Performance Improvement Plan: Benefits, Process and Examples

By Indeed Editorial Team

Updated 24 November 2022

Published 4 October 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Managers use various strategies to maximise their staff's potential. A performance improvement plan is one such strategy that enables employee development through honest feedback and actionable steps for improvement. When used in the appropriate situations, it can benefit both employees and the company. In this article, we explain what is performance improvement plan, its benefits, step-by-step process to implement it and example drafts for different situations.

What Is A Performance Improvement Plan?

A performance improvement plan or PIP is a formal document explaining where an employee needs to improve and gives clear guidelines to attain it. A PIP is implemented when an employee is continually missing the company's expectations towards their work or behaviour. Either way, its main objective is to promote constructive feedback, clarify the company's expectations and enable employee development.

Usually, a PIP is drafted by the employee's immediate superior, and human resource personnel works as a facilitator between the two. On receiving the PIP, the employee has a specified time, generally from one to three months, to meet the objectives. Achieving them can help the employee improve performance, or failing them can result in demotion, transfer and even termination.

Related: What Is a Code of Conduct? Importance and Examples

Benefits Of A Performance Improvement Plan

Performance improvement plan provides various benefits to both staff and the company. Some of the benefits are as follows:

Boosts employees' morale

PIP is focused on helping the staff improve rather than penalising them for their underperformance. It ensures that staff who struggle with the work but want to improve get support from the company. With actionable objectives and support, they can be certain that the company wants them to improve. This boosts the employee's morale.

Minimises staff turnover

Frequently searching, hiring and training new staff and allowing time to adjust to the jobs for optimal output can be expensive for the company. Therefore, it is important to keep the staff turnover to a minimum. With a PIP, you can avoid high turnover by helping the staff overcome the issues instead of terminating them.

Encourages accountability and efficiency

Employees need to have a sense of accountability towards their work to achieve results. While some understand their roles very well and perform them with responsibility, others may need honest feedback and guidance. PIP helps you to communicate the gaps and clarify the expected results, motivating employees to be accountable and efficient in their work.

Related: What Is Attrition Rate and How To Calculate It?

What To Include In A Performance Improvement Plan

A good PIP includes all the essential details to define the problems, goals, solutions and outcomes. Here is the information to include while drafting it:

  • Employee information: Include the basic employee information, such as the name of the employee, designation and department.

  • Reason for PIP: Add a statement summarising the purpose of the document.

  • Areas of concern: Define the areas where the employee's performance is not as expected and needs improvements. To help them better understand the concerns, it is important to add quantifiable data and concrete examples of where they lack.

  • Improvement goals: Provide measurable improvement goals, along with the actionable steps to achieve them.

  • Timeline: Specify the start and end date during which the employee has to achieve the goals.

  • Expectation and consequences: Clearly address the expectations from the employee and the consequences of failing to meet them.

How To Implement A Performance Improvement Plan

Here is the step-by-step-process for implementing a PIP:

1. Determine whether a PIP is appropriate

Determine if a PIP is appropriate for the situation. While a PIP is focused on helping the employee and enabling better performance, you can avoid it if other approaches can accomplish the same goals. Many times, you can fix the performance deficiencies with proper feedback and one-on-one coaching. Try such methods and if the issue still persists, you may implement PIP.

2. Identify the problems

Identify the problems and be specific about where the employee lacks. Being specific and detailed is crucial because it helps the employee understand the problem and for you to better define the goals and guidelines. Comparing the benchmark performance and relevant policies with the employee's current performance and conduct can help you clarify the gaps.

3. Define the objectives, guidelines and consequences

Creates objectives that are SMART, specific, measurable, attainable, relevant and timely. This eliminates any chances of confusion and communicates clear expectations. Also, define the guidelines and resources that help the employee achieve the goals and state the outcomes of failing to do so.

