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How to Create a Performance Improvement Plan (+ Template)
Published October 28, 2021
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
A performance improvement plan (PIP) is a management tool used to create a roadmap to help an underperforming employee succeed. Whether an employee is failing to meet their objectives or has excessive tardiness that must be corrected, a PIP can help an employee improve.
Employees often think of a PIP as a precursor to termination. While that can certainly occur, make sure you are transparent with your employees and reassure them that a PIP helps them get back on the right track. To help you support your employees, here is our guide to creating a PIP, including a free performance improvement plan template.
What to Include in a Performance Improvement Plan
You need to include eight key items in every performance improvement plan, which should be just one tool within your employee management process. Whenever you put an employee on a PIP, use a performance improvement plan template to ensure you treat each one the same. This can help your company avoid legal trouble by removing the appearance of discrimination.
1. Determine If a PIP Is Appropriate
First, determine whether a PIP is appropriate in the given situation. A PIP should only come after you’ve had conversations with the employee about their performance or workplace behaviors and taken at least initial steps to help them improve. Employees should not be surprised or caught off guard by a performance improvement plan.
It’s also good practice to make this determination in consultation with HR. Working alongside HR will make sure you remain compliant and are using a company-approved PIP. HR can also help you discuss the plan with the employee, taking some discomfort off your shoulders.
2. Identify Improvements Needed
Once you’ve determined that a PIP is appropriate, it’s time to create the plan. Make sure you provide adequate details to show why the employee’s present performance is deficient and what specifically they need to do to improve.
I recommend attaching the job description to the PIP. This reminds the employee of the minimum requirements for the job they hold and can help you ensure that you’re holding the employee accountable to their stated duties.
These areas for improvement should come directly from the manager’s previous notes about the employee’s performance, which may have been discussed in previous performance reviews. If the employee hasn’t been made aware of any issues, I do not recommend putting them on a PIP as the first course of action. Always discuss issues with employees in real time, if possible, or at least during regular check-ins. These check-ins will also give managers documented evidence of how long the employee has been underperforming and what steps have been taken so far.
3. Define PIP Goals
Now that you know where an employee needs to improve, it’s time to set the goals for how they achieve success. Just like you set goals for departments and employees, you should also set goals in the PIP using the same method. I recommend using SMART goals: Specific, Measurable, Achievable, Relevant, Time-bound. Setting these goals can be easier with a performance management system.
You don’t want to have a ton of goals listed on the PIP which could overwhelm an employee and make them feel you’re setting them up for failure. Choose one to three key goals that your employee needs to focus on and provide them with the structure needed to achieve the goals.
Let’s say you have an employee who missed key deadlines on the last two projects they were assigned. You discussed this performance issue with them after each project deadline was missed and tried to help, but they haven’t improved. The employee has another project coming due in a few months, and you want to make sure they meet the deadline. Here’s how you might structure your SMART goals in the PIP:
Now let’s put it all together: Project X will be completed accurately and by the April 30 deadline by setting up and hitting key milestones to ensure the project is on pace.
Ultimately, you’re trying to help the employee achieve success and come off the PIP.
4. Structure Timeline
Using SMART goals to structure your PIP will help you create the timeline for completion. But you need to set more than just the end date for the PIP, which I recommend setting to align with the performance you’re looking to improve. In our example, this deadline would need to align with the Project X completion date of April 30. However, it’s perfectly reasonable to set a PIP timeline of 90 days, six months, or whatever timeline works for the situation at hand. Above all, the timeline needs to be reasonable.
You also need to set checkpoints throughout the PIP. A PIP is not a document you create, discuss with the employee, and then let them navigate through it alone. As a manager, you need to be prepared to work with the employee to give them every opportunity for success. That means setting aside regular check-in times to answer questions and guide them.
5. Speak With the Employee & Provide Support
When it’s time to review the PIP with the employee, I recommend having HR present to help document the conversation. Having another person present will keep the conversation on point.
By expressing your desire to help the employee succeed, you can set the tone for a fruitful conversation. During this meeting, you should also encourage the employee to speak openly and suggest any changes to the PIP. Perhaps they have ideas on how to be successful or may need to ask clarifying questions. Either way, giving them the time to be heard shows them you value their input.
In your discussion with the employee, outline the support you will provide. This should include regular project meetings to ensure the pace of the project is on track and key milestones are being met. Be prepared to assist the employee with any issues that arise.
6. Have Everyone Sign
You must have the employee sign the PIP, acknowledging they understand the goals they need to achieve. You should also sign the PIP attesting to the details contained in it and that you will provide necessary support to the employee. It’s also good practice to have HR sign the PIP to acknowledge they have reviewed the plan and find it reasonable and achievable.
