handbook. 

Do they work? No. Not with that attitude. 

In this article, I want to cover what performance improvement plans are supposed to be, why we often get them all wrong, and what we can do as people managers to effectively coach our underperforming employees. 

What is a Performance Improvement Plan? 

A Performance Improvement Plan (or PIP), is a document managers create for employees who are not meeting their job expectations. The document will usually include examples of poor performance, corrective behavior required, resources available to the employee, and a timeline for improvement. 

It’s a coaching tool with higher stakes – a performance improvement plan is typically the final step before termination. 

Performance Improvement Plan Template

Free Performance Improvement Plan Template

Download our free Performance Improvement Plan template designed by the Hiring Experts at CareerPlug to help you guide conversations with your employees.


Performance Improvement Plan Example

Let’s look at an example. Say you have an employee, Naomi, who is frequently late to work. As Naomi’s boss, your first step is creating clarity for Naomi on your expectations through direct feedback. You explain to Naomi that arriving on time is part of her job responsibilities and important to your business operations. You ask Naomi if there’s anything preventing her from being on time. If there’s a legitimate barrier, you might problem-solve together. Then, have Naomi commit to a plan to arriving on time. 

That’s the first step for nearly any performance issue: a direct conversation. In many cases, this will solve the problem. 

But let’s say Naomi is on time for the next week, but then backslides into old patterns. That’s strike two. Another conversation is needed to explain that if the tardiness continues it could impact her job security. You owe it to Naomi to repeat your expectations and the need for improvement. 

If the problem persists, that’s when you need to be crystal clear. At its best, a performance improvement plan creates clarity for both managers and employees. You prepare the written plan and review it with Naomi. You talk about what you’re willing to do to help her improve and explain what will happen if she does not. It’s all in writing. You follow through on your commitments. Now it’s up to her. 

In one world, Naomi meets the expectations of the plan and she stays on as a great employee. 

In another, Naomi’s attendance issues are not solved and you part ways with her. 

In her book Dare to Lead, Brené Brown writes, “Clear is kind – unclear is unkind. Not getting clear with a colleague about your expectations because it feels too hard, yet holding them accountable or blaming them for not delivering is unkind.” 

Performance Improvement Plans are kind. 

Except, when they are not. 

When Performance Improvement Plans Don’t Work 

The common advice for an employee handed a performance improvement plan is simple: start looking for a new job. A PIP isn’t to help you, it’s to get rid of you

As managers, as organizations, we give PIPs a bad reputation. Because most of us are doing it all wrong. 

Here’s how we’re failing our struggling employees when we present them with a performance improvement plan: 

  1. Unclear expectations. We want Kyle to be a high-performing team member, but we’re not sure what that looks like. We don’t outline clear metrics, deliverables, or behaviors for Kyle. We figure we’ll know “high performing” when we see it. 
  2. No prior feedback. We save up all of Kyle’s mistakes and document proof of his shortcomings over months, but the first time Kyle hears about it is in the performance improvement plan. We reason he should have just known he wasn’t performing well. 
  3. The decision has been made. We’ve already made up our minds that we want Kyle gone. We knew long before the PIP that there is nothing Kyle could do to prove himself. It’s merely a formality at this point. Let’s check this HR box and start hiring his replacement.

That final point – you’ve already decided to fire someone – is the ultimate failure of PIPs. The biggest mistake I’ve seen managers make is waiting too long to seriously manage performance issues. You go back and forth on how you feel about Kyle’s performance. You hired him and are ashamed it’s not going well. You like him and want to protect him. You are uncomfortable giving him direct feedback. 

Whatever the reason for the delay, eventually it becomes too much not to do something. Having an underperforming employee is hurting the rest of your team and maybe even driving away your top performers. Maybe you see how much easier it would be to achieve your goals with an employee who could do the job better. You are done. But wait, don’t you need to do a PIP first? 

If that’s where you are, you have failed not only that employee but your team and your business. 

Okay. That’s harsh. But I want to talk about how to create effective performance improvement plans and to do that you have to start from this foundation: performance improvement plans should give underperforming employees opportunities to succeed. 

If that’s not where you are, it’s better to be upfront. Whether that’s terminating the employee with some extra pay in lieu of notice, talking about a plan for them to transition out in the next couple of weeks, or whatever makes sense for your circumstances that protect your business and current team while letting the employee exit with dignity. 

Bottom line: if you’re just going through the motions with performance improvement plans, they’ll never work. 

How to Create Effective Performance Improvement Plans 

One more time: performance improvement plans should give underperforming employees opportunities to succeed. 

That means, first and foremost, that you need to have performance improvement conversations with your team earlier than you think. Coaching should be a regular part of managing your team, and when you first see a performance issue you start providing feedback. Remember, one direct conversation can often solve the problem. 

If it doesn’t, begin closely managing performance improvement while you still believe in their success, not after you’ve given up on them.

Here’s how to create an effective performance plan to set employees up for success: 

  1. Document clear examples of underperformance. Metrics are easiest here, for example: meeting sales quota or resolving X support cases per week. If it’s a behavior issue, refer to specific examples in the plan i.e. “Naomi arrived over thirty minutes late for work on [these dates]” rather than “Naomi is always late”. 
  2. Understand what success looks like. What performance metric do they need to achieve? What behavior do they need to exhibit? Be as clear and specific as possible. 
  3. Offer resources. As the manager, your job is to help them be successful. How are you going to check in with them on the progress of the PIP? Will you offer additional meetings and coaching? Will you provide them with retraining or additional educational materials? 
  4. Set a clear timeline. Layout the timeline for improvement. Some PIPs are 30 days. Some are 90 days. What makes sense for your business and what you’re asking them to accomplish? 
  5. Be clear. Tell the employee that their job may be in jeopardy if they fail to complete the expectations of the plan. 
  6. Get the employee’s commitment. Express your commitment, and ask them if they can commit to following through with this plan. It’s a tough conversation, so you can let them sleep on it if needed and revisit with them the next day. If they decide not to commit, you can mutually decide to part ways. 

Remember: the number one recruiting strategy is retention. It’s worth the effort to determine if your underperforming employees can become more engaged and motivated to succeed in their current role with increased support and direction from leadership.

You’ll still inevitably terminate some employees. Not everyone will be the right fit for your team. But you’ll part ways knowing you gave them a real shot at correcting their performance with your full support. That’s something the rest of your employees will see and appreciate.

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