Performance Improvement Plans: Benefits, Risks, and Alternatives

Just the phrase performance improvement plan (PIP) strikes fear in the hearts of some employees. Employers have long used PIPs as a signal to workers that a job loss is looming.

In reality, when done well, PIPs can help employees improve on poor performance through a collaborative process that’s built on regular communication and support from their manager. The trick, however, is using PIPs only in cases where they are truly required and understanding that alternatives are far more effective at supporting employees. 

This article covers the benefits and risks of performance improvement plans, how to implement them with care, and why PIP alternatives are often the better option. 

What is a performance improvement plan (PIP)? 

A PIP is a formal performance management document that employers use to help underperforming employees. An effective PIP typically does the following: 

• Highlights issues, such as failure to meet specific goals or counterproductive behaviors
• Provides a framework for how employees can address those shortcomings over a stated period of time
• Spells out how a manager will support the employee’s efforts to meet the PIP’s stated goals

The Pros and Cons of PIPs

PIPs provide a structured approach to performance improvement and the development of better skills and work habits. Throughout the process, managers should emphasize that they see potential in the employee, said Paul Carelis, vice president of HR services at MP-HR, a human capital management company.

Sometimes, employees on PIPs do lose their jobs because they haven't met expectations. But Carelis has seen employees with performance improvement plans learn and grow in their career and truly thrive. “There are definitely success stories with PIPs,” he said. “You just have to make sure it’s someone who is willing to put in the work and motivated enough to look past this, [so] they can really turn things around.” 

But the implementation of PIPs requires care because they are often perceived as punitive or a precursor to termination, potentially damaging employee morale and trust. Some see it as a sign of “quiet firing,” or deliberately creating a hostile work environment that encourages employees to leave voluntarily, as a 2022 Harvard Business Review article explains the term. 

In a survey of 1,000 US workers, the article’s authors found some common signs of quiet firing, which included setting up unreasonable performance targets and evaluating an employee unfairly. Both could be outcomes of a poorly devised PIP. 

Is a performance improvement plan necessary? 

To build a company culture where PIPs aren’t considered simply a stop on the roadmap to termination, managers must be careful not to overuse the tool. “In an ideal world, you never get there,” said Kathryn Matz, senior partner at Hands On, a learning and development company. 

But, in some cases, a PIP may be necessary. Here’s when a performance improvement plan might be useful — and when it’s best to deploy an alternative. 

When You Might Need a PIP

A PIP might be the answer if the employee has persistent work performance issues even after receiving previous feedback about the behavior, or if specific, measurable areas of performance need improvement.

For example, you might need to create a PIP if, despite warnings during one-on-ones with their manager, a marketing team member is still not delivering the required number of social media posts or a salesperson is receiving low marks from customers in pulse surveys. 

Managers may have mentioned the issues, but, for whatever reason, the employee isn’t improving, said Shaya Fidel, head of people at TigerEye, an enterprise software solution for sales. 

“Sometimes, even when managers are being pretty direct with feedback, [employees] still aren’t quite picking up what the manager is putting down,” Fidel explained. “It may be the manager’s tone. And, sometimes, in a remote workplace, [communication] can be challenging. So a PIP can be that bit of a wake-up call to an employee.” 

When You Don’t Need a PIP

A missed deadline from an otherwise productive worker and other one-off mistakes or minor issues should never trigger a PIP. Neither should situations that require training instead of performance correction or cases where the employee’s role or responsibilities are unclear.

For example, an employee likely doesn’t deserve a PIP for not implementing a new software system if every training session took place while they attended a trade show. 

Similarly, a PIP shouldn’t be used to ding an employee who hasn’t met expectations from an ambiguous job description or inconsistent guidance from management. And a new hire who is a bit slower than their coworkers at completing a specific task after the first week likely could use some grace — and a mentor to guide them — rather than a performance improvement plan.

3 Main PIP Components 

An effective PIP is clear about the problem, details the action that should be taken, and ensures that an employee and their manager agree on the path forward. Here are the three main parts of any performance improvement plan.

1. Performance Issues

A performance improvement plan should never be a surprise for an employee. Any performance issues — like unprofessional behavior, consistently late reports, or frequent absences — should have been discussed during regular manager-employee conversations. And because a well-written job description should outline their role’s responsibilities, employees should already know how they aren’t meeting expectations.

