Performance improvement plans (PIPs) have an unfortunate reputation as a tool to ‘manage’ people out of the organisation. This reputations turns what could be an effective tool for improving performance and retaining employees – saving time, money and resources – into something that often irrevocably severs the psychological contract. It’s time, therefore, that PIPs were better used in organisations to more effectively achieve their aim: to improve performance.
What is a performance improvement plan?
Performance improvement plans are an organisational process designed to improve an employee’s recurring underperformance. They are a formal method, often managed by HR, invoked when informal ways to improve performance – such as coaching and feedback – have failed.
Performance improvement plans document how the employee’s performance to date has been unsatisfactory and provide a clear action plan for the future, with agreed goals on what must be achieved and when, as well as the support and guidance that will be offered by the organisation to help the employee achieve their goals.
PIPs have three outcomes: dismissal of the employee, retention of the employee and extension of the PIP process. Because dismissal is a potential outcome, procedure and full documentation of all events and agreed actions are essential when it comes to PIPs as grievances and disputes are likely to arise.
The problem with performance improvement plans
The core problem with PIPs is the seriousness with which they are viewed and the reputation they have for being a way to get rid of employees. On both sides, they are often associated with an irrevocable breakdown in the employment relationship – with only one possible outcome. Against this backdrop, the chance of the employment relationship surviving, even if the employee meets the terms of the PIP, are in many cases slim.
How can employers use PIPs more effectively?
Make performance an ongoing conversation
In a healthy workplace, performance improvement should not be delineated from individual roles. The way organisations beat their competitors is by constantly striving to be more efficient and effective. This happens at the organisational level all the way down to the individual level. It’s part of having an organisational growth mindset, of always looking for new ways to improve.
Line managers should, on a regular basis, work with employees to drive performance enhancements. Feedback cultures help here, because conversations then naturally gravitate towards improving performance. When performance is part of the fabric of daily life, underperformance is picked up much earlier and can be corrected over time, with full support, reducing the chance of needing to resort to performance improvement plans.
And if you do need to use performance improvement plans, they feel more like the formalised next step in an ongoing process that does not turn underperformance into a deal-breaker, but rather treats it as a temporary problem that can be fixed.
Remember that employment is a two-way street
The dynamics of employment relationships are complex: when they break down, the fault rarely rests entirely with one side. And if the fault is shared between both sides, it follows that solutions that are co-created will likely work most effectively.
Part of this comes down to attitude and mindset. Those involved in the PIP on the organisational side, such as line managers, must go into the process thinking that a solution is forthcoming and accept that their own actions may have contributed to the issues at hand.
In most PIP processes there are clear guidelines on the support and guidance the organisation needs to offer to meet the terms of the PIP and it’s important that this doesn’t solely focus on how to help the employee solve ‘their’ problems.
There will inevitably be behaviours or situations from the organisational side that are making the issues worse and these should be tackled in order to show the employee that there is organisational impetus and motivation to achieve a positive outcome.
Beware of biases and assumptions
If the level or nature of the support given to the employee before the PIP was poor, then the employee may simply be unaware of where they are underperforming or not clear on the expectations of the role. It’s very easy to fall into the fundamental attribution error, for example, where everyone believes the employee is ‘deliberately’ underperforming.
This may be more likely after a PIP has started, because those on the organisational side may assume that the seriousness of the PIP process means that there must be a ‘problem’ with the employee. This is dangerous and often precludes a positive solution being found because people will be less likely to think the issues can be solved.
Treat them as a conversation opener
Sometimes relationships just don’t work out. In these cases, there’s no need for an acrimonious split.
PIPs can be a way to allow both sides to move on. No employee wants to be stuck working for a company that doesn’t suit them but they may be afraid to say that they actually would like to leave. Give them the space to do so.
They may be open to protected conversations (where the process allows them), potentially leading to settlement agreements, helping to achieve an outcome that works best for everyone and saves money, time and resources being needlessly spent.
