Whether you own a small, independent startup or manage human resources for a large corporation, you need a performance management strategy to keep your team engaged, productive, and accountable for individual and business goals. In this guide, you'll learn how to create an effective performance improvement plan, or PIP.
Whether part of a large corporation or a small startup, employee performance management techniques are essential. An employee PIP can address issues with your workforce before these concerns derail your organizational goals. Here's some more information about PIPs, their benefits, and how to use them.
What is a PIP?
A PIP, sometimes called a performance review, is a document that outlines a particular employee's performance issues, such as lateness or failure to meet productivity benchmarks. It defines performance goals for the employee so they have targets to work toward as they change their behavior and, as a result, advance their career. PIPs aren't necessarily negative, although they do typically address performance gaps. Instead, they help improve employees' productivity and performance by providing them with detailed feedback. Companies use PIPs to ensure an employee's success.
The criteria for successfully completing a PIP can include goals such as undertaking additional training, attending frequent manager meetings, or achieving better metrics for key performance indicators. You can structure each PIP to fit the needs of the team, the organization, and the individual employee.
What are the benefits of PIPs?
Employee PIPs can help your team maintain good workplace habits, meet goals, maintain engagement in their work, and contribute to organizational success. Some companies use PIPs during employee probationary periods.
Working with the employee to design the plan and discussing areas for improvement in detail can make a PIP more successful. It shows that you recognize the employee's challenges. Having a plan in place also helps prevent litigation if the employee's performance doesn't improve and you have to dismiss them.
PIPs can also help managers and team members communicate with each other clearly. According to Gallup, employees who receive regular feedback from managers are four times more engaged.
"PIPs aren't necessarily negative, although they do typically address performance gaps. Instead, they help improve employees' productivity and performance by providing them with detailed feedback."
When should you implement an employee PIP?
Employee PIPs work best when someone on your team is struggling with one or more tasks. Signs of an underperforming employee can include:
- A decrease in productivity or engagement
- An increase in time-off requests
- An increase in arriving late
- A recent drop in performance
- A company reprimand or warning
PIPs can also be effective when your employee handbook doesn't include strategies for personal improvement. In this case, you can brainstorm strategies based on the situation, such as training resources or increased supervision.
How do you use an employee PIP?
You should provide regular performance feedback rather than a one-time PIP. Continuous review ensures the successful completion of the PIP. You can update the document with new goals when the employee fulfills the PIP requirements. You may need to refer workers for disciplinary action or additional resources if they cannot complete the PIP.
How do you create an effective PIP?
An effective PIP should leave the employee feeling empowered to take action and grow in their role. Refer to these tips to create a successful PIP:
Speak to the employee first
Before you present a PIP, speak to the employee directly so you can explain why you're instituting the plan and let them know what to expect. Focus on the positive aspects of their career and the potential opportunities the PIP creates. It's also a good idea to ask what actions they think they should take to improve their performance and incorporate their ideas in the document.
Focus on ways to improve
Before creating a PIP, decide what skills the employee needs to improve and what knowledge they should expand. They might benefit from additional training, orientation, motivation, and support from their team leaders.
Even the best workers can suffer from a drop in productivity. An employee may not know how to use some tools efficiently or may have a learning curve when it comes to a new software program. Distractions in the workplace or the employee's personal life could keep them from performing at their best as well.
Set achievable goals
The PIP should include realistic expectations to encourage the employee to improve and succeed. Set achievable objectives and increase goals gradually. For example, if they make around 10 sales per week, the PIP might encourage them to work toward making 15 sales per week as opposed to doubling their sales. Set incremental targets that build up the employee's productivity slowly to achieve the primary goal rather than overwhelming them with a big change right away.
Use a timeline
Set a target date for PIP goals and inform the employee about the consequences of missing this deadline. Timelines are often 30, 60, or 90 days long depending on the person's role and the goals they're trying to achieve.
Provide guidance and positive reinforcement
Even at the most successful companies, an employee might occasionally struggle or feel lost. In this situation, encouragement and support can help keep an employee on track. Think of a PIP as a chance for your company and employee to grow and improve together.
Provide resources, training, and time
When you set up a PIP, make sure that the employee has access to the necessary supplies, technologies, and time they need to succeed in their role. This might include more time to focus on an important project or off-site training in a new program. Without the right resources, your worker will be unable to meet the stated objectives.
Conduct a PIP review
After your employee completes their PIP, it's a good idea to meet with them and discuss their successes and failures. This should be a conversation about the effectiveness of the plan and their individual performance. Review the employee's performance holistically to assess the success of the PIP. Ask them how they felt about the plan and what they think their next career steps should be.
Make consequences clear
While you should do your best to promote a positive outlook with PIPs, employees on this type of plan need to understand the consequences of failing to meet the stated goals. The PIP should include both the terms of success and the next steps if goals are not met in clear language that everyone can understand.
By following these guidelines, you can make PIPs useful and effective for your employees. Checking on your employees frequently and tracking their performance carefully can keep them from slipping back into old habits.
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