6 Steps to Creating a Performance Improvement Plan

Nobody wants to tell someone they’re not doing a good job. And when you have to have that conversation with an employee… and you have to tell them they’re just not performing well at their job… that’s a hard conversation. Those hard conversations are worth it, though. In fact, avoiding them can be detrimental — about 40% of employees reported that their managers avoided having honest conversations with them, leading them to disengage.

So instead of shirking from these tough conversations with underperforming employees, let’s look at a tool you can use to have this conversation and to help the employee improve their performance: a performance improvement plan or PIP. A PIP is a career development tool you can have in your arsenal to tackle underperformance without risking disengagement. Let’s dive into performance improvement plans, why they can help, and how to create one.

What Is a Performance Improvement Plan? 

A PIP is an official written document that outlines an employee’s performance problems, a time frame for improvement, the criteria used to measure improvement, and any requirements for regular check-ins. The purpose of the PIP is to give both you and the employee an official document to fall back on when working through performance shortcomings.

What will usually happen is the employee’s supervisor will write up a PIP and send it to HR for approval. An HR manager will then look it over and approve it. The employee will then check in periodically with both their supervisor and HR to ensure that the established benchmarks are being met.

PIPs don’t have to just be used for performance issues, though! You can also create a performance improvement plan for an employee who’s doing well but would like to improve and get promoted. 

Why a PIP Can Be a Good Thing

An employee who gets a PIP might consider it a bad thing. After all, isn’t it a document outlining how they aren’t doing well enough? Not so fast! A PIP (when framed correctly) can actually be a powerful tool that helps both your company and the employees who get them. Let’s look at some of the benefits of creating a great performance improvement plan.

• Promotes a positive culture. Company culture matters. In fact, it’s as important as compensation to many employees: 77% of job seekers will evaluate a company’s culture before accepting a job offer. The good news is that performance improvement plans promote a positive company culture. A PIP is designed to support the employee, and employees can feel reassured that they’ll be supported to improve when needed. 
• Can help employees feel cared for. Creating a PIP takes time and effort. Employees recognize that. Taking that time to create a great performance improvement plan can help employees feel cared for. 
• Helps you save on turnover costs. Firing an employee isn’t cheap. Training someone new to fill that spot can cost you one half to two times the employee’s salary. Plus firing can lead to reduced productivity. So taking the time to help your team members improve instead of firing helps you save time and resources.

So don’t assume a performance improvement plan is a punishment. It can be the next step for your team’s growth and benefit your company. That being said, only good performance improvement plans will give you the results you need. Here are a few best practices you can use to create a PIP and utilize it successfully. 

How to Create a Performance Improvement Plan

Let’s dive into the 6 steps to create a performance improvement plan and how you can use it to help your team grow. 

1. Identify Performance Issues

The first step is to identify if there are performance issues. Do you have any employees regularly underperforming or coming up short in their performance reviews? Those might be people you want to start on a PIP. You might also have a manager reach out to you about creating a PIP for a team member.

Here are some questions to consider as you determine what the issues are and if a PIP is the right choice for the situation:

• Is there a personal issue affecting the employee? 
• Is the employee’s manager invested in helping the employee succeed? 
• Does the employee have all the proper training they need to succeed at what they’re asked to do? 
• Can the manager explain the performance problems? 
• Do the performance issues show up in reviews?

Once you’ve determined that a PIP is right, determine what the exact performance issues are. The big question to consider with performance issues is this: is this a performance issue that can be fixed with a formal improvement plan? Many performance issues can be improved with a performance improvement plan — even “soft skills” like leadership. Insubordinate behaviors, however, might not be fixable with a PIP.

To really create a great PIP, collect objective performance data. Have the employee observed several times, use measurable metrics, or any other similar tactic to determine how the employee actually performs. From there, it’s helpful to know what your performance expectations are, so you can see how far the employee needs to come. 

2. Develop a Comprehensive PIP

Once you understand the performance issues, it’s time to dive into writing a comprehensive performance improvement plan. Here are a few best practices you may want to include in your PIP:

• Define the purpose and objectives of the PIP. This can help reassure the employee that the performance improvement plan is designed to help them succeed, and it can help you outline your expectations for performance improvement.
• Establish specific and measurable goals. To help your employees succeed, a performance improvement plan should have specific goals for them to achieve. Think SMART goals (specific, measurable, attainable, relevant, and time-bound). For example, if you have an employee who’s struggling with professionalism, you might include goals like
  • Being on-time to work 5 out of 5 days a week for 3 consecutive weeks
  • Following the dress code every day for 2 consecutive weeks
  • Attend 2 training sessions on professionalism in the next 2 months
• Outline steps and strategies. Once you have the goals clear, outline the specific steps the employee can take to succeed. It’s often helpful to include how you and their manager will evaluate their performance, so they have all the information and strategies they need to perform well. 
• Determine a timeline. A performance improvement plan will usually last 30, 60, or 90 days. You’ll typically also want to inform employees about how often they’ll need to meet with you to discuss their progress during this time.

