Performance Improvement Plans: An Employer’s Guide to Managing Employee Performance

Employees are the driving force behind your business, and their performance is one major aspect that can make or break your profit margin. When recruiting, the best candidate for the job is typically selected. Unfortunately, there are times when the selected candidate doesn’t quite meet the expectations. In cases like this a performance improvement plan (PIP) is a good option to bring underperforming staff up to speed.

What is a performance improvement plan?

A performance improvement plan is a detailed document outlining the ways in which an employee may be falling short in their role, and the steps needed to improve performance. A PIP may also be issued to an employee who wants to be promoted to a new role but doesn’t quite meet the necessary standard.

The employee’s manager or supervisor will prepare the PIP based on the most recent performance review or employee appraisal and should include a deadline for improvement.

What are the benefits of performance improvement plans?

While PIPs may not always be received well by the employee, they have several benefits. A PIP helps to:

1.      Set employee expectations – PIPs provide clarity to underperforming employees regarding the expectations for their role. Managers must clearly communicate how the employee’s efforts will align with the company’s goals. Most employees if given the chance to make improvements will. Improved performance will result in increased productivity.

2.      Build strong company culture – When employees are given direct feedback on their performance, it can help to promote a sense of belonging in the company. If an employee feels that their career growth and success is important to their employer, it can strengthen company loyalty and commitment to the company’s growth.

3.      Save time and money – Recruiting and hiring new employees is an expensive and time-consuming process. Issuing a PIP to an underperforming employee is a lot less costly and time consuming than training an entirely new employee. If the PIP is successful, it may save employers thousands of dollars in recruitment fees.

How to create a performance improvement plan?

Designing an effective performance improvement plan to get your employee back on track involves creating a strategic and specific plan that is easy to understand and actionable. Here are some key tips to consider for creating a successful PIP:

• Set a specific time period – A performance improvement plan is typically set for 30-120 days. The time period will vary depending on the specific issues that need to be addressed.
• Create SMART goals – The goals outlined in the plan should be Specific, Measurable, Achievable, Relevant, and Time-bound. This will make tracking improvements simpler.
• Provide the necessary resources - As an employer it is your duty to ensure your workers are fully equipped with all they need to succeed. Ensure you provide the resources necessary to meet the targets set in the PIP.
• Evaluate for improvement – Keep track of your employee’s progress using specific milestones and targets. Tracking improvement is the only way to know if the terms set out are being met.
• Be clear about consequences – Communicate the consequences of not meeting the set targets or achieving the outcome presented.

Can an employee be terminated if PIP is unsuccessful?

There are times when a termination clause is added to a PIP if the employee’s performance does not improve. While it may be tempting to use poor performance as grounds for termination with-cause, it is not recommended since the threshold for a with-cause termination is difficult to prove. The wrongful termination of an employee could lead to lengthy court cases and hefty fines.

If you can prove that the conditions of the PIP were reasonable, SMART, and the employee was given a fair opportunity and time to improve their performance, you can move forward with a termination without cause notice, knowing you have minimized the employees' chances of claiming wrongful termination.  

Need help improving employee performance?

Our experts can help you develop employee PIPs, any other company policies, and provide advice on any HR issues you may have. We also provide expert health and safety advice to keep you compliant and help protect you from fines. Contact us today 1 (833) 247-3652 to learn more.