How to Create and Introduce a PIP

Thomas J. Peters, best known for his book In Search of Excellence, once stated, “The day firing becomes easy is the day to fire yourself.” A manager’s role is to do everything they can to help their direct reports succeed. Thus, an employee’s failure can be attributed to a failure on the part of their manager. Not all direct reports fail due to their managers, but strong leadership can tip the scales.

Terminating an employee should be an employer’s last resort. But what can a manager and Human Resources do if an employee isn’t meeting organizational goals and expectations? What is your plan for improving performance? Maybe the answer is in the question: a Performance Improvement Plan, or PIP. Keep reading to learn how to create and introduce a performance improvement plan (PIP).

What Is a PIP?

A Performance Improvement Plan, or PIP, is a formal document devised for an employee who has not been performing at an acceptable level within their role and is being provided the opportunity and guidance to salvage it. A PIP can be created to address soft skills such as leadership and communication or job-specific skills needed to hit targets, like learning a certain program.

PIPs should only be introduced after first having a few initial conversations with the employee. An employee should not be shocked when their manager introduces a PIP. A PIP normally includes:

Specific goals required of the employee
A timeline for which these goals must be met
Clear actions to take to achieve these goals
Clear objectives for improvement

A PIP usually gives employees 1-3 months to meet these expectations. The document should state that the PIP serves as a final warning for the employee, and if they still fail to meet their goals, it may be taken as their resignation.

Who Creates a PIP?

Managers are typically the ones creating a PIP. However, they often choose to get input from HR before rolling it out. HR can also coach managers on supporting their direct reports through a PIP.

As an HR pro, you likely regularly have difficult conversations—whether informing employees that their wages are being garnished or letting a team member go for gross misconduct. By regularly exercising this muscle, you’ve probably become a seasoned professional at redirecting and reframing conversations to help employees feel cared for. As an HR Party of One, you may feel like you have to navigate these difficult conversations alone– but you don’t! Join our HR Party of One Community to connect with other HR pros and gain new perspectives on issues you face daily.

Managers may not feel as prepared to have those difficult conversations with their direct reports, so HR and managers should partner in the employee’s best interest. HR can be there to terminate an employee if the performance improvement plan doesn’t go according to plan but also to frame the introduction of a PIP as an opportunity for growth.

The Benefits of a Performance Improvement Plan

Most employees want to do well at their jobs but may not know how to. Introducing a PIP can provide many benefits to the employee and your organization, such as:

Creating a very clear, structured pathway for an employee to succeed
Making the employee accountable
Identifying the root causes of the employee’s performance issues
Reducing employee turnover

How to Develop a PIP

A strong PIP will ensure employees have everything they need to improve their performance. To develop a PIP, take the following steps:

Create or use a template: Using a template for every PIP you introduce can help you avoid accusations of favoritism or discrimination.
Outline performance issues: How, specifically, is the employee underperforming? Do you have evidence of these issues? At BerniePortal, managers document conversations that occur in their weekly one-to-one meetings with direct reports under our performance management feature. When developing the PIP, having this “paper” trail to refer back to helps managers and HR justify the need for a PIP.
Identify underlying issues: What’s the big picture? Is something deeper or personal preventing an employee from performing well? This step will likely require you to converse with the employee directly. When having this conversation, be careful about asking specific questions. You don’t need to know exactly what’s going on; it could cause compliance issues if you terminate the employee. For example, say a sales team member at your organization is suddenly not meeting goals, and you ask her about underlying issues. She informs you that she’s pregnant and she’s been too stressed to make calls. She could claim discrimination if she did not follow through with the PIP and you terminated her.
Create the PIP with clear goals and expectations: Use SMART goals, which stand for specific, measurable, attainable, relevant, and time-bound. For example: “Sales employee X must book at least 6 meetings in the next 14 days.”
Create a timeline: How long does the employee have to accomplish goals and meet expectations outlined in the PIP?
Check-in with the employee: As appropriate, provide as much support as possible throughout the PIP timeline.
Sign the document: Ensure the employee and their manager have signed the PIP.

Is a PIP Legally Necessary?

A PIP is not legally necessary. In the majority of the U.S., an employer can fire an employee at any time and for any reason besides discrimination or whistleblowing. This is because most U.S. States follow at-will employment. A PIP is a company’s last effort to keep an employee and should be seen as a courtesy.

While you are not legally required to use PIPs at your organization, not using them (or misusing them) can seriously damage your organization’s culture and reputation. A manager must do everything possible to help their employees succeed. Therefore, a PIP is necessary to retain employees.

The Stigma Around Performance Improvement Plans (PIPs)

Many perceive a Performance Improvement Plan (PIP) as just another version of a two-week notice, and this stigma often festers due to toxic workplace cultures.

Before introducing a PIP, consider the following questions:

Are you waiting until an issue has escalated too far before initiating a PIP? If the employee is “past the point of no return” in your eyes, then you have waited too long. Managers should provide employees with constant constructive feedback before introducing a PIP.
What is your intention behind introducing a PIP? If you are introducing the PIP to clear your conscience or avoid accusations of favoritism for terminating an employee, then you are introducing the PIP for all the wrong reasons.
Do you actually want the employee to stay at your organization? When introducing a PIP, your ultimate goal should be for the employee to succeed and stay at your organization. If you plan to fire them anyway, a PIP wastes time for you, the manager, and especially the employee.
Why did you hire the employee in the first place? At our recent Weekdays with Bernie Conference, Aron Ain encouraged employers and HR leaders to start with trust, acknowledging that they probably wouldn’t have hired an employee if they didn’t trust them to get the job done. People don’t have to earn Ain’s trust; they have to unearn it. You can minimize the stigma associated with PIPs by showing employees you genuinely trust them to improve.
How clear were managers on the role's expectations? To minimize the need for PIPs, HR can coach managers to set clear guidelines for employees from when they sign the offer letter and even as early as in the interview process. For additional information, check out our HR Party of One episode on coaching managers to give effective feedback.

Additional Resources

You can stay informed, educated, and up to date with important HR topics using BerniePortal’s comprehensive resources:

BernieU—free online HR courses, approved for SHRM and HRCI recertification credit
BerniePortal Blog—a one-stop shop for HR industry news
HR Glossary—featuring the most common HR terms, acronyms, and compliance
Resource Library—essential guides covering a comprehensive list of HR topics
HR Party of One—our popular YouTube series and podcast, covering emerging HR trends and enduring HR topics