5 ways to improve performance improvement plan outcomes

Published: 23 July 2024 | by Natasha Wiebusch, Brightmine Marketing Content Manager

“I’m getting fired.”

“How do you know?”

“I just got PIP’d.”

This conversation is not unique. In fact, most would say it’s a normal reaction to being placed on a performance improvement plan, or PIP. Though PIPs were not originally designed to foreshadow termination, today, it is how employees perceive them.

According to Robert Teachout SHRM-SCP, Legal Editor at Brightmine, this often makes them poor performance management tools. “PIPs are very often ineffective because employers are using them for termination documentation instead of employee improvement,” says Robert.

Given their fraught reputation and questionable uses, many employers today avoid using them to improve talent outcomes. Some have even suggested scrapping them altogether.

Still, there may be hope for PIPs in the world of performance management. This article provides changes you can make to the PIP process to get better outcomes and fewer exits.

Understanding performance improvement plans

A performance improvement plan (PIP) is a formal document that:

• Notifies an employee of a performance deficiency.
• Establishes performance goals an employee must meet.
• Lays out a time-bound plan for employees to follow to meet those goals.

A PIP is not a typical component of the performance management process. It’s an agreement employers use when an employee is exhibiting prolonged poor performance. Most of the time, employers use the PIP process as a last resort.

If an employee fails to meet the requirements of a PIP, their employer can take further disciplinary action. This may include demotion, suspension or termination. Most often, employers terminate employees who do not meet the PIP’s goals.

The problem with performance improvement plans

PIPs are most often ineffective for a few key reasons:

Managers use them for termination

First, they have a poor reputation as a recordkeeping practice for managers who are preparing to fire an employee. Specifically, employers often use PIPs to protect the organisation from lawsuits by providing a record of the employee’s underperformance. Because of this, employees generally see PIPs as a sign that they’re about to lose their job.

Organisations also usually have employees sign a PIP acknowledging their performance issues. Unsurprisingly, many employees find this practice threatening.

Together, these feelings of fear of losing one’s job and threat do great damage to an employee’s psychological safety.

They’re a form of negative reinforcement

Even when managers use them to improve performance, their negative connotation tends to make them less effective than, for example, coaching. That is, between the “carrot” method and the “stick” method, a PIP is most certainly a stick. And, studies show that negative reinforcements — such as threats of pay cuts, demotions or termination — are less likely to improve performance than positive reinforcements.

Their one-sided nature

Additionally, PIPs are often one-sided, which can result in misalignment between a manager and employee. Instead of working on a plan together, managers usually draft the PIP alone and give it to the underperforming employee. They then discuss the PIP’s requirements, leaving the employee with no choice or say in the PIP’s contents.

Together, the problems PIPs have made them poor performance management tools. To make them work for both managers and team members, they need more than a makeover.

Getting better performance improvement plan outcomes

The benefits of performance improvement plans may be elusive, but they do exist. To capture these benefits, you’ll need to transform performance improvement plans and processes surrounding them. The following are changes to consider:

1. Don’t use PIPs as evidence for termination

It should go without saying: To improve performance with a PIP, you can’t use them for the purpose of terminating an employee. Though it may be a convenient way to create a record of performance issues, you simply can’t use them for both termination and performance improvement.

Instead of relying on PIPs for record-keeping, ensure you have good record-keeping practices. This may include memorialising performance conversations on a regular basis or memorialising goal setting. One way to do this is to have more than one formal performance appraisal a year.

For example, you can require quarterly performance check-ins along with one larger yearly appraisal. This provides managers an opportunity to provide formal, written feedback to employees throughout the year. Importantly, regular check-ins with all employees won’t single out poor performing employees.

With good record-keeping practices, you can reserve PIPs for genuine efforts to improve employee performance. And with certain termination out of the picture, employees may be less inclined to shut down when they receive one.

2. Get the whole picture

The role managers play in employee engagement and performance cannot be understated. According to a study by Gallup, managers account for a whopping 70% of the variance in employee engagement. Because managers have such a significant influence on performance, it’s crucial to examine their role in underperformance before resorting to a PIP.

To help get the whole picture, establish a processes and procedures managers must follow before creating a PIP. At minimum, managers requesting a PIP should:

• Formally discuss their reasons for requesting a PIP with human resources.
• Provide thorough documentation related to the employee’s underperformance.
• Be able to show what efforts they have made to coach the employee.

If you notice a manager tends to have lower performing employees or higher turnover than other managers, consider investigating their management practices. This may include reviewing their performance appraisals, employee engagement surveys and other performance documents.

Manager fit

Some organisations recognise that poor employee performance may not always be the fault of the employee or their manager. Rather, it may just be that it’s not a good fit. For this reason, these organisations have created policies that make it easier for employees to request a transfer to another manager.

For example, a company may implement a policy that states it will approve one manager transfer for an employee during their tenure – no questions asked – as long as they’re in good standing.

Policies like these can help prevent poor engagement and performance before it begins. However, whether they’re possible will depend on the company’s talent strategy, company size and talent needs.

3. Find middle ground

Employees often feel blindsided when they receive a PIP. Even when employees know they’re having performance issues, most are surprised when they realise they’ve reached “the last resort.” Generally, misalignment between the manager and the employee about the employee’s performance are to blame.

To reduce the shock of a PIP, consider strategies to formally communicate performance issues before they reach the level of a PIP. This may include:

• Conducting more regular performance check-ins.
• Coaching managers on how to provide both positive and negative feedback.
• Creating an intermediate development plan that acknowledges areas for improvement, but is not as dire as a PIP.

4. A two-way street

Instead having managers create PIPs on their own, consider coaching them to create the PIP together with the employee. Allowing an employee to participate in the process can help the employee take ownership over their performance issues and understand expectations. It can also help managers build trust with an employee by agreeing on priorities and a timeline.

To do this effectively, managers must have good communication skills. Accordingly, make sure managers receive thorough training on how to have difficult conversations. Thorough training will help them navigate discussions about poor performance with employees and how to improve. Training should include coverage of:

• Coaching techniques.
• Providing objective feedback.
• Preventing bias.
• Practicing empathy.
• Creating psychological safety.

Unfortunately, not every employee will willingly participate in this process. In some cases, employees may refuse to acknowledge their performance issues or agree on the terms of the PIP. To help set expectations, ensure employees understand from the beginning that a PIP can still move forward even without their participation.

5. Have regular check-ins

Once the PIP is in place, managers should have regular meetings with employees to check on their progress. Check-ins provide additional coaching opportunities for managers and also help identify potential hurdles employees are facing. During these meetings managers may also offer additional resources and reiterate their desire to help employees succeed.

The power of positive reinforcement

Regular meetings are also an opportunity to provide positive reinforcement, which is key to improving performance. Indeed, research has repeatedly shown that positive reinforcement is more effective at improving performance. Though PIPs themselves are bad news, by celebrating progress, managers can help rebuild employee confidence.

Beyond performance improvement plans

Performance improvement plans are far from the only performance management tool for struggling employees. Learn more about improving performance through the Brightmine HR & Compliance Centre, formerly XpertHR tools and resources.