Do we need PIPs (Performance Improvement Plans)?
Updated: Oct 16
PIP - Performance Improvement Plan. Quite possible the most dreaded word by HR teams and managers in the workplace (even worse than "feedback"). We have been getting a lot of questions regarding PIPs lately, so we wanted to lay out what it is, the positives, and the negatives.
WHAT ARE PIPs?
PIP is typically a formal documented plan that outlines an employee's performance issues and steps to fix/mitigate those issues in the future. PIPs can last anywhere between 30 days to 6 months. They are mainly designed for two purposes:
Improving employees' performance
Documenting issues to protect the business (e.g., from accusations of unlawful termination)
They are usually used as the "last resort" in addressing employee performance before termination. Here is what PIPs can look like (templates by smartsheet).
If done correctly, PIPs can add tremendous value to employees and organizations. They create a formal process and document in which the employee receives clear directions on objectives and ongoing feedback. They also act as very clear warnings for employees to pick up their performance - as we all know, conversations and hints are sometimes just not enough.
Of course, as mentioned above, another benefit is that you have a formal document that outlines performance issues of employees, which can be used to reduce risk of litigation in the event of terminations.
In practice, PIPs have many, many issues. Often, managers see PIPs just as a prerequisite to termination and nothing more. By the time managers issue PIPs, they have already made up their mind about terminating the employees - i.e., they have no intentions of actually improving the employees' performance. At the same time, employees often know that this is the case and start looking for other jobs immediately. I know of organizations where a PIP is effectively equivalent to a termination notice with guaranteed pay for 30 days.
Even if employees end up completing the PIP period successfully, PIPs are typically documented in their performance files. It could create a very vicious cycle. For example, if the employees want to transfer departments or want to compete for promotions against colleagues who have never had a PIP, they are at significant disadvantages (take a look at our article discussing biases here).
WHAT WE THINK
PIPs are not easy to get right. If you are a people leader setting up or revamping talent development or performance management, here is what we would suggest: Forget about PIPs. Foster the culture of constructive and continuous feedback. Create a process to store all employee feedback in one place. We are admittedly biased here, given that our business focus is enabling the culture of feedback for our clients through our solution - but hear us out.
If your employees are sharing effective feedback with each other, issues are being brought up to the surface in real-time. They are getting specific suggestions on how to improve on these issues. Exactly what PIPs are meant to do, but without the stigma, especially because EVERYONE is receiving feedback in real-time, not just the under-performers. It just becomes a part of your organization's DNA.
Second, if you have a process to store all of this employee feedback (e.g., through tools like Pavestep) so that they are accessible, PIPs no longer serve any purpose in your already-full binder of HR processes. Kill two birds with one stone - develop your employees AND simplify your processes.
If you are set on creating a PIP for your organization, make sure that your managers are trained on what it is and isn't. It should truly be the last resort in improving employee performance.
Want to learn more about how you can enable the culture of feedback for your organization? Feel free to get in touch with us and request your demo.