How to Draft an Effective Performance Improvement Plan [+ FAQs]

As a business owner, you should constantly be seeking ways to improve workflow, efficiency, and returns on your investments. Thus, it is critical for employers to constantly monitor and maintain the performance level of their employees. But what happens when an employee is falling short of the mark? It is not always the best idea to simply fire and rehire. A great way to maintain and guide the performance level of employees is through a performance improvement plan!

Performance improvement plans are a customized and detailed guide that is tailored to an employee. Performance improvement plans consider the causes of underperformance, and highlight short, medium, and long-term goals that an employee should meet to stay on track in terms of their performance. 

Performance improvement plans may sound like bad news to an employee, as it may make them think they are on the verge of termination. However, many employers use performance improvement plans to proactively correct mistakes and underperformance to give employees a fair chance to improve. A well-structured and thoughtful performance improvement plan is great for company morale and efficiency, as it keeps performance up and shows your employees you care about them and their improvement within your company. 

This article will discuss everything you need to know about crafting the perfect performance improvement plan for any occasion and will provide tips, samples, and much more to take your PIP to the next level!

A performance improvement plan is an official document that provides a comprehensive and detailed explanation of changes an employee needs to make to their workflow to avoid getting fired. Performance improvement plans typically delineate milestones that an employee should reach within 30, 60, and 90 days after the meeting. 

Performance improvement plans and performance reviews are sometimes conflated with each other but are slightly different. Whereas performance reviews are great at tracking the performance of an employee, it does not offer recommendations and ways that an employee can improve. A performance improvement plan will incorporate features of a performance review to set a foundation upon which improvements can be made. Therefore, it can be argued that a performance improvement plan is a more effective way to not only track the performance of an employee but to ensure that they are staying on track!

Performance improvement plans are beneficial in several ways; here are a few.

1. Creates a healthier company culture

Sometimes, employees need goals to work towards to motivate higher performance levels. A strong performance improvement plan is a great way to relay these target goals! Instead of cultivating a workplace culture of fear of underperformance, performance improvement plans create a healthy company culture where employees understand that they are not alone and that they will not be arbitrarily fired if they are unknowingly underperforming. 

2. Saves the company resources (time, money, etc.)

The termination and hiring of new employees is a lengthy and expensive process. Not only will you need to pay a severance package to a terminated employee per their contract, but time and money will need to be spent scouting, interviewing, and onboarding a new employee. A performance improvement plan takes your current workforce and sets them on the right track, mitigating the need to fire and hire when an employee underperforms. 

3. Effective

Oftentimes, an employee is unaware they are underperforming. Falling into routine is easy, and bad habits are those that often go unnoticed. Instead of reprimanding and taking aggressive action against an underperforming employee, a performance improvement plan can be used to notify an employee about their underperformance. In many cases, receiving a performance improvement plan is enough of a wake-up call for that employee to make changes to their work style and perform at the level you want them to!

Creating a strong performance improvement plan is a multi-step process that considers many factors. Here are the most important steps to creating a well-structured and comprehensive performance improvement plan. 

Identify the problems with the manager & employee

The first step to drafting a performance improvement plan is to recognize the need for one. Sit down and consult with the manager or supervisor of the employee in question and single in on the areas in which they are underperforming. 

Set measurable & achievable goals

Once you have narrowed down the issue, begin to find solutions or ways that the employee can improve. Make goals for several time markers; a typical performance improvement plan will have target goals for 30, 60, and 90 days. This will form the meat and potatoes of your performance improvement plan. These goals will largely depend on the position of the employee, but here are some examples of goals that could be considered for the following positions.

Define the support & resources that the employee will receive

A large part of a performance improvement plan is making sure that the employee knows that they are not alone. Ensure that you provide and clearly outline the support that an employee will receive throughout executing their performance improvement plan. 

Some common examples of resources provided for employees under a performance improvement plan include 

• Courses
• Seminars/Training
• 1-on-1 mentoring/supervision

Create a timeframe or schedule to track progress

Determine the timeline you wish your performance improvement plan to follow. This varies on a case-by-case basis, but general performance improvement plans are set over a 2-3 month period.