7. Monitor Progress
This is a key component to any successful PIP. If you let an employee go off on their own, they will be destined for failure. However, by guiding them and helping them hit little goals, you can help them achieve the overall goals of the PIP and reach a successful outcome.
As a manager, you need to show your commitment to the employee. You do this by prioritizing them, keeping scheduled check-ins, and being present to help them succeed. Each check-in should be used to celebrate even small wins, motivating the employee to continue their improvement.
8. Conclude PIP
Hopefully, this is a celebratory affair. As long as the employee meets the stated objectives of the PIP by the deadline, or sooner, the PIP is deemed successful. Both you and the employee should sign off on the PIP, concluding the plan. Make sure the employee understands that their improved level of performance is expected to continue.
Not all performance improvement plans end successfully, however. If an employee is unable to complete the goals outlined in the PIP and has been given support by their manager, demoting or terminating the employee may be the next step.
Nonetheless, if an employee has shown improvement and motivation but was unable to meet all of the goals, you might extend the deadline. If you look back at the PIP and see, in retrospect, the timeline and goals were not realistic and might have been too aggressive, adjusting the timeline is perfectly acceptable to give the employee every chance at success.
A solid performance management system can help you create and track performance improvement plans efficiently. Check out our top performance management system picks for the best options.
Bottom Line
Employees who do not meet company expectations may need to be put on a PIP. A well-structured and implemented PIP creates a culture of development and investment in your employees, which can lead to more engagement and higher productivity from your team. Utilizing our free PIP template and following the steps outlined here, you can create a personalized improvement plan that illustrates exactly what your employee needs to improve, giving them the support and guidance they need to successfully conclude the plan.
About the Author
Charlette Beasley
Charlette Beasley is a writer and editor at Fit Small Business focusing on payroll. With more than a decade of accounting and finance experience, Charlette has worked side-by-side with HR and accounting leaders to establish and help implement payroll best practices, controls, and systems. Her experience ranges among small, mid-sized, and large businesses in industries like banking and marketing to manufacturing and nonprofit.
Performance improvement plan template: A step-by-step guide
Published on: 12 Apr 2021 by Christina Pavlou, 11 mins to read
When you hear the words “performance improvement plan,” what comes to mind? For some, the phrase has a negative connotation involving ultimatums or the first step of a layoff. But in truth, this powerful HR tool is a way of providing useful feedback and coaching, improving performance, and investing in your employees.
Having a performance improvement plan template in place can prepare your company to approach employee performance and productivity issues quickly and effectively. It gives you the freedom to deal with concerns in a constructive way instead of jumping directly to termination.
And the end result benefits employees and organizations alike.
Here’s what we’ll cover in this guide about performance improvement plans:
What is a performance improvement plan?
A performance improvement plan (PIP) is a documented process for addressing employee performance issues. A formal plan lets managers and HR partner with employees so the latter can step up to their role and keep their good standing with the company.
A PIP communicates the action or solutions that will correct the poor performance. It also includes resources for helping employees take that action, and a defined timeline for achieving the needed change.
Why you should be using a performance improvement plan
PIPs help you create a culture of learning and improvement that inspires employees and communicates your company values. Creating a plan for improvement instead of immediately letting an employee go when there are performance issues benefits both the employee and the organization.
Feedback and guidance help employees feel engaged and valued. Specific, actionable feedback also boosts morale. Employees know you’re invested in them and are willing to help them succeed, and that gives them more job satisfaction. When your employees are engaged and happy, your company profits. You decrease employee turnover, which translates into higher productivity and reduced costs.
A good plan will also help you know exactly what action to take as you work through productivity issues. A performance improvement plan intends to fix problems and close knowledge and skill gaps. If you don’t see improvement after implementing a PIP, it can be an indicator that there’s a larger training gap. It may also reveal obstacles that a straightforward plan can’t remedy. In that case, your PIP may then result in termination or some other job change like transfer or demotion.
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When and how to use a performance improvement plan
The key role of HR and management is determining when a PIP is necessary. They need to decide what scenarios merit using a performance improvement plan, and then work together to implement it.
The first clue is in the title. These are situations in which performance is not measuring up to expectations but can feasibly be improved with the right resources.
Overall, PIPs are a way for companies to help their people overcome obstacles. They can be applied to any area where employees need some help to succeed — things like attendance issues, difficulty meeting deadlines, misunderstanding of job expectations, or lack of engagement.
Let’s look at a few common questions people have about when and how to use PIPs.
Q: Should we apply a PIP for all employees or just those who are underperforming?
