Performance improvement plans: Best practices

Whether part of a large corporation or a small startup, employee performance management techniques are essential. An employee performance improvement plan (PIP) can help team members to keep their productivity levels from dropping. Here's some more information about performance improvement plans, their benefits, and how to use them.

What is a performance improvement plan?

A performance improvement plan, sometimes called a performance review, is a document that outlines any issues a particular employee has with their performance. It also defines performance goals for the employee, letting them know how you want them to change their behavior. A PIP is similar to a report card. It tells employees which areas they should work on improving in order to advance their careers.

The criteria for a performance improvement plan's success can be anything from attending additional training to improving sales and meeting with a manager more regularly. How you structure a PIP depends on your team's situation and the goals of the company.

The benefits of a PIP

An employee performance improvement plan helps employees maintain good workplace habits, meet their goals, be more engaged in their work, and be part of a successful team. Some companies use PIPs during probationary periods for employees. However, they aren't necessarily something negative. Instead, they help improve the person's productivity and performance by providing them with detailed feedback. Companies use PIPs when they want to ensure an employee's success.

Working with the employee to design the plan and discussing the areas for improvement in detail can make a PIP more successful. It also shows that management recognizes 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.

"HR representatives and managers should continuously review PIPs. They can help with employee development, but only when employees follow the outlined plan and managers treat employees fairly."

When to implement an employee performance improvement plan

Employee performance improvement plans work best when an employee is struggling with one or more tasks. Common 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. They let managers come up with different strategies for a variety of situations, including providing help for employees with insufficient training and when a company changes its business model.

Using an employee performance improvement plan

HR representatives and managers should continuously review PIPs. They can help with employee development, but only when employees follow the outlined plan and managers treat employees fairly.

Managers should also provide regular performance feedback. If needed, they can take additional disciplinary action. The ultimate goal of a PIP is finding a solution that works for the employee, their professional development, and the company. PIPs can also help managers and team members communicate with each other clearly. According to Gallup, people who receive regular feedback from managers are four times more engaged.

Creating an effective performance improvement plan

To create an effective performance improvement plan, it's important to prepare your employees so they're ready to take action. Share with them the information the performance improvement plan will contain, the role that the you'll take, and what will happen after completion of the plan. Here are some tips for creating a successful PIP:

Speak to the employee first

Before you present a PIP, speak to the employee you're creating the plan for. 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 a performance improvement plan could lead to. It's also a good idea to ask what actions they think they should take to improve their performance. This can help the employee treat their plan as a tool for personal improvement.

Focus on ways to improve

Before creating a performance improvement plan, decide what skills the employee needs to improve and what knowledge they should expand. They might benefit from learning new facts, getting additional training, or receiving motivation and support from their team leaders.

A drop in productivity can occasionally happen to even the best worker. An employee may not know how to use some tools or types of software efficiently. Distractions in the workplace or the employee's personal life could keep them from performing at their best as well. Including these potential causes in the PIP can sometimes help. However, in some circumstances, it can add more work for managers and employees.

Set achievable goals

When putting a PIP in place for an employee, it's important to have realistic expectations. You want the employee to succeed and improve their performance, and the plan should help them do so. 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. Once you decide what outcome you want, think about how to get there. Set incremental targets, such as over the course of 30 days, that build up the employee's productivity slowly to achieve the primary goal. 

Use a timeline

It's also a good idea to set a timeline or deadline for performance improvement and inform the employee about the consequences of not meeting the goal. Timelines are often 30, 60, or 90 days long, and they differ depending on the person's role and the goals they're trying to achieve. 

For example, a valued salesperson who has been struggling with low sales might have 90 days to improve their performance. An administrative employee could get 60 days, and someone making errors that increase business costs and reduce profits often gets just 30 days. However, many people with 30-day PIPs can ask for a 30-day extension if needed.

Provide guidance and positive reinforcement

Even at the most successful companies, an employee might occasionally struggle or feel lost. It's important to communicate with employees clearly and make sure that they understand what their goals should be so that they feel comfortable with the tasks ahead of them. Offering encouragement can also help keep an employee on track and demonstrate your support. Think of a PIP as a chance for your company and employee to grow and improve together.

Provide resources, training, and time

To develop their skills, employees need the right resources, training, and time. When you set up a PIP, make sure that employees have access to the necessary supplies or technologies they need to succeed in their roles. This can help them improve their performances quickly and efficiently.

Conduct a performance improvement plan review

After your employee completes their performance improvement plan, it's a good idea to meet with them and discuss successes and failures. This should be a conversation about the effectiveness of the plan as well as the performance of the individual. Review the employee's performance holistically, and decide whether the PIP was a success and if the employee met their goals. Ask the person how they felt about the plan and what they think their next steps should be in their career.

Make consequences clear

While you should do your best to give PIPs a positive outlook, it's also important to make sure that people understand the consequences of not following a PIP or improving their performance. Put the benefits and potential consequences in writing, and make the language clear enough for all employees to understand easily.

By following these guidelines, you can make PIPs useful and effective for your employees. Checking on people frequently and tracking their performances carefully can keep them from slipping back into old habits.


Learn more about management best practices:

Are you wondering what skills can help improve your career? Here are some useful skills for managers.

As a manager, you can increase your employees' productivity by increasing their skills.

Good problem-solving skills can help you create a successful PIP and avoid stress.

Discover ways you can reward your employees who work from home.

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