Not every business is filled with star employees who consistently meet or exceed the expectations placed on them. For employees who don’t fall into that category, the responsibility of helping them boost their performance often falls on their managers.
A performance improvement plan (PIP) is a popular tool to set them on the right path. This plan sets expectations for an employee with the goal of helping them improve their performance. To get the most out of a PIP, managers need to clearly understand what it is, what to include, and how to develop it.
A performance improvement plan is a document created by a supervisor or manager that outlines what employees can do to achieve their performance goals. In many instances, these plans are meant for struggling employees, though they can be used for employees who are already doing an excellent job but have opportunities to grow further.
The document outlines the following:
Since PIPs can have a negative connotation, many HR professionals have long believed that they are best implemented only when employees’ struggles become noticeable and action is needed to correct unsatisfactory performance.
However, some HR professionals are changing their tune as the workplace evolves. Seeing the benefit of PIPs for employees who are already doing an excellent job and have the potential for even better performance, these plans are no longer used just for struggling employees.
“Employees who hear ‘performance improvement’ may assume that something isn’t right or there are dire consequences as a result of being placed on a PIP,” Leanne E. King, founder and CEO of SeeKing HR, told us. “This is truly a negative reaction to what is often an attempt to correct or redirect the behaviors of an employee.”
This is why King added that the preferred term is “development plan” for employees who are doing well and ready for a new assignment or responsibility.
“The catch is in the culture of the organization,” King said. “It’s all in how the process is communicated with employees. Using a single-document performance plan with a check box for improvement and development gives employees a better indication of what may be the next steps, step up or step out.”
Traditionally, a performance improvement plan follows a series of five steps:
A performance improvement plan, or a development plan, can be beneficial for employers and employees. As an employer, you want to get the best from your employees. After all, higher-achieving employees can equate to a higher return on your business investment.
Simply telling employees they need to do better usually won’t have the desired result. Instead of sending these underperforming employees off on their own to figure out how to improve, managers need to clearly identify areas for improvement and lay out a path forward for the struggling team member.
At the other end of the spectrum, you should identify your high performers and set benchmarks for them as well. [Read related article: Times Are Changing: The Future of Performance Management Trends]
“Research shows that significant value for the company can be easily generated by benchmarking the top performers in a structured way, seeing how they operate, and then building those outcomes, tasks, decisions and methodologies into how everyone else can improve themselves,” said Josh Rovner, an author and consultant in the space of building effective organizations. “This is how you can create and use a performance improvement plan for everyone in the company, not just the underperformers.”
These are some additional benefits of a performance improvement plan:
If staff members are not aware of how management sees their performance, they can’t take responsibility for it. A performance improvement plan equips team members with the information they need to take responsibility for their performance and work toward improving it.
As job roles evolve, your staff may not be aware of how their role affects the company or if it even matters. When employees know exactly what is expected of them, those expectations can empower them by showing them they make a difference and give them goals to work toward. This can help you retain otherwise bored and unmotivated staff.
Offering a documented understanding of how employees are doing and where they can improve helps them feel engaged and improve within areas they may not have realized they were lacking in.
If an employee ultimately needs to be terminated for poor performance, the process might be easier for both parties when the performance issues have been documented through a performance improvement plan. Workers who are terminated will already know their employers’ expectations and have some warning of what’s coming when they see they aren’t hitting their goals.
Developing and writing a performance improvement plan is a straightforward process.
Sometimes, having an informal conversation with a subordinate or documenting an issue by email is enough to improve performance. An example of when a PIP might be needed is a sales agent who isn’t meeting their sales quotas. If a PIP is necessary, move on to step two.
Outline the behaviors that need to improve and get to the root cause of the issue. These are some examples of actionable goals:
If you don’t have specific examples of the problem to give the employee, hold off on submitting the performance improvement plan and start documenting them as you see them. Provide as much detail as possible in the examples. Outlining specific examples with dates is the best way to avoid legal issues.
As part of the performance improvement process, specify your expectations in the areas where the staff member needs to improve. Expectations are different from job duties; do not pull these expectations from the employee’s job description. Focus on the end results of an employee’s behavior or actions, not just the activities they perform. This can give the employee a clearer understanding of what your expectations are and why.
Step 5: Offer resources.
Expecting workers to improve on their own is not always realistic, especially if they have been struggling for a while and clearly aren’t sure where to turn for help. Offering resources can put a positive spin on the performance improvement discussion and give employees a way to succeed. Here are some examples of resources you could include in the performance improvement plan:
A defined timeline can help team members achieve their goals in a reasonable time frame and track their progress. A typical timeline for performance improvement is 30, 60 or 90 days. Your timeline should provide structure and offer realistic, achievable goals.
Your performance improvement document should conclude with a place for all parties involved to date and sign.
You can find a wide selection of templates online to help you develop your PIP. Below are some free templates to guide you in laying out the PIP:
Skye Schooley contributed to this article. Source interviews were conducted for a previous version of this article.