A: PIPs are not general feedback, like a regular performance evaluation. They’re used for employees who are underperforming in some way or not meeting their objectives. A plan may involve training, but it’s different from the official employee learning and development programs your company has in place. PIPs are meant to address poor performance and not general upskilling or reskilling.
Q: Why do I need a performance improvement plan template?
A: A PIP template will guide you in creating a plan with specific steps and measurable goals. Starting with a template helps you move quickly on resolving issues. You won’t have to worry about creating a plan from scratch and potentially missing critical steps.
A template ensures consistency and guarantees that the entire plan, along with goals, outcomes, and timelines, is documented. HR can review templates created in advance to ensure they’re fair and not biased against the employee.
Q: Should I use a PIP the first time I notice an employee needs support, or should it be our last resort?
A: PIPs are targeted plans that support employees in improving performance and reaching goals. If a PIP fails, you might need to terminate the employment contract, transfer the employee to a new role, or extend the plan. To avoid jumping directly to these kinds of outcomes, try other methods to help employees first.
After a regular performance review, discuss concerns with the employee and give them the chance to respond and improve. Start by trying to understand why your employee is underperforming. They may be unaware of the problem. Or, they may just need to engage with training or other resources already available to them. Their issue may stem from personal concerns that they need time off to resolve.
If the issue is not so straightforward and you can’t remedy the concerns without intervention, it may be time to put a PIP in place.
Q: How long should a performance improvement plan last?
A: The timing depends on specifics like the company, the issue, or the employee’s role. As a rule of thumb, you can use a 30, 60, or 90-day plan.
Base the timeline on the nature of the problem you’re addressing. For example, one month might be too soon to see results in certain roles, but six months could be too much if the plan is not effective. In the latter case, you may wish to put together a three-month plan with monthly progress reports so you can see how things are progressing.
A performance improvement plan example
Imagine you manage a sales team.
The issue: Janet, one of your salespeople, hasn’t met her sales quotas for the last three months. She’s been lagging behind most of her team for the last quarter. When you talk with her about it, she admits she feels stuck. She knows she’s behind, but she doesn’t know what to do to break through to the numbers she needs.
She’s been through the same product training as all her colleagues but is having a hard time selling your latest product. Janet wants to improve, and after talking, you think that with the right resources, she can. You decide to work with HR to create a PIP.
The plan: You make a plan that involves Janet participating in an in-depth sales training course and shadowing one of her teammates on sales calls. You determine that you’ll check back in three months to see if Janet’s next quarter is more on track.
The goal: This plan gives Janet reassurance that the company will invest in her, and also provides her the resources she needs to reach her quotas. The timeline will make sure she gets through the plan and up to speed as quickly as possible.
Developing your performance improvement plan step-by-step
Knowing how to develop a PIP will prepare you to step up and address performance issues in your company before they escalate.
In Janet’s case, having a process in place allowed management to address the issue quickly and effectively. A good plan will help you know exactly how to proceed to give employees the best chance possible to succeed. You can develop a solid PIP using the following steps.
1. Determine the goals of the PIP
If you don’t define what you want to achieve, you likely won’t see the change you need. It’s important to analyze the reason for the plan and clarify what exactly needs to change to reach success.
What results should you be seeing? Can you quantify the results? Write down the specifics. These goals are the foundation of your plan.
2. Make a plan
Determine what steps will get you to success. Formal training? A new pattern of checking in regularly on certain assignments or behaviors? Your PIP should include measurable outcomes and goals that will help you reach them. You should define your timeline, as well as whether and when there’ll be any check-ins.
Don’t forget to specify what will happen when the plan is successful, as well as how you’ll proceed if the employee doesn’t achieve the goals.
3. Communicate the plan and the anticipated goals with your employee
It’s important that you sit down with the employee and clarify the purposes and the desired outcomes of the PIP. This is a collaboration, and the employee needs to understand their part of it. Share what success looks like and how the steps outlined will lead to success.
4. Implement and track the progress of your PIP
Once you’ve communicated the plan to your employee and they understand what’s expected of them and why, put the plan into action. Start working toward the specific goals and timelines set, checking in regularly to see how your employee is getting on. Uphold the timeline you set in the plan.
5. Evaluate the results and decide on the next steps
When you reach the agreed-upon deadline, determine whether the goals have been reached. Meet with the employee to discuss the results. This is why it’s important to set measurables goals in the beginning.
If your employee has reached their goals, you can retire the plan and discuss what support they need from you to maintain their success. If they haven’t met the criteria, it’s time to move to the next steps. This may mean termination or some other change to their working situation.
Download and customize your performance improvement plan template
If you’re struggling with how to write a performance improvement plan, a ready-to-use template can help. We’ve created a sample performance improvement plan you can download, customize based on your needs, and fill with your data any time you want to put a PIP in place.