4. Draft and review the plan

Draft the plan by adding all the discussed information, employee details, statement of reason, areas of concern, set goals and consequences. Once drafted, review the plan to ensure if it is attainable and genuinely helpful to the employee. You may also want to discuss it with a human resource staff to verify and be compliant with company policies.

5. Implement the PIP

Conduct a meeting with the employee to discuss the PIP. This may not be a pleasant meeting for most of the employees. But you can help them understand the need for PIP and how the positive outcome can benefit both parties. Also, be open to accepting the employee's concerns and feedback. If adding or changing anything can make the plan more effective, you can welcome it. After all, the main objective of PIP is to help your team member improve.

Once you have discussed the plan with the team member, made the required updates and completed the formal procedures, forward it to the human resource department for approval.

6. Monitor the progress

Once the employee begins to work on the plan, regularly revisit and monitor their progress. You may conduct meetings, provide feedback and help solve any issues to help them follow the plan. Your commitment and support towards the plan can encourage the employee to be accountable and put more effort into it.

7. Conclude the plan

Following the completion of objectives or reaching the deadline, you can end the PIP. If the employees have accomplished the goals, they can continue to perform their normal duties. Although, ensure that they maintain the same performance. While if they fail to meet the objectives, follow the decided consequences. Sometimes, if the employees fall short of the objectives but have genuinely worked to accomplish them, you can consider an extension of the plan.

Related: Essential Areas of Improvement for Employees (With Tips)

Examples Of A Performance Improvement Plan

Here are the examples of PIPs related to employee performance and behaviour:

Example 1: PIP for unprofessional behaviour

Here is how a manager might encourage their team member to exhibit better behaviour at work:

Jenn Smith
Customer service executive
Customer service
September 25, 2021

Reason for performance improvement
The purpose of this improvement plan is to define issues in your conduct and behaviour and give you an opportunity to improve them as an employee of Mills Company.

Problems identified with your work behaviour

  • Issue 1: You are expected to report to the work on time by 10:30 a.m. But you were found consistently late in reporting and logging in on multiple occasions in the last quarter.

  • Issue 2: You are expected to follow the company's leave policy of submitting the leave application in advance (except sick leaves) and get them approved by your manager before commencing on leaves. You failed to adhere to the company's leave policy eight times in the last quarter.

Actions to improve conduct
You must perform the following activities for the next 30 days:

  • Commit to report to your team leader every day five minutes before the shift.

  • Any uninformed leave is treated as an absence of duty and considered as a failure to follow the improvement plan. In case of a medical emergency, product a valid reason with a doctor's certificate.

  • Revisit the leave-policy section of induction training and complete the test. Your team leader shall provide the training module.

We are confident that following the mentioned steps you can improve your performance and meet the expectations of Mills company. If you fail to do so for the next 30 days, disciplinary actions may be taken against you, including termination.

Example 2: PIP for performance/productivity

Here is an example of a PIP to work on better performance:

John Smith
Sales executive
September 25, 2021

Reason for improvement plan
The purpose of this improvement plan is to define issues in your work performance and give you an opportunity to improve them as an employee of Allow Company.

Problems identified with your performance

  • Issue 1: You are expected to meet the conversion rate of a minimum 20%. But you failed to meet your minimum sales conversion for Q2 2021.

  • Issue 2: You are expected to maintain a quarterly customer retention rate of 50%. You failed to meet the minimum customer retention goal for Q2 2021.

Actions to improve performance

  • Commit to a minimum of three hours of phone time in the office per day.

  • Secure five lead appointments per week.

  • Share your weekly lead list with your immediate supervisor every Monday by 9 a.m.

  • Secure a minimum of two in-person visits with existing clients per quarter.

  • Ask your immediate supervisor for mentorship and assistance as needed.

We are confident that following the mentioned steps you can improve your performance and meet the expectations of our company. If you fail to do so in the next 60 days, disciplinary actions may be taken against you, including termination.

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