Is a Performance Improvement Plan a Sign for the Exit Door?

It can be frustrating when an employee seems to have potential but keeps falling short in meeting their performance standards. One way to address ongoing employee performance or behavioral issues is to implement a Performance Improvement Plan (PIP), especially after a manager has already attempted to train or coach the employee, with little or no success.

PIPs can be used in a wide range of circumstances, including when an employee is not meeting goals or metrics, to address work product deficiencies, for attendance issues, or when there are communication problems or disruptive behavior.

While widely used, PIPs are often misunderstood by employers and employees as a sign for the exit door. However, the goal of a PIP is to improve employee performance, not necessarily manage someone out. An effective PIP should clearly communicate expectations to your employee, provide them the tools to succeed, and include a process for monitoring progress, with the goal of getting the employee back on track.

Should We Place Our Employee on a PIP?

If you are considering a PIP for one of your employees, here are some questions to ask:

• Is there an identifiable performance problem? First, it is important to ensure that the manager has clearly identified a work deficiency or performance issue. For example, if the manager says that their employee is “not reliable,” ask them to provide specific examples and documentation. This will help you determine the root cause of the issues and develop tailored goals for improvement.
• Has the manager communicated the problem? Before placing an employee on a PIP, consider whether the manager has communicated and documented the issue and given the employee an opportunity to improve. If the employee is not aware of the issue, additional training and coaching may resolve the problem without the need for a PIP.
• Is a PIP likely to improve the issue? PIPs are typically most effective for performance deficiencies by providing clear expectations and helping the employee understand why they are falling short. PIPs are less effective in addressing willful policy violations or insubordination. If an employee is simply refusing to follow your policies or directives, consider disciplinary action to address the issue, or disciplinary action in conjunction with a PIP.
• Is the manager willing to work with their employee? If a manager is requesting a PIP so they can ultimately terminate their employee, help your manager understand that the goals of a PIP are not to set someone up for termination. If the concern is about documentation to support a future termination, consider whether disciplinary action is more appropriate.
• How much time is needed? The Company should assess how quickly they need the employee to improve and determine realistic expectations regarding training time. For example, if a sales employee needs to improve their metrics, placing them on a PIP for one week likely does not provide enough time to train, develop skills, and monitor meaningful progress. PIPs typically last one to three months.

What Should We Include in Our PIP?

Your PIP should clearly define the role’s expectations and identify areas of concern, with specific examples. We recommend attaching a current job description for additional clarity.

The PIP should establish specific goals and expectations for when the employee must meet their milestones. In developing goals, many employers use the “SMART” method, ensuring goals are specific, measurable, achievable, relevant, and time-bound.

For example, instead of stating that the employee “needs to improve attendance,” the PIP should include a specific metric: “For the next 60 days, you must have perfect attendance, with the exception of legally protected or excused absences, in accordance with our policies.” As another example, instead of saying that an employee needs to “improve their sales,” provide a specific goal: “In 30 days, you must make 50 sales. By 60 days, you must make an additional 100 sales.”

We also recommend providing a list of available resources for the employee, such as Standard Operating Procedures, training, policy documents, or contacts for questions.

Make sure your PIP addresses how frequently your manager will check in with the employee (e.g., weekly, biweekly). For lengthier PIPs, you may require frequent performance evaluations, such as at the 30^th, 60^th, and 90^th day of your PIP.

Finally, include a disclaimer that the Company may end the PIP early if insufficient progress is achieved, and remind employees about the at-will nature of employment, as applicable.

How Should We Follow Up?

Managers should actively check in with their employees during a PIP regarding progress and encourage the employee to ask clarifying questions. It is important that the manager documents the employee’s progress (or lack thereof) and assesses whether the employee is on track to achieve their goals.

At the conclusion of a PIP, the Company should evaluate whether there was meaningful improvement. If an employee showed encouraging improvement but still failed to meet all goals, or there was not enough time for meaningful evaluation, the Company may consider extending the PIP. If the employee does not improve (or even worsens), the employer may consider a transfer, demotion, or termination, based on the circumstances and the company policy.

Let us do the work for you! CEA has a Sample PIP available here for members. We are also available for consultation. Give us a call at 800.399.5331.