For instance, if an employee is underperforming in their duties, their performance improvement plan can detail a 3-month process to get them back to speed. This may include lightening their workload and progressively adding more as they grow accustomed to it.

Define the actions that will be taken for different outcomes

Finally, figure out what consequences and measures are in place should the employee not improve during their performance improvement place or if they revert to their previous ways following the conclusion of the plan.

For instance, if an employee is set on a performance improvement plan to correct bad behavior and they do not improve, make it clear that failure to comply will result in immediate termination or a demotion. 

This section will provide a breakdown of the different components of a performance improvement plan. Be sure to include these sections in yours to ensure that your plan addresses everything it needs to!

The employee’s information

Ensure that your employee performance plan contains the employee’s information, including their full name, job title, and department they work under. 

Date

For the sake of record keeping, as well as to accurately track the performance of the employee, ensure you include the date on an employee performance plan. 

Metrics that need to be improved

Identify the areas that require improvement. A good way to structure this section of the performance improvement plan is through a list or a table!

Activities planned to improve performance

Map out the activities/events that are in place to assist the employee in improving their performance. Similar to the metrics of improvements, this section of your performance improvement plan should be listed or tabulated to mitigate any confusion that could arise. 

Targets/goals & deadlines

Create a timeline for the employee to follow your performance improvement plan. Set target goals for your time intervals and make sure that you clearly describe the nature of each goal and how you would like to see them achieved. 

Final date for completing the PIP

Your performance improvement plan should have a projected date of completion. This places a physical deadline on the employee and, in many cases, is effective in triggering a rapid change!

Results

Every performance improvement plan should indicate the metrics of success. This helps employees greatly in determining whether they are following the plan correctly. 

Progress review meeting schedules

Comprehensive performance improvement plans will state pre-scheduled progress review meetings with the employee to ensure that they are on the right track or if the plan needs further adjustments to better align with the employee’s needs. 

Fields for outcomes of progress review meetings

Employee improvement plans should also state when the results of the aforementioned progress review meetings will be shared with the employee. This feedback is essential for the employee to fully understand if what they are doing aligns with their employer's expectations. 

Final review results

Finally, the performance improvement plan should indicate when a final meeting will be held to discuss the results of the plan and the steps to be taken moving forward. Ensure that the employee understands the gravity of the situation and that they should work hard towards performing at the level you require them to. 

Here are some examples of performance improvement plans for different layouts.

Performance Improvement Plan for Attitude Sample 

Performance Improvement Plan for Sales

HR Improvement Plan

These are some commonly asked questions about performance improvement plans. We hope that the answers to these questions will shed some more light and clarify the functions and benefits of a well-structured performance improvement plan. 

1. When should a performance improvement plan be used?

A performance improvement plan should be used in cases where an employee is underperforming or misbehaving in the workplace (this, of course, excludes more severe issues such as abuse, violence, and harassment). More importantly, performance improvement plans should only be used when you, as the employer, believe that the problem can be fixed and that the employee is capable of change. Performance improvement plans should be carefully thought out and should be delivered to the employee as soon as possible to limit underperformance as quickly as possible. 

2. How to ensure a PIP is effective?

A PIP’s effectiveness can best be judged through regular meetings with the employee in question. Performance improvement plans can also be directly supervised during working hours, which gives an employer a closer look at the employee’s actions and allows for immediate corrections when necessary. 

3. How long should a performance improvement plan last?

While the length of a performance improvement plan varies on the position of the employee, general time frames of 1, 2, or 3 months are most commonly utilized. 

4. What are the advantages of a PIP?

The primary advantage of a performance improvement plan lies in the efficiency in employee behavior turnover, the time saved from having to scout and hire a new employee, and the financial savings from not having to pay a severance package for a terminated employee and a new compensation package for an incoming hire. 

5. What are the disadvantages of a PIP?

A performance improvement plan can be disadvantageous because, in some cases, employees sometimes do not take criticism well. This results in little to no improvement and makes the formulation of a performance improvement plan a waste of company time and resources. 

--- Originally written by Alexander Coye ---