Let’s use our previous example with Janet to see how our performance improvement plan template looks like:
Let’s see each section in more detail:
It’s also important to note the timeline of the plan, including any interim check-ins. Finally, when you discuss the PIP with your employee, make sure you’re clear about what will happen next — whether your employee completes the plan successfully or not. You can either add the next steps in the performance improvement plan template or include them in an email you’ll send to your employee as a formal agreement about the PIP.
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Conclusion
Performance improvement plans are a key piece of the puzzle of unlocking employees’ potential and helping them reach their goals and business objectives. To access this benefit, determine how you’ll implement your program and create a performance improvement plan template to get you started.
When used correctly, those plans shouldn’t pose a threat to employees or create a sense of fear and insecurity about their future in the company. Instead, they should communicate your company’s willingness to support them and create engagement.
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How to Create Effective Performance Improvement Plans (PIPs) That Drive Success
How to Create Effective Performance Improvement Plans (PIPs) That Drive Success
At one point or another, every manager is going to have an underperforming employee. Whether he/she isn’t meeting job requirements or is consistently exhibiting behaviors that are not in line with company expectations, the manager will reach a point where it is clear that the situation has to change. When an employee is not performing well or reaching their full potential, not only do the manager and employee suffer but the entire team and company also eventually feel the domino effect of these behaviors. The overall result is frustration, wasted time, and deflated people.
Firing an employee might seem to be the logical course of action at this point, but we urge HR and Managers to consider another approach: formal performance improvement plans (PIPs). The process of identifying root causes of poor performance, outlining clear expectations for improvement, and giving the employee a chance to remedy shortcomings, could not only save time and costs related to termination and re-hiring, it creates a culture of performance accountability for employees and their managers.
This sounds great, but not every employee finds it easy to take criticism — but that doesn’t mean they don’t welcome their reviews. Employees want to develop and grow into their roles, but 53% of employees report that reviews don’t make them work any harder.
The majority of employees believe that their reviews are inaccurate, leading them to dismiss the findings altogether. Through a performance improvement plan (PIP), organizations can find ways to give positive encouragement to struggling employees, while helping them develop their experience and skillsets in a way that aligns with their goals.
What are the benefits of a performance improvement plan?
A performance improvement plan shows the employee that the organization understands their current challenges and long-term goals and will take an active role in supporting them. Employees are more likely to be engaged and productive if they understand what the organization expects. PIP’s outline in detail any issues or behaviors that are causing problems, corrective actions to take to improve, and what meetings and resources will be available to offer support.
Performance improvement plans aren’t only designed for those who are falling short of their current requirements, but also for those who are currently feeling unfulfilled in their roles. Improvement plans can be used to increase employee mobility, allowing them to transition into higher-level roles or move laterally into roles that they feel they are better suited for. All of this creates a better trained, more talented workforce.
When should you implement a performance improvement plan?
Performance improvement plans are most useful if an employee is struggling. Whether their work productivity has decreased or they have started taking more time off, many managers can identify an employee who has become disengaged from their work. As mentioned before, PIPs should be implemented when there is a clear trend in poor performance and positive change and improvement are needed. The goal of a PIP should not be to document performance so that you can easily fire (although PIPs can serve as useful records), rather as an opportunity for the employee to right the ship.
Open lines of communication are important with PIPs and the ultimate goal should always be to find a satisfying solution for the organization and the employee. Managers need to reach out to employees to see what they need to deliver the work they are capable of.
How can you improve the effectiveness of a performance improvement plan?
Of course, just as a PIP needs to be rewarding, there also need to be clear consequences outlined for a failure to meet goals. The PIP establishes an agreed-on plan between the employee and the organization regarding the best way to improve their results. If the employee breaks this contract, there should be a transparent set of circumstances. These should be outlined at the beginning of the PIP process and employees should confirm that they understand.
What can go wrong?
Having a development conversation isn’t easy for anyone, and if a manager says it’s easy, they are either lying or not doing it correctly! Even though good managers will find a way to deliver the message with respect, caring, and noticeable concern and support, employees might feel defensive and put off. This is why the conversation is awkward. In order for PIPs to be effective, the conversation has to happen and managers need to be prepared to face the music alongside their employees.
We recommend a few ways to ease the potential sting of PIP’s:
Performance improvement plans can be the formal process for helping managers deal with poor performance, but it also promotes a culture of accountability within the company. By creating encouraging, effective performance improvement plans, organizations can improve their outcomes and retain the best employees. Ultimately, this will lead to a high-performing pool of talented and focused individuals.