How to Create a Performance Improvement Plan (+ Template)
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
A performance improvement plan (PIP) is a management tool used to create a roadmap to help an underperforming employee succeed. Whether an employee is failing to meet their objectives or has excessive tardiness that must be corrected, a PIP can help an employee improve.
Employees often think of a PIP as a precursor to termination. While that can certainly occur, make sure you are transparent with your employees and reassure them that a PIP helps them get back on the right track. To help you support your employees, here is our guide to creating a PIP, including a free performance improvement plan template.
Thank you for downloading!
What to Include in a Performance Improvement Plan
You need to include eight key items in every performance improvement plan, which should be just one tool within your employee management process. Whenever you put an employee on a PIP, use a performance improvement plan template to ensure you treat each one the same. This can help your company avoid legal trouble by removing the appearance of discrimination.
1. Determine If a PIP Is Appropriate
First, determine whether a PIP is appropriate in the given situation. A PIP should only come after you’ve had conversations with the employee about their performance or workplace behaviors and taken at least initial steps to help them improve. Employees should not be surprised or caught off guard by a performance improvement plan.
It’s also good practice to make this determination in consultation with HR. Working alongside HR will make sure you remain compliant and are using a company-approved PIP. HR can also help you discuss the plan with the employee, taking some discomfort off your shoulders.
2. Identify Improvements Needed
Once you’ve determined that a PIP is appropriate, it’s time to create the plan. Make sure you provide adequate details to show why the employee’s present performance is deficient and what specifically they need to do to improve.
I recommend attaching the job description to the PIP. This reminds the employee of the minimum requirements for the job they hold and can help you ensure that you’re holding the employee accountable to their stated duties.
These areas for improvement should come directly from the manager’s previous notes about the employee’s performance, which may have been discussed in previous performance reviews. If the employee hasn’t been made aware of any issues, I do not recommend putting them on a PIP as the first course of action. Always discuss issues with employees in real time, if possible, or at least during regular check-ins. These check-ins will also give managers documented evidence of how long the employee has been underperforming and what steps have been taken so far.
3. Define PIP Goals
Now that you know where an employee needs to improve, it’s time to set the goals for how they achieve success. Just like you set goals for departments and employees, you should also set goals in the PIP using the same method. I recommend using SMART goals: Specific, Measurable, Achievable, Relevant, Time-bound. Setting these goals can be easier with a performance management system.
You don’t want to have a ton of goals listed on the PIP which could overwhelm an employee and make them feel you’re setting them up for failure. Choose one to three key goals that your employee needs to focus on and provide them with the structure needed to achieve the goals.
Let’s say you have an employee who missed key deadlines on the last two projects they were assigned. You discussed this performance issue with them after each project deadline was missed and tried to help, but they haven’t improved. The employee has another project coming due in a few months, and you want to make sure they meet the deadline. Here’s how you might structure your SMART goals in the PIP:
- Specific: Project X will be completed accurately and on time.
- Measurable: Using key milestones, the employee will meet a Project X deadline of April 30.
- Achievable: By defining milestones and reviewing steps, Project X will be set up for a successful on-time completion within the reasonable time period provided.
- Relevant: Milestones will be built in coordination with the manager and all team members.
- Time-bound: Project X will be completed by April 30.
Now let’s put it all together: Project X will be completed accurately and by the April 30 deadline by setting up and hitting key milestones to ensure the project is on pace.
Ultimately, you’re trying to help the employee achieve success and come off the PIP.
4. Structure Timeline
Using SMART goals to structure your PIP will help you create the timeline for completion. But you need to set more than just the end date for the PIP, which I recommend setting to align with the performance you’re looking to improve. In our example, this deadline would need to align with the Project X completion date of April 30. However, it’s perfectly reasonable to set a PIP timeline of 90 days, six months, or whatever timeline works for the situation at hand. Above all, the timeline needs to be reasonable.
You also need to set checkpoints throughout the PIP. A PIP is not a document you create, discuss with the employee, and then let them navigate through it alone. As a manager, you need to be prepared to work with the employee to give them every opportunity for success. That means setting aside regular check-in times to answer questions and guide them.
5. Speak With the Employee & Provide Support
When it’s time to review the PIP with the employee, I recommend having HR present to help document the conversation. Having another person present will keep the conversation on point.
By expressing your desire to help the employee succeed, you can set the tone for a fruitful conversation. During this meeting, you should also encourage the employee to speak openly and suggest any changes to the PIP. Perhaps they have ideas on how to be successful or may need to ask clarifying questions. Either way, giving them the time to be heard shows them you value their input.
In your discussion with the employee, outline the support you will provide. This should include regular project meetings to ensure the pace of the project is on track and key milestones are being met. Be prepared to assist the employee with any issues that arise.
6. Have Everyone Sign
You must have the employee sign the PIP, acknowledging they understand the goals they need to achieve. You should also sign the PIP attesting to the details contained in it and that you will provide necessary support to the employee. It’s also good practice to have HR sign the PIP to acknowledge they have reviewed the plan and find it reasonable and achievable.
7. Monitor Progress
This is a key component to any successful PIP. If you let an employee go off on their own, they will be destined for failure. However, by guiding them and helping them hit little goals, you can help them achieve the overall goals of the PIP and reach a successful outcome.
As a manager, you need to show your commitment to the employee. You do this by prioritizing them, keeping scheduled check-ins, and being present to help them succeed. Each check-in should be used to celebrate even small wins, motivating the employee to continue their improvement.
8. Conclude PIP
Hopefully, this is a celebratory affair. As long as the employee meets the stated objectives of the PIP by the deadline, or sooner, the PIP is deemed successful. Both you and the employee should sign off on the PIP, concluding the plan. Make sure the employee understands that their improved level of performance is expected to continue.
Not all performance improvement plans end successfully, however. If an employee is unable to complete the goals outlined in the PIP and has been given support by their manager, demoting or terminating the employee may be the next step.
Nonetheless, if an employee has shown improvement and motivation but was unable to meet all of the goals, you might extend the deadline. If you look back at the PIP and see, in retrospect, the timeline and goals were not realistic and might have been too aggressive, adjusting the timeline is perfectly acceptable to give the employee every chance at success.
A solid performance management system can help you create and track performance improvement plans efficiently. Check out our top performance management system picks for the best options.
Bottom Line
Employees who do not meet company expectations may need to be put on a PIP. A well-structured and implemented PIP creates a culture of development and investment in your employees, which can lead to more engagement and higher productivity from your team. Utilizing our free PIP template and following the steps outlined here, you can create a personalized improvement plan that illustrates exactly what your employee needs to improve, giving them the support and guidance they need to successfully conclude the plan.
