Performance Improvement Plan – [See Its Benefits And How To Create It]

Have you ever had a performance improvement plan (PIP) implemented? If not, then you’re missing out. A PI Plan helps improve the overall performance of your organization.

It is an approach to provide a systematic improvement opportunity to an employee. PIP serves as a way to build the skills required by an organization and enable the workforce to continually improve their performance.

By implementing a performance improvement plan, managers can monitor the individual goals of employees in order to provide the necessary training or guidance.

It is the utmost goal of every organization to see its workforce performance increase but what happens when the opposite is the result?

In this complete guide, I will walk you through why you need a PIP, its benefits, and how you can effectively implement a performance improvement plan that works.

What is a Performance Improvement Plan?

As mentioned in the introduction, PIP (Performance Improvement Plan) is a written document describing issues with an organization’s plans to improve the areas in which it falls short of established standards or goals.

The plan involves assessing current areas of strength and identifying problem areas that need corrective action. It also outlines evidence-based strategies that will be used to address the organization’s shortfalls and meet performance goals.

PIPs help employees to focus on improvement in areas they have identified.

This does not replace the formal performance management process but provides for a more structured and focused engagement between an employee and the supervisor in order to identify the issue(s) and develop a roadmap for improvement.

Why And Who Needs a Performance Improvement Plan?

As a manager or business owner, can’t you just chew an employee out for messing up? Maybe you could. But a performance improvement plan helps your employee know that he or she needs to improve and why the improvement is necessary.

Not only that, but it gives your employees an opportunity to respond and give their perspectives on the issue.

You can also use performance improvement as documentation if you have to make a decision later on down the road. Performance improvement plans are an essential tool in the manager’s toolbox.

What are the Benefits of a Performance Improvement Plan?

1. It promotes reputable company culture

If there’s one reason you should have a formal performance improvement plan in place, it would be for reputable work culture.

Organizations with formal PIPs, who really stick to their plan and make sure that it is carried out before termination, find that they experience a more positive company culture.

Therefore, as a manager, if you find yourself spending too much time assisting an employee, you may need to place them on a PIP.

Investing in your employees, educating them about their specific issues, and setting up an improvement plan will promote company culture.

2. Improve workforce efficiency

If your employees want to learn what you expect from them, and if they want to improve their performance, then a Performance Improvement Plan can be one of the most effective tools for boosting morale.

PIP helps in communicating the desired performance expectations with employees. It also provides proper feedback on job responsibilities and expected benchmarks.

Overall, this process will help employees improve their performance.

3. Speeds up the corrective action process

One of the most important benefits of implementing a performance improvement plan is that it formalizes the process of dealing with problematic employees. If you don’t take steps to deal with poor performers, it with affect the entire team.

By having a formal PIP in place and implementing it effectively, you are able to address the issue and move forward without having to worry about increased friction amongst your team members.

4. Promotes Equity

Having a PIP is a great way to bring both parties to the table, have a real and honest conversation, and figure out how to make the situation better.

By doing this, one person’s opinion isn’t stronger than another’s, which eliminates bias from the process. It also levels the playing field, allowing each employee to be heard and encouraging them to work through challenges together.

5. Increases employee engagement and accountability

Performance Improvement Plans often increase employee engagement and this leads to increased accountability.

Since the employee is holding themselves accountable for what they said they would do, it increases the chances that the actions were actually completed.

6. It reduces the need for termination and litigation

A performance improvement plan can reduce the need for termination and litigation by giving an employee a chance to improve their performance in certain areas, enabling them to become more valuable employees

Rather than having to immediately terminate an employee with no chance of correcting the problem, you can trust that during the PIP timeframe, the employee will do his or her best to improve and gain the skills required to perform effectively.

How Do You Create An Effective Performance Improvement Plan?

Does your business require performance improvement from an underperforming employee? Improving poor performance is a challenge that many managers and supervisors face.

At some point in your career, you may have to prepare a Performance Improvement Plan for an underperforming employee.

Here’s how to develop a PIP that works:

1. Clearly define the problem

To create an effective PIP, the very first step is to define the problem. Make sure you get to the root causes of why it is an issue. You may want to brainstorm with your employees or teams about what is causing them to miss work targets and KPIs consistently.

2. Set clear achievable goals

An effective performance improvement plan must have clear, achievable goals that are specific to the employee’s job description. This helps managers give feedback in a consistent and meaningful way to employees, in order to maximize the chances for success.

When you clearly define expectations in terms of goals, a performance plan is more effective.

3. Determine acceptable performance

The primary goal of this process is to enable employees to reach acceptable levels of job performance through training, resources, and encouragement from both the employee’s manager and team members.

Once you have identified the performance metrics or objectives that need to be met, you will want to determine acceptable performance. For example, you may decide that a metric must improve from 60% to 80%.

