Key Takeaways
- A performance improvement plan (PIP) is a tool to help employees address gaps in their achievements toward job goals.
- A well-designed PIP can boost job performance and help employees get better results.
- PIPs can also be used as part of a termination process to protect employers from discrimination claims.
- While it’s best to take a performance plan at face value, you should also use the opportunity to line up a new job, just in case.
How Does a Performance Improvement Plan Work?
A performance improvement plan is a formal statement explaining how an employee must change their behavior, increase their productivity, or improve their progress toward KPIs. Otherwise known as performance action plans, these documents list the areas in which an employee is underperforming, suggest remedies for each issue, and provide a timeframe in which the manager will measure progress.
Managers often create a performance improvement plan after issuing at least one verbal or written warning, although the process varies at different employers. Once placed on a PIP, employees usually have 30, 60, or 90 days to achieve their goals.
Note
There are few laws governing when and how employers issue performance plans, as long as they don’t apply them unequally to workers based on characteristics protected by equal opportunity law, such as race, gender, and disability.
Example of a Performance Improvement Plan
Most performance plans include the following sections:
Employee Information
This includes your name, job title, manager’s name, and date the plan was issued.
Statement of Purpose
In the first line or first paragraph, the manager will summarize the problem. For example, if you're not hitting sales targets, your manager would specify the goal and how your performance is falling short.
Desired Outcome
The plan should state what you need to do to succeed within these parameters. In the example of not hitting sales goals, your manager might say that you need to hit 75% of the goal in the next 60 days to meet expectations.
Metrics for Success
The more specific the PIP is, the easier it will be to succeed. Look for metrics specifying targets of time, clients retained or signed, money saved or earned, etc.
Action Plan
The document should outline how often you’ll meet with your manager, what results you’ll be measuring, and what the desired outcome will be.
Note
You will be asked to sign the PIP. Generally, your signature attests only that you’ve received the document, not that you agree with it. If you want to make that clear, you can add a note saying, “signature to confirm receipt.”
Pros and Cons of PIPs
Pros
Opportunity for improvement
May provide time to find a new job
Cons
May fail to outline specific KPIs
Does not guarantee continued employment
Pros Explained
- Opportunity for improvement: Assuming the employer is acting in good faith and designs the PIP to clearly define progress, this document can be a tool that helps you perform better.
- May provide time to find a new job: In the worst-case scenario, a PIP may function as a final warning—and thus a nudge to start looking for your next role.
Cons Explained
- May fail to outline specific KPIs: A performance improvement plan is only as good as the person who designed it.
- Does not guarantee continued employment: Most U.S. workers are employed at will, which means that they can be fired at any time, even in the middle of a performance plan.
What Should You Do If You're Put on a Performance Improvement Plan?
If your manager at work puts you on a performance improvement plan, review it carefully. Make sure you understand why you're being put on this plan and what the intended outcome is. It's important to reflect on why you may have been underperforming or underproducing at work. Ask your manager questions, and organize your schedule and work so that you can follow the PIP and get back on track with your team and company. Make sure you understand what happens if you do not accomplish the PIP.
Failing to meet the plan's goals and deadline could result in termination. So if you feel like you may not be able to meet the expectations, it's important to start thinking about your next move. Maybe your current job is not the right fit, and that's OK. You might want to start searching for a new job then.
Frequently Asked Questions (FAQs)
Is being placed on a performance improvement plan grounds for discrimination?
Simply being placed on a performance improvement plan usually is not grounds for discrimination. Historically, courts have not viewed performance improvement plans as “adverse employment actions” in the same way as terminations or demotions. However, it’s always wise to seek the advice of an employment attorney if you have questions about possible discrimination on the job.
Is a performance improvement plan the first step toward being fired?
Ideally, a PIP would not necessarily be the beginning of the end of your tenure at an employer. However, some companies use them that way. So, while you should always do your best to achieve the goals outlined in the agreement, it’s also wise to look for new opportunities when placed on a performance plan.
How long does a written warning stay in my employee file?
Warnings and other performance-related documentation can stay in your employee file indefinitely. The precise length of time depends on company policy. The exception is if you are working under a collective bargaining agreement or employment contract specifying that you have the right to have disciplinary material removed from your file after a set period of time.
