First published on Wednesday, April 5, 2023
Last updated on Wednesday, November 13, 2024
When an employee is not performing to company standards, employers need to intervene. It is a difficult, but necessary, conversation to have. When there is underperformance in the workplace, it is important to step in and attempt to resolve the issue.
One of the most common methods of addressing performance issues is implementing a performance improvement plan (“PIP”).
In this guide, we’ll explain what PIPs are, how to develop them for your business, and their importance. As well as the HR support available if you need to implement a PIP.
What is a performance improvement plan?
A PIP is an action plan created by the employer and employee to address and remedy reoccurring performance issues. This is used to formally document what an employee is required to do to improve their performance at work.
The benefits of performance improvement plans
Performance improvement plans will provide benefits for the individual employee and the company. Not only does a PIP provide actionable steps for an employee to make progress but the team will benefit from a change in performance too.
An easy-to-follow guide for employees
With the documentation of a performance improvement plan, employees will have a clear understanding of how to improve their performance at work. A PIP provides the employee with ownership and accountability of their performance. Giving them an easy-to-follow framework to work towards. With set goals and objectives, actions, and timelines.
Can improve company culture
When one employee is underperforming it will have a direct impact on their team members. Recognising when an individual is not producing results or contributing to the outcomes of the business, shows employees that management care. Not just about performance but professional development and personal growth too.
Overall, this will have a positive impact on company culture.
Increase employee retention
With clear pathways for improvement, an employee will feel a greater connection to the role and the business. By utilising PIP as a solution for underperformance, rather than opting for immediate disciplinary action, you can support rates of employee retention throughout the business.
When a person knows their employer cares about their performance and development, they are more likely to stay in the business and commit to their professional development.
How PIP can be used within your business
Although performance improvement plans can be part of the disciplinary process, they are a tool that supports employee engagement and helps the employee to meet the business’ standards.
There are many reasons why a performance improvement plan is an appropriate course of action. However, the most common reason is for failing to meet sales targets in a sales industry. Other performance improvement plan examples include lateness, tardiness, or absenteeism.
Is a PIP the solution?
If you are unsure if you should put an employee on a performance improvement plan, there are a few things you should consider before acting.
Review company policy or employee handbook: Most employee handbooks will detail the procedure to take when placing an employee on a performance improvement plan.
Find evidence of an employee’s underperformance: you should have documented evidence of the employee’s issues. For example, if you are contemplating placing an employee on a PIP because they are not meeting sales targets, you should have evidence to back it up. Additionally, there should be some record of the measures the employer has already taken for the employee not reaching targets (i.e. verbal or written warnings).
Determine whether a PIP is the correct course of action: This will include meeting with the employee and manager who asked to put their employee on a performance improvement plan.
Sometimes, situations or issues can be remedied without a PIP. Speaking to the employee can help everyone fully understanding and remedy it quickly and informally.
A PIP should be used to help an employee improve, not to be used to punish or scare an employee. Additionally, if you do not have evidence to support a PIP, an employee may commence a legal proceeding for constructive dismissal.
A step-by-step guide to create a performance improvement plan
Once you have determined that a PIP is appropriate, you can begin creating and documenting a plan that is appropriate for the individual employee.
Assess performance: Document the current performance issues and explain this clearly to the employee. They must understand why they are being placed on a PIP and what this means.
Explain company expectations: Document the expectations the business has of the employee and link this to the reasons for the use of a performance improvement plan.
Identify gaps: Find the areas in which the employee is underperforming. For example, they may not be responding to email queries or lack in technical skills to complete their reports.
Set goals: By setting clear and concise goals you create an action plan for change. Any goals you set should be SMART - Specific, Measurable, Achievable, Relevant. Resources and support need to be accessible for employees to achieve their performance goals.
Review progress and monitor performance: When creating a PIP, you should set timelines and hold performance reviews to track the progress of an employee.
What to include in PIP documentation
A performance improvement plan should be a written document that includes the following:
The employee’s name.
The employee’s title.
The employee’s department.
The date the plan was issued.
Specific performance metrics that need to be improved.
Goals and activities needed to improve performance (with target dates included).
Performance improvement plan timeline.
Expected results (preferably with defined measurables).
A schedule of progress review meetings (with fields for stating the outcomes of progress reviews).
Final review and results.
The plan should provide clear points that the employee and their supervisor have agreed to. Lastly, both parties must sign off on the PIP to evidence their understanding and acknowledgment.
Do Performance Improvement Plans Work?
Unfortunately, there is no statistical data to support the success of performance improvement plans in the workplace. Alternative disciplinary measures such as a PIP are collaborative efforts between the employer and the employee to resolve the performance issues.
The employer and employee can speak about the issue, and in some situations, the employer can identify potential personal issues that may be impacting employee performance.
How Long Should a Performance Improvement Plan Last?
The duration of a performance improvement plan greatly depends on several factors. These include the purpose of implementing one, the employee themselves, the company, as well as the complexity of the job.
Usually, performance improvement plans range from 30 to 90 days. However, an employer and employee may agree to shorten or lengthen the time depending on the progress made during the plan.
What if the Employee Does not Perform under the Plan?
If an employee does not meet the expectations under the agreed upon performance improvement plan, then you and the employee must decide whether to continue the employment relationship. It is important to refer to the employment contract regarding the employee’s rights at termination.
Alternatives to Performance Improvement Plans
Sometimes a performance improvement plan may not be the best option. So, it’s important to maintain open communication with your employee about your expectations. Typically, when both the employer and employee engage in the discussion, there will be a way for both parties to come to an understanding of what is expected.
Get Advice on Performance Improvement Plans with BrightHR
A performance improvement plan is a great strategy to retain an employee whose performance has been lacking recently but who does have the motivation to be a strong team player. Afterall, it is, in most cases, more cost-effective and time efficient to support an underperforming team member than it is to dismiss and replace them.
It furthers shows the willingness that you put into each employee to ensure their continued development growth in your company.
If you need assistance developing a policy about performance improvement plans or guidance on them, our BrightAdvice service allows you to receive quality advice on any employment issues you may have.
Contact us on 1 300 029 198 or book a demo today.
