7 things to consider when using a performance improvement plan (PIP)
By: Claire Lew
Tags: Management, Performance, Leadership, Startup Lessons, Leadership Development

It’s always easier to be a good manager when things are going well. But when an employee is struggling — especially someone who shows a lot of promise — what do you do?

The first step is to figure out if the employee knows they’re underperforming (I discuss this at length here.) Then, it’s time to coach an underperforming employee (hopefully) to success. You need a plan of action.

One way to help an employee improve their performance is through what’s classically known as a performance improvement plan — or PIP, for short. Some companies have a formal PIP process in place, with templates and predefined steps, while other companies and managers forgo having any type of PIP at all.

What works best depends on the employee’s particular situation and the company’s cultural environment. For instance: Has this poor performance been chronic, or something more recent? Does your company generally view process as a means to reduce complexity, or are they process-averse?

To get a better sense of if a formal performance improvement plan would work for you and your team, we asked our 1,000+ managers in our online community, The Watercooler, in Know Your Team about their experiences.

Based on their responses, here’s what you should consider when coaching an underperforming employee and using PIPs:

Is it a lever, or a crutch?

Netflix vocally eschews all performance improvement plans. They’ve observed how other companies use it as a crutch to flag poor performance, rather than as a lever to improve performance. Managers will put an employee on a PIP as “proof” to HR that they tried to help someone. Or in more nefarious situations, a manager will use a PIP to usher someone out of the company. Like any process in an organization, performance plans only work if the intention matches the outcome (whether that outcome is intentional or not.) If the ultimate outcome of PIPs is that they’re a convenient “out” for managers — rather than a genuine path for employees to improve — performance plans will be toxic for your company. Empty relics serve no one.

Never make the PIP a surprise.

Any low performance should have been discussed in a previous one-on-one meeting already. Your direct report should not be caught off guard that you’re suggesting a performance plan to them. In larger companies, this is also something that should have surfaced in feedback to HR (be it ad hoc or via your monthly feedback cycle, depending on what your cadence is.)

Let the employee know a PIP is a possibility.

Folks can turn the ship around, before needing a performance improvement plan. Knowing that a PIP might be on the horizon can be a powerful motivator for some. However, given this, be conscious to not frame the possibility as an ultimatum. Instilling fear is not productive in the long-run. Rather, be transparent as possible about the person’s level of performance is and what the potential next steps might be. For instance, during a one-on-one meeting, you could say, “We need your performance to be at [X tangible level], and I want to work with you to improve. I don’t think we’re at the point where we both need a performance improvement plan in place yet. But, I do want to share that could be a potential next step down the line if we don’t improve, together. Right now, I do want to support you to figure out how to make things better. Would you be open to discussing that?”

Consider having others in addition to the employee present for the conversation.

Watercooler members who are part of larger companies recommended the meeting about the PIP involve the employee, the manager, and HR. This is to make sure all relevant parties are on the same page. If you do choose to involve HR, be wary that some find it distracting (if not a bit ominous) to have HR in the room when the PIP is being discussed. At the same time, others prefer to have HR present from the beginning because it helps establish continuity of information. You’ll want to weigh these trade-offs, for your own team, when evaluating whether or not others should be a part of the PIP conversation.

Have an overall consistent flow for the PIP.

Based on what Watercooler members shared, here’s a general outline for how you could set up a PIP in your company:

Meet with the employee to discuss the performance plan. Make it clear ahead of time that this is the purpose of the meeting, so the employee can plan accordingly in advance, themselves. Use Know Your Team’s One-on-One Meeting Tool to outline the conversation, and give the employee adequate time to prepare for it. Clearly define, together, what “success” tangibly looks like, and when it should be achieved by (typically 4–6 weeks out). Discuss why this marker of success is important to the team, and how it helps move the team forward. Get on the same page for how a successful outcome will be measured. Agree on the method of measurement. Develop a plan during the meeting for how to reach success. What might daily or weekly activities look like? Does either of you have suggestions for what should be done differently so success is attainable? Set up 4–6 weekly checkpoints. Talk about what “success” for each weekly checkpoint might look like. What will the measurable output be? During each weekly checkpoint, discuss the progress made to date, based on the metrics you previously agreed to. What’s been going well and not well? How can either of you do things differently to make better progress? How well is the employee tracking toward “success,” as was previously defined? During the last weekly checkpoint, declare success — or decide it is time to part ways. Obviously, one of these conversations is much harder to have than the other. If the employee has fallen short of meeting the successful outcome, have this discussion as directly and respectfully as possible. Here are some tips on letting someone go with grace and dignity.

Draft the plan always with the employee’s input.

This is paramount. An effective performance improvement plan is “we can improve together” and not just “I’m telling you what to change.” Every step of the way, from having the initial discussion about poor performance to defining the weekly check-points, you should be co-creating the PIP, and working together to figure out how to get to the outcome you both want to achieve.

Understand the cultural implications of a PIP.

For some Watercooler members, PIPs work incredibly well for their team because their team thrives on having clear processes and structures in place. However, another Watercooler shared how, because 80% — 90% of employees who were put on a PIP left the company during the PIP period, it culturally made the PIP “a herald of doom.”

Regardless of whether you decide to move forward with a formal performance improvement plan or something more informal — the important piece is that you’re purely focused on helping your employee improve. That’s your purpose as a manager, after all: To create an environment for your team to do their best work. It doesn’t matter if you call it by a three-letter acronym (“PIP”) or not. The outcomes are what matter.