When writing a PIP, managers should explicitly detail where the employee is underperforming on key tasks explained in the job description. The manager should also pull examples of underperformance from past performance reviews, feedback from coworkers, and one-on-ones.

“The conversation [is] much easier for the person delivering it if they can say, ‘Hey, this is something we’ve talked about…and we’re still seeing those same concerns, so we’re going to put a formal plan in place,’” Carelis said. 

Solutions like Lattice can streamline the work to gather the data, ensuring objectives and key results and performance feedback are documented and easily accessible in a single location. 

2. Performance Goals 

Once the issue has been identified, it’s time to set improvement goals and make plans to strengthen skills where needed. Consider the case of an employee who has failed to turn in error-free bi-weekly reports on time for the last two months. Goals for the employee might include: 

• Turning in accurate reports on time
• Improving organizational and time management skills, so that deadlines are met going forward
• Communicating proactively to flag issues that could delay submission

As goals are set, organizations should offer resources, such as additional training, mentorship, and other tools that can help employees work more productively and effectively.

{{rich-highlight-1}}

3. Action Plan 

An action plan for the employee to accomplish those improvement goals sets specific timelines for important milestones. For example, an action plan for the employee who has failed to submit those error-free reports on time could look like this: 

Within 2 days:

• Review the PIP and provide relevant feedback about the issues.
• Begin working on the goals.

Within 2 weeks:

• Prepare the next report with plans to submit it two days in advance to allow the manager to check it for accuracy and ensure that it’s complete by the deadline.
• Demonstrate ability to proactively communicate roadblocks and other issues.
• Set a date to attend time management and organizational skills training.

Until PIP is complete:

• Meet weekly with the manager to provide updates on work so far and whether roadblocks have been navigated.
• Complete skills training.
• Turn in reports on time and free of errors. 

Throughout the PIP’s timeframe, which typically runs 30, 60, or 90 days, managers must regularly check in with the employee, track progress, and see signs of improvement. “You want this to be a motivational tool more than anything else,” Carelis said. “The more motivation you can provide in those check-ins, that’ll keep things on track.” 

{{rich-highlight-2}}

5 Ways to Implement PIPs with Care

Implementing PIPs requires finesse to ensure that the focus remains on helping the employee do their best, not encouraging them to launch a job hunt or update their LinkedIn profile. Here’s how to implement performance improvement plans with care.

1. Check in with HR.

Before establishing a PIP, meet with human resources first, Fidel said. With any potentially sensitive discussion about performance, employers must consider labor laws and other legal requirements, along with the organization’s general rules and procedures that govern them. HR professionals can ensure the performance improvement plan complies with regulations, Fidel explained. They also can offer another perspective.

“It’s always a good idea to give it a second pair of eyes to read through things and just make sure that it’s super clear,” she said.

2. Be clear and set context.

Employees already are wary of performance evaluation processes, which can often rely on a manager’s “subjective judgment,” according to a 2024 Gallup article. In the same report, 67% of surveyed employees said evaluations are most often based on their manager’s observations, not specific metrics about their job performance. To strip some of the skepticism, lead a PIP-related conversation by sharing insights about measurable objectives and other metrics.

Don’t say: “Your reports are always late and full of errors.” 

Do say: “Your bi-monthly reports have been late for the last two months. They also frequently have errors, particularly data entry and calculation mistakes.” 

Finally, set the context for the concern, Fidel advised. Draw a direct line between the performance deficiencies and the broader impact on the team and the business’s key goals and objectives. “Help them understand the why behind them,” she said. That way, “They can see there is a real business impact to the things [they are] doing, and you’re not just singling [them] out.”

3. Be thoughtful about performance expectations.

PIPs often run for 30, 60, or 90 days. But when choosing a PIP’s timeframe, managers must be realistic about how much an employee can accomplish based on their job responsibilities, Carelis said. If a salesperson is being considered for a PIP because of slow sales, but the organization’s sales cycle runs 60 days, expecting the individual to make big gains in a single month isn’t fair. They likely won’t have time to complete a sale.

“You’re not realistically going to be able to know whether or not they were able to truly perform in that time period,” Carelis explained. A 60- or 90-day PIP will provide the employee with the time needed to demonstrate better performance. 

Also be realistic about what they can actually accomplish within the timeframe. “[Don’t] jam pack the PIP with a bunch of stuff that you know in your heart of hearts as it’s being written, it’s not going to happen,” Matz said. 

