When one of your workers is experiencing a performance issue, a performance improvement plan (PIP) may be able to help. PIPs can help you redirect the employee’s behavior so that they can become a top performer. Unsurprisingly, PIPs are far more common at fast-growth organizations than at slow-growth companies.
Do You Document “Performance Improvement Plans” for Underperforming Employees?
Recently, we completed the 2024 HR Benchmark Report. We asked 1,065 small businesses about their performance management and HR practices. Then, we looked at how the answers of fast-growth and slow-growth companies compared to each other.
63% of zero-growth firms said they documented PIPs for underperforming workers.
76% of fast-growth firms said they documented PIPs for underperforming workers.
We found that there was a 13-point spread between slow-growth and fast-growth companies, which demonstrates a strong correlation between faster growth and documenting PIPs. However, this spread jumped to a whopping 31 points when we only looked at businesses that had 25 workers or less.
49% of zero-growth firms said they documented PIPs for underperforming employees.
80% of fast-growth firms said they documented PIPs for underperforming employees.
What Is a Performance Improvement Plan?
At its heart, a PIP is a way to help an underperforming employee reach an acceptable performance level. It includes concrete problems and actions the employee needs to take to reach their performance goals. Additionally, the performance improvement plan should include a timeline for reaching these goals.
Because PIPs can eventually lead to a termination, they often have a bad reputation with employees. In addition, some workplaces use them solely to document their termination process instead of to boost job performance. When used correctly, PIPs are an incredibly effective way to help all of your employees operate at a minimum level.
When Should You Use Performance Improvement Plans?
A PIP is effective anytime an employee is underperforming and needs guidance. While workplaces sometimes use PIPs with new employees who are on a probationary period, they’re normally designed for current workers. You may want to use a PIP if you notice the following signs of an underperforming worker.
- There’s been a drop in performance.
- The employee is frequently absent.
- Your company has received a complaint.
- The worker often arrives late.
- The employee seems less engaged.
A performance improvement plan should be used when there’s an employee you want to keep who simply needs to be redirected. You may also need a PIP if you have a labor agreement that demands them.
Likewise, PIPs are effective if a good employee suddenly has performance issues or is going through something difficult in their personal life. If you have a probationary employee who is almost at the end of their probationary period and isn’t quite achieving their performance goals, a PIP is an effective idea.
PIPs aren’t just a legal step to take before firing someone. When used in this fashion, they demonstrate to other employees that no help is available. Creating good-faith PIPs that are genuinely focused on employee improvement is smart because these PIPs impact your company culture and employee morale. You want all of your employees to know that your main goal is to achieve your performance objectives and that you’re willing to work with employees to reach your company’s performance goals.
How to Create a Performance Improvement Plan
To help an underperforming worker improve, there are a few things you should do when you create a PIP for them.
Clarify the Problem
All PIPs should include the problem, solution, and timeline. Clarifying the problem is important because workers don’t automatically know if they’re underperforming. While PIPs should be primarily future-focused, you will need to devote some time to analyzing the employee’s previous behavior so that they can understand how they need to change.
Determine Your Objective
Once you’ve defined the problem, the next step is figuring out what your ideal solution looks like. The goal should be well-defined, attainable, and doable. If the objective is unattainable, it’ll demoralize the employee and make them think that the PIP is simply a preparatory step for eventually firing them.
Offer Support
To help employees reach their PIP goals, it’s important to provide them with support. Let employees know what type of support is available when they have questions in the future. If you’re recommending additional training, this is a good time to discuss what training programs or topics you expect the employee to complete.
Plan Check-Ins
A good performance improvement plan will include a schedule of progressive review meetings. These meetings are an ideal opportunity to provide ongoing support, answer questions, and review how the worker is doing on their PIP objectives. Because a PIP is intended to spur the employee’s growth, you need to arrange for multiple plan check-ins throughout the duration of the employee’s PIP.
Discuss the Consequences
During the PIP meeting, you should cover the consequences of not achieving the performance goals. While you should be clear that the PIP is merely intended to redirect their performance, the employee also needs to know that there are clear consequences, such as termination, if they don’t work toward their PIP objectives.
Tips for Effectively Using Performance Improvement Plans in Your Workplace
PIPs are an incredibly effective tool for redirecting an employee’s performance. Because of the impact PIPs have, they are strongly correlated with better company growth. To make the most of this tool, make sure to use the following tips.
Be Positive
You don’t want the employee to feel like a termination is rapidly approaching. If your underlying goal is to boost performance, it’s important to focus on being positive. While the employee still needs to know that there are consequences to not complying with the PIP’s goals, you should avoid being too negative.
Always Follow Up
After you have a PIP review meeting, you don’t want to simply send the worker off and meet up at the end of the PIP timeline. Instead, make a plan to follow up with the worker throughout the PIP process. During these follow-up appointments, it’s important to give the employee feedback and provide them with an opportunity to ask questions about their performance-related goals.
Ensure Access to the Right Resources
For an employee to improve, they need the right resources. This may simply mean the help of a mentor at your company or instructions from their PIP documentation. It may also involve additional training, certifications, or one-on-one coaching.
Focus on the Root Cause of the Problem
You don’t want to cloud your PIP’s objective with too many milestone goals or side projects. Focus on the main issues, so employees have clarity about what they need to work on. Then, ask the worker if there is anything extra you need to do to help them achieve their performance goals.
Create a Dialogue
To help workers achieve their goals, you need to create a dialogue with them. Employees need to feel like they can turn to you or their training manager for extra help. Encourage the worker to ask questions. In turn, ask the worker if there are any training tools or resources you can provide to help them succeed.
Make Sure the Goals Are Achievable
When an employer creates a PIP with the intent of ultimately firing the worker, they’ll often ensure the goals are unattainable. If your intent is to improve the worker’s performance, you should make goals they can actually achieve. Attainable goals are better for the employee’s motivation and morale. Plus, they demonstrate that your sole intent is to improve the worker’s performance.
Use Positive Reinforcement
While it’s important to convey the consequences of non-compliance, you should use positive reinforcement as much as possible. If the employee is making a serious effort to improve their performance, tell them how well they’re doing.
Always Put It in Writing
Documenting a PIP is important if you have to terminate the employee or take an adverse action. However, documentation also matters when you have a worker who genuinely wants to succeed. Recently, Mary Simmons, the vice president of HR Compliance, Learning, and Development at Asure Software, talked about this in a Mission to Grow podcast about performance optimization.
According to Mary, “If they have it in writing, they can review it at another time. When you’re giving negative feedback, sometimes they don’t hear everything that you said because they’re upset.” If your goal is to help employees listen to the PIP and make improvements, you need to provide them with documentation, so they can review it later on.
Often, employees will be too upset during a PIP review to listen and remember what is said. By writing everything down, you’re helping the employee remember and follow the PIP so that they can eventually reach their performance goals.
Put Your Performance Improvement Plans Into Action
With a performance improvement plan, you can motivate an underperforming employee to reach a higher level of proficiency. Fast-growth businesses know that PIPs are important, so they have a strategy for documenting them in place. Through effective PIPs, you can get underperforming workers to reach their full potential.
If you’re ready to take your company’s growth to the next level, we can help. To learn more about PIPs and performance management, reach out to our team of small business HR experts today.