Performance Improvement Plans: A Necessary Safeguard for Managers

Determining whether an employee should be let go when issues arise can be difficult. If the employee has performed well previously, it’s often in the organization’s best interest to keep them on board rather than finding and training a replacement. Additionally, the threat of wrongful termination lawsuits can be a significant reason to give companies pause. Thankfully, there is a solution that managers can use for both cases.

Below, we will cover the topic of Performance Improvement Plans (PIPs), and how they can be used by managers to determine if an employee can meet expectations or should be allowed to excel elsewhere.
 

Why Do Managers Need to Use Performance Improvement Plans (PIPs)?

Companies today can face quite a few difficulties in finding the right talent. There are constraints put on what can be done to discern a candidate’s performance history versus what is presented on a resume or in an interview. Some candidates interview exceptionally well but for one reason or another, their performance paints a different picture once hired.

Immediately terminating employment isn’t a wise first step. For one, the process of finding, interviewing, hiring, and training another employee for that position can be both time-consuming and costly. The threat of lawsuits if the wrong steps are taken in termination, or if they can even be perceived as being wrong, can also be significant.

Performance Improvement Plans (PIPs) are used to provide the employee with a clear and concise pathway to meet the expectations of their role in the company. It also allows the organization to see if the employee in question can rise to the expectations of their role.

From the manager and company’s standpoint, a PIP shows a clear and well-documented attempt at asking the employee to meet the needs of their position, along with a documented pathway to do so. If they are unwilling or unable, the organization can show that it has put forth the effort to clearly communicate and even assist the employee with meeting the needs of their role.

Now that we know why PIPs can be important tools for managers, let’s delve into what they are and how they should be used if needed.
 

Understanding Performance Improvement Plans (PIPs)

A PIP is typically not the first step in asking an employee to adjust something about their actions or performance. These plans are typically only implemented after informal coaching or feedback has not given the necessary results. By elevating these communications to a PIP, the process moves from informal to formal to communicate that changes must be made to continue the working relationship.

For a PIP to be effective, it should have:

Clear objectives: In moving from informal coaching to a formal PIP, clear objectives need to be communicated.

Actionable steps: The PIP should include actionable steps that outline how the employee can meet objectives.

Timelines: As with any project, realistic timelines and milestones should be set for the employee to navigate the objectives set out within the PIP.

Support and resources: Set the employee up for success with access to resources to help them meet the objectives of the PIP.

Feedback and evaluation: Establish regular sessions for the employee to receive feedback on their PIP progress and evaluations.
 

Benefits of Implementing PIPs

Creating and implementing Performance Improvement Plans may seem like an unnecessary process at first glance, but they can provide a net benefit for both sides of the equation.

Some of the benefits that the PIP process provides are:

Time and cost savings: PIPs can avoid the time and cost needed to find, interview, hire, and train a new employee when the current employee may be able to rectify the situation.

Clarity and alignment: Poor communication may be why an employee is missing expectations, and a PIP can outline what goals and objectives are needed.

Opportunity for development: A PIP may be what an employee needs to discover skill gaps and the resources to fill them.

Fair and transparent process: PIPs indicate that a company would like to see the employee meet expectations by establishing a clear and transparent process for what is needed of them.

Retention and engagement: It is far more beneficial to retain trained employees than to let them go, and engaged employees deliver better performance. Well-run PIPs can offer both.

Legal compliance: The formal PIP may be a prerequisite before termination, ensuring due process by allowing the employee to meet expectations of their role.
 

Best Practices for Effective PIP Implementation

PIPs are not new, but they are gaining more usage now based on current needs. These processes have been refined since their creation, and have established some best practices for the process:

Early intervention: Performance issues should be addressed proactively so the employee doesn’t feel they are suddenly being “picked on.” Informal coaching or feedback should only be elevated to the formal PIP process when other measures have proven ineffective.

Collaborative approach: Involve the employee in developing the PIP so they understand the expectations, ownership, and approach.

Specific and measurable goals: Clear, measurable, and achievable goals should be set within the PIP to objectively assess the employee’s progress.

Regular communication: Regular and scheduled feedback, guidance, and encouragement are necessary to keep the employee engaged and aware of their progress.

Supportive environment: PIPs shouldn’t be seen as a punishment but rather an attempt to help the employee succeed.

Flexibility and adaptability: Be flexible and willing to adapt if aspects of the PIP evolve based on feedback or changes in priorities or objectives.

Documentation: As with any process, ensure that the PIP is well-documented in terms of the plan, its objectives, progress, actions taken, reviews, and outcomes for reference and compliance purposes.

Fairness and consistency: Always follow established policies, procedures, and legal requirements for all PIPs to ensure fairness, consistency, and legal compliance across the organization.
 

Challenges and Considerations

Performance Improvement Plans can be an effective tool for managers, but there are challenges to consider when designing and implementing them. One main challenge is that the employee in question may see it as a punitive measure, or worse, feel as if it’s a sign that they aren’t wanted within the company.

To prevent this from happening, managers should use the best practices outlined above, and keep the following considerations in mind:

Employee perception: Some employees may see PIPs as a punishment if the plan and its purpose aren’t properly communicated.

Resource allocation: Creating and implementing PIPs can include time and effort from multiple levels and stakeholders.

Legal and compliance issues: PIPs should be developed in compliance with the pertinent employment regulations and laws, as well as your organizational policies to ensure compliance and avoid legal disputes.

Cultural and organizational factors: Take care that a stigma is not attached to those going through PIPs within your organization. Also consider cultural differences, your organization's dynamics, and the individual circumstances when designing a PIP to ensure that it’s relevant, effective, and fair.