What’s an Employee Performance Improvement Plan (PIP)?

two co-workers in a performance management meeting

Whether you’re new to managing employees or on a path of developing your management skills, one central tenet of employee management is a process to help under-performers improve. After examining the financial cost of terminating an employee for poor performance and hiring someone else, choosing improvement over firing is a smart business strategy that any leader or manager should embrace.

We know that's easier said than done. Working with an employee to get better at their job is full of uncomfortable conversations, but with the right tools in your management belt, you’ll soon be able to move through the process with ease.  Here’s everything you need to know to hit the ground running with a performance improvement plan.

How can employees improve their performance?

While there’s no clear answer of what constitutes adequate performance for each business, there are several ways that employees can improve their performance. Whether it’s something as direct as improving sales numbers or softer skills, such as demeanor or cooperation, there is almost always some way that an employee can improve. It doesn’t always have to be a negative critique, either; feedback could be about maximizing employee efficiency rather than addressing a problem.

While most managers only step in to improve performance when an employee's work ethic has become problematic, improvement can also mean elevating an employee from good to great.

What is a performance improvement plan (PIP)?

“A performance improvement plan (PIP), also known as a performance action plan, is a tool to give an employee with performance deficiencies the opportunity to succeed,” explains SHRM, adding that, “it may be used to address failures to meet specific job goals or to ameliorate behavior-related concerns.”

When putting a PIP into action, ensure that your ultimate goal is to improve performance, rather than justify a termination. Performance improvement plans are separate from a paper trail that should already be in place to document an employee’s potential path to termination; instead these plans are action-focused which should lead an employee back into good standing within the company.

Next, if you determine that a PIP is the right way to go, sit down with the employee and develop a plan together with the help of HR to moderate. While the manager should be guiding the PIP creation process, it’s important to include the honest feedback of the employee so that the plan has the potential to be realized. performance improvement programs should include any and all relevant information, such as specific statistics, examples, or the job description for references.

After creating and implementing the plan, the next step is monitoring its progression. Depending on how monitoring goes, at the conclusion of the performance improvement plan, the employee’s performance will ideally have been corrected, at which point he or she will walk away with the awareness that these new levels of achievement are expected to continue. or, if it goes into the other direction, it might be time to consider reassignment, demotion, or termination to resolve the issues at hand.

What is an employee corrective action plan?

As the University of Washington explains, an employee corrective action plan is similar to a PIP. “The objective of corrective action is to correct and resolve employee performance problems in order to retain the employee as a productive staff member,” the university's HR Operations department explains.

Things can get a little tricky when it comes to dealing with “at will” employees and it’s important that what’s called “just cause”—essentially ensuring that the corrective action plan was properly carried out in case of any legal action taking place if the action results in a way that an employee could choose to dispute.

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