Performance Improvement Plan (PIP)

Definition

The term performance improvement plan refers to a process used by companies to increase the performance of employees not meeting the company's minimum standards for their position.  Performance improvement plans can address both behavioral problems as well as productivity. 

Explanation

As part of the performance appraisal process, an employee that is not meeting the minimum requirements of their position may be placed on a performance improvement plan, or PIP.  Following an unsatisfactory performance evaluation, the employee may be asked to work with their supervisor to develop their plan, which will clearly outline the agreed-to performance expectations.  This includes successfully meeting all of the objectives appearing in the plan.

Since the business is identifying an employee in immediate need of improvement, the plans are typically 30, 60, or 90 days in length.  In addition to outlining deliverables, the employee may be asked to modify their behaviors.  This is of particular importance when an employee is thought to exhibit behaviors that are disruptive to coworkers.

The steps involved in constructing a performance improvement plan usually include:

• Supervisor Feedback:  this first step involves the documenting of the employee's performance issues.  These should be fact-based observations that clearly show a pattern of inappropriate behavior or underperformance relative to expectations.
• Creating an Action Plan:  the supervisor (and oftentimes the employee) will develop a clear set of goals or deliverables for the employee.  These actions should be measureable and time-bound.  For example, each deliverable will have a clear due date.
• Weekly Meetings:  employees will meet with their supervisor to review their progress during the prior week.  These meetings are normally no more than 30 minutes in duration. The purpose of the meeting is to ensure there is agreement between the employee and supervisor with respect to the current performance of the employee.
• Termination of Plan: there are several possible outcomes to a PIP.  1) The supervisor will inform the employee they've successfully achieved all of the objectives of their plan.  2) The supervisor will inform the employee they've failed to meet the objectives of their plan.  At this point the employee may be terminated.  3) The supervisor will inform the employee they've made some progress, but recommends the employee is placed on a second plan.

Note:  If the employee refuses to commit to the objectives outlined in their PIP, the employee may be immediately terminated.

Related Terms

double time pay, back pay, hazard pay, holiday pay, overtime pay, merit increase, performance appraisal