4. Communicate the plan and the anticipated goals

This is likely the first time your employee has dealt with an issue at work that they can’t fix. Therefore, they may not be taking this issue as seriously as you’d like them to.

So, it’s essential that you make them understand how exactly the PIP is going to help them become successful in their job. It should transform their performance and positively contribute to their growth, development, and overall professional experience.

5. Schedule consistent feedback meetings

The next is scheduling consistent feedback meetings with the employee. The frequency will depend on the needs of the employee and the organization, but in general, twice a month is a good start. Remember to document each meeting, noting dates and what was discussed.

This allows you to keep the employee informed of how they’re performing. It helps alleviate any doubt that may be occurring that you are not satisfied with their work.

6. Make employees feel valuable while on PIP

As a good leader, it is your sole responsibility to consistently make your employee feel valuable to the organization, even while they are on a performance improvement plan. You must demonstrate to the employee that they are an important part of the team.

You may want to intentionally highlight their contribution to the growth of the organization so far. No matter how little it might be. The truth is that nobody wants to be told they’re not doing well at their work.

7. Track the progress of your performance improvement plan

While the employee is going through your Performance Improvement Plan, it’s important for you to keep track of the employee’s performance and provide a status update after each milestone or step.

Also, ask for feedback from the employee to ensure that they are comfortable with the plan and how it’s progressing.

8. Provide extra support and/or training

PIP is a great opportunity to provide employees with support and training to bolster the skills they may not have, but are required for the job.

Remember, it’s not about punishing your employees or making them feel as if they can’t do their jobs well enough.

Provide necessary resources or training to improve employee performance and achieve the PIP objective. Oversee behavior/tasks and ensure that employees are meeting expectations.

9. Clearly outline the consequences of a lack of improvement

If an employee does not meet the goals and intent of your improvement plan, outline what the next steps are.

You may want to review the goals with them or may plan to terminate their employment. Having this in writing can provide clarity for you as the manager and for your employees.

Not only will this make it a fair thing between you and the employee, but it also provides proof that you did everything in your power to correct their behavior before moving forward with more serious consequences.

10. Reward employee when the PIP’s goal is achieved

This step is not a part of the formal process. But, it is always a good idea to reward employees when they achieve the goals and objectives you set out for them.

Praise the employee for his/her performance. You could offer an increase in salary, a leave, or a letter of praise to show they are valuable to the organization.

When is the Best Time to Implement a Performance Improvement Plan?

The best time to implement a performance improvement plan is when an employee’s performance is quantitatively deficient. To put it another way, you’ll want to be able to assess performance using a standardized rubric or scale.

If an employee fails to reach productivity targets, has a timeliness problem, misses deadlines, or does not satisfy specific quality criteria for their work, a PIP may be beneficial.

However, keep in mind that this strategy is designed to address a persistent issue. Meetings or feedback letters may be more appropriate for one-time difficulties or short-term gaps in performance.

What Causes Poor Employee Performance?

Though there are many of them and it varies with companies, some of the most common reasons include:

  • Poor delegation of tasks
  • Lack of consistency in processes
  • Lack of supplies
  • Not enough accountability
  • Broken chain of command
  • Missed deadlines
  • Lack of morale, commitment, and engagement
  • Inaccessible work environment
  • Poor communications
  • Overly complex processes
  • Irrelevant goals and objectives
  • Inadequate training and support
  • Poor co-worker relations


Is a performance improvement plan a step toward dismissal?

This is one of the misconceptions about PIP. It is not a step to get you fired or dismissed and neither is it a punishment.

Performance improvement plans are put in place to help underperforming increase productivity and meet employers’ expectations.

How long should a performance improvement plan last?

While how long a performance improvement plan should last is dependent on your organization, the cause of employees’ poor performance and their position, a 30-day, 60-day, or 90-day plan is a good starting point.

What must be in your performance improvement plan?

A Performance Improvement Plan is actionable rather than subjective. Your PIP will have the critical elements of what needs to be improved, the expected standards of performance, a timeline for improvement, and regular check-ins with your manager.


The benefits of performance improvement plans for employers can be significant, including increased productivity and reduced costs.

A PIP gives employees the opportunity to develop new capabilities, with the benefit of employer support, which can lead to long-term improvements in job performance.

Not only will employees gain knowledge through a performance improvement plan, but new skills can also be applied to other areas of the workplace for improved efficiency and higher productivity.

And the overall results? Better employee retention rates, higher levels of productivity, and fewer legal hurdles.

If you’re interested (which I expect you to be) in more resources and training to help your employee meet your business or organization’s expectations, here are the important training for employees I recommend.

In addition, I would also love you to read my guide on implementing Employee Assistance Programs (EAP). Remember, a better way to grow your business is to invest in your employees.

I hope you found this guide helpful.

Thanks for reading.