You might also consider using a performance improvement plan template to help you format and hit on the key components. 

3. Communicate the PIP to the Team

A successful PIP requires communication between the team and the managers. So while it might not be the most comfortable conversation, it’s worth it. The goal of this conversation is to:

• Explain what a performance improvement plan is and what the value of one is. If team members have bad associations with PIPs, this is a great opportunity to work through what you mean and what a PIP is designed to do. It’s helpful to reinforce that PIPs are something to help everyone succeed. 
• Explain the details of the performance improvement plan. Once your employee understands the purpose of the PIP, it’s important to take time to walk them through the performance improvement plan you created and what every detail means. That way you’re both on the same page. 

4. Implement and Monitor the PIP 

Once everyone’s on the same page about the PIP, you’re ready to implement the plan. Don’t forget that implementing the performance improvement plan isn’t the end, though. It’s time to monitor. Here are 3 ways you can monitor progress if your employee is on a PIP:

• Provide ongoing feedback and coaching to team members. Part of employee development is giving feedback. In regularly scheduled meetings or one-on-one meetings with your team members, take time to give them feedback on what you’ve noticed with the PIP and their performance. The time after implementation can also be a great opportunity for on-the-job training to make sure your team members have all the support they need. 
• Monitor progress and assess performance improvement. Your PIP should have specific goals and metrics for the employee to hit. Continually monitoring progress toward these goals can help you assess how they’re improving. If they’re struggling to hit goals, you might need to take time to consider why that might be. 
• Adjust the plan as needed. When the PIP isn’t working as you intended, you can always adjust the plan as needed. Just make sure to take time to communicate any changes to the employee, so they are aware of the updates. 

5. Document and Evaluate PIP Results

After 30–90 days, the performance improvement plan will end. What then? It’s time to look at the results. Here are a few ways you can evaluate PIP results:

• Document PIP discussions and actions taken. Document any meetings that have happened and everything everyone involved has done. That could be any time you checked in with the employee and all of the steps the employee has taken to improve. 
• Assess team progress and performance improvement. Once you’ve documented everything that’s happened, you can assess if performance improvements took place. Having clear expectations of what success looks like helps make it easier to measure performance improvement when the PIP is finished. 
• Determine further actions based on PIP results. Once you can measure success, you can decide what further actions need to be taken. Does the employee need further support? Are they ready to perform at the level you expect? Do you need to instead work toward termination? 

6. Ensure Fairness and Compliance 

Remember that a performance improvement plan is designed to be fair. If you have a manager who’s not willing to help the employee succeed, a PIP might not be the best route of action. Also a PIP comes with some legal implications to consider. A PIP can’t be disputed legally, unless there’s evidence of discrimination. So ensure fairness, and you’ll also ensure compliance.  

Final Thoughts

Overall, a performance improvement plan is a great way to help your employees get their performance up to snuff and for you to show that you support and care about your employees.

But, PIPs are only one way to show you care about your employees and about their wellbeing. Start supporting your employees outside of the office too! Talk to a Wellbeing Specialist today to learn more about additional ways you can support your employees and provide benefits that enhance their wellbeing.

References

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• Landry, L. (2022, August 30). How to Navigate Difficult Conversations with Employees. Harvard Business School. Retrieved June 15, 2023 from https://online.hbs.edu/blog/post/how-to-have-difficult-conversations-with-employees#:~:text=A%20study%20by%20the%20Society,work%2C%20leading%20them%20to%20disengage.&text=Access%20your%20free%20e%2Dbook,part%20of%20leadership%20and%20management. 
• McFeely, S. & B. Wigert. (2019, March 13). This Fixable Problem Costs U.S. Businesses $1 Trillion. Gallup. Retrieved June 14, 2023 from https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx. 
• Organ, C. (2022, October 13). How To Create A Performance Improvement Plan (PIP). Forbes. Retrieved June 15, 2023 from https://www.forbes.com/advisor/business/performance-improvement-plan/. 
• Paychex. (2019, November 15). The True Costs of Firing an Employee. Retrieved June 15, 2023 from https://www.paychex.com/articles/human-resources/the-true-cost-of-terminating-an-employee. 
• SHRM. (2015, February 18). How to Establish a Performance Improvement Plan. Retrieved June 15, 2023 from https://www.shrm.org/resourcesandtools/tools-and-samples/how-to-guides/pages/performance-improvement-plan.aspx. 
• Sihite, A. (2020, May 22). Employee Rights on a Performance Improvement Plan — What to Know. Retrieved June 15, 2023 from https://managebetter.com/blog/employee-rights-performance-improvement-plan.