4. Create space for the employee.

An employee could be struggling for any number of reasons — low motivation and engagement, a personal issue at home, or a lack of on-the-job resources. Before issuing a PIP, have a candid conversation with the employee to ensure you understand the root cause of any poor performance, Fidel advised. 

At the start of the conversation, share your own concerns and establish why it’s important for them to do better. Follow it up with something like this, Fidel suggested: “What I recognize is that this is probably a lot to take in…I want to hear from your standpoint, how do you think things are going from your end? Is there something I’m missing?” 

Sometimes the employee may request a day to think about the feedback, and that’s okay, Fidel said. Plan to revisit it the next workday. 

The conversation can get a bit murky, Fidel acknowledged, especially as an employee raises concerns about a lack of resources or support. But, she said, if that’s the issue, the process can serve as a reminder for employees to be more proactive about communicating their needs. 

If they raise a personal issue such as a physical or mental illness, bring HR into the mix to ensure applicable labor rules, such as the Americans with Disability Act, are followed, Fidel advised. “You can empathize, but always talk to HR.”

5. Train managers.

In most cases, PIPs can be avoided if managers and employees engage in continuous feedback conversations that highlight missteps long before they become a potentially job-ending issue. 

Keep managers trained to engage their direct reports in employee performance conversations, Matz said. Continue reminding them about the importance of those discussions, retrain them on how to do it, and then verify that they are actually meeting and talking with their employees. 

{{rich-highlight-3}}

Alternatives to PIPs

A performance improvement plan may be required in some cases, but it should generally be a “last resort,” Matz said. These PIP alternatives should be part of any organization's talent management playbook and can be far more effective than a PIP at motivating workers to do their best.

1. Continuous Feedback

Regular conversations with their managers ensure that employees are praised for their great contributions and that any issues are addressed early and immediately, long before a PIP is ever required. A continuous cycle of feedback — which includes regular check-ins, employee recognition, goal-setting, and project retrospectives — is a hallmark of high-performance workplace cultures. 

A better spin on PIPs that can be part of this ongoing feedback loop with managers is an individual development plan (IDP). The formal document is created by both an employee and their manager as part of regular career growth planning. IDPs are an effective tool to outline short- and long-term career goals, along with specific areas for development. 

2. Coaching and Mentoring

Working with peers, colleagues, and top talent within the organization allows employees to improve their skills and map out their futures. Mentorship programs can be particularly helpful for new hires during and after onboarding, especially when they are still getting acquainted with an organization's processes. 

“If you’re picky about how a job is done and this employee is doing it a different way than how you prefer, what better way is there for them to learn how to do it than from [a mentor] who they can ask questions of and get it fully explained?” Carelis said. 

3. Training and Development Programs 

Ranging from one-off virtual webinars to formal academic classes, training and development programs can help employees address skills gaps and allow for upskilling and reskilling as needed.

Carelis recommended making some programs readily available online, so employees can refer to them frequently and on their own time. Introduce them to team members who can answer their questions as well. “It makes it easier to correct mistakes and makes them feel more confident to be able to do the job correctly,” he pointed out. 

4. Job Rotation and Role Adjustment

Lagging performance can sometimes signal that an employee is ready for a change or isn’t leveraging their talents and strengths. When possible, allowing workers to change or adjust roles within the company can help them discover a better career path for them.

Employers also can hold onto an employee who might be the right fit for the organization, but who just needs a different role to shine. “You had some level of conviction at the point of hiring them or at the point of promoting them — they’ve got something,” Matz said. “Is there something else that is better suited for them?” 

Remember: Employees are people too.

Employees deserve to be treated with care and respect. PIPs can be structured with that in mind, especially when the process is deployed as a way to motivate and engage workers who need a boost, not to set them up for failure and firing. But, among the many tools in an organization's performance management toolbox, more effective alternatives exist.

PIPs are easily avoided when managers meet regularly with employees to talk about roadblocks and challenges; organizations provide the right support for employees to shore up any skills gaps; and workplaces value the kind of psychological safety that ensures individuals feel free to speak up when they need help without fear of reprisal. 

To build a feedback culture across a workforce and ensure that performance feedback is being shared in the most effective and impactful way, download Lattice’s Workbook: How to Request, Give, and Receive Feedback. The guidebook takes you through the steps required to exchange feedback and covers how solutions like Lattice can help HR teams keep feedback all in one place to track new issues and support employee growth.