12 Importance of Performance Improvement Plan PIP in 2023

After a poor performance evaluation, management might give an employee one last chance to improve through a performance improvement plan (PIP or a performance action plan).

A performance improvement plan sets specific goals for the employee to achieve in order to avoid termination, demotion, or transfer.

This article highlights everything you need to know about a performance improvement plan. It also explains the 12 importance of a Performance Improvement Plan. Read on!

What is a Performance Improvement Plan in HR Term?

To put it simply, a performance improvement plan (PIP), often known as a performance review, is a formal document that identifies any existing performance concerns as well as plans to address the productivity issues.

A PIP is similar to your old-school report cards. These, if you recall, highlighted your performance, triumphs, obstacles, and the objectives you should strive for.

Depending on the situation and purpose, the criteria for a performance improvement plan’s “success” can range from further training to more frequent check-ins with management.

Why is it necessary for some employees to have a performance improvement plan?

PIPs are for employees who are experiencing some sort of shortfall. This does not necessarily imply that they are not putting forth sufficient effort.

Quite the opposite is true. It might be because an individual received insufficient training or that your business strategy has shifted.

That is why, before implementing a performance enhancement strategy, it is critical to determine the core cause of any performance concerns.

There are a variety of reasons why you might think it’s vital for an employee to engage in a PIP, but the common thread is that you want to see a change in their performance from a management standpoint.

When should an Employee Performance Improvement Plan be Implemented?

When an employee is having difficulty, it is best to adopt an employee performance improvement plan. Managers should be able to recognize the indicators of a poor performer.

Reduced productivity; lower engagement; those who take more time off or are becoming unpunctual are some of the symptoms that an employee is struggling with.

When there is a clear tendency of poor performance, the process should be initiated.

Other reasons for implementing a Performance Improvement Plan include the following:

During the probationary stage of an employee’s employment with the organization.
If an employee has always been a good employee but has recently displayed an unusual pattern of low performance.
If a person performs poorly in a few areas but well in the majority of others, this is a red flag.
When your employee handbook lacks a proper performance improvement approach, the PIP is a feasible solution.
When an employee is dealing with personal issues that have recently impacted their performance.

How to use an Employee Performance Improvement Plan?

An Employee Performance Improvement Plan is used to assist employees in achieving goals that they may be having difficulty achieving, as well as to try to reduce maladaptive behaviors.

An employee PIP can be considered as a probationary term for employees at a low level, with many people viewing an employee PIP as the first step toward dismissing an employee.

While this may be true in some circumstances, PIPs can benefit both the employee and the firm. A PIP indicates that the firm intends to keep the employee in most instances.

It’s a methodical technique to improving performance using a talent management strategy and proper documentation.

Management will collaborate with the employee to develop a strategy and will make every effort to facilitate dialogue in order to pinpoint specific areas for improvement.

Managers and HR representatives should examine the plan on a regular basis in all circumstances. Performance reviews are an important part of an employee’s continuing development, and PIP reviews are no exception.

This will help to guarantee that staff follows the plan and that employees on PIP are treated fairly. The management should keep a close eye on the employee’s work performance and provide feedback as needed, and if necessary, take disciplinary action.

The ultimate goal of any Individual Improvement Plan should always be to identify a solution that benefits both the employee and the organization.

A more effective PIP depends on clear communication between the manager and the team member.

How Can I Improve the effectiveness of an Employee Performance Improvement Plan?

The following steps will help you improve the effectiveness of an employee performance improvement plan:

Clearly define your objectives

By providing clarity, the employee can grasp their aims and goals. In contrast, failing to provide clarification will lead to the employee asking more questions and increasing their perplexity.

Employees must be aware of their individual aims and goals. The more exact the goals, the easier they should be to achieve.

Communication

Employee Performance Improvement Plans are developed in a collaborative manner. Employees and management alike should be able to openly discuss their current challenges and their plans for achieving the higher-level objectives.

Employees may get dissatisfied with the strategy and act maliciously toward it. As a manager, make certain that the employee understands your expectations.

Keep in touch with your manager as an employee to ensure that the PIP is carried out as efficiently as feasible.

Checking in on a regular basis

Regular check-ins are especially critical in strengthening the effectiveness of an improvement plan, almost as an antecedent to the prior point.

Regular check-ins give structure but also provide regular direction, keeping staff from disorienting.

The Sources of the Problem

Perhaps there is an underlying core explanation for the downward trend in their performance at work.

Have they recently had a bereavement in their family or other personal issues? Is there something bothering them at work – do they wish to take on more responsibilities? With honesty and respect, try to talk through any potential concerns that the employee may have.

Optimism

Despite the fact that the employee is on an Employee Performance Improvement Plan because they need to improve, there are usually always good aspects.

Demonstrate to the employee that they are an important part of the team. Make a point of highlighting the positive aspects of their job. Nobody wants to be told they’re awful at their work, and when they’re put on PIP, it’s natural that they’ll think about it.

Structure

The structure has already been mentioned, and it is nearly a recurring subject in Employee Performance Improvement Plans.

Creating a timeline of what you (as the manager) anticipate from the process is maybe the most critical aspect of the structure.

Organize regular check-ins with the employee as well as formal meetings, and keep track of their performance.

Provide employees with a pre-defined structure that outlines what you want and when you expect it.

Provide additional assistance and/or training.

Don’t leave the employee to fend for themselves! Providing additional help is a good way to improve the effectiveness of your PIP.

Returning to point four: fundamental causes, it is critical to acknowledge that low performance may be the result of a lack of training.

If an employee has had a poor onboarding experience with little assistance, they may struggle when given real-world responsibilities.

Furthermore, if a person gets a promotion or a larger task without the necessary training, they are likely to struggle, negatively impacting their performance.

Consequences that are clear

The aforementioned factors of creating an Effective Employee Performance Improvement Plan all have a positive viewpoint – which is critical!

However, it is equally critical to ensure that the employee understands that if performance does not improve, there will be obvious consequences.

At the start of the PIP process, pre-define, explicit, and transparent repercussions must be put down.

What are the Importance of Performance Improvement Plan?

When they could just terminate the individual, why do employers adopt performance improvement programs to overcome issues that lead to poor performance? There are various advantages to employing PIPs.

#1. A more positive corporate culture

The use of PIPs fosters a sense of responsibility. Employees are aware that failure to achieve expectations will result in disciplinary action.

This adds to a positive work environment. Employees that put in long hours feel valued because they understand that everyone must contribute.

Employees who are having difficulty understanding that their bosses will help them if they fall behind by presenting them with actionable goals. Everyone now has a greater understanding of what I’m saying.

A performance development plan is also useful for individuals who want to advance in the firm or are fit for a different position.

In other words, PIPs make employees feel appreciated at work since they know their boss will help them achieve their long-term professional goals.

Simultaneously, performance action plans enable businesses to improve their workforce by hiring more engaged employees.

#2. Reviews are less effective.

Reviews are rarely followed upon. Furthermore, even when criticism is constructive, some people have a negative reaction to it. Worse, the majority of people believe such input is incorrect. Because of these circumstances, employees frequently disregard reviews and continue to perform as before.

PIPs, on the other hand, give employees a clear picture of where they’re falling short and what they need to do to improve.

Performance improvement programs might even urge staff to try harder if they are articulated with the correct “why.”

#3. Saves Time and Money

Every business wants to keep staff turnover to a minimum since it saves time and money.

Expenses connected with terminating employees and recruitment are avoided when present employees are assisted to enhance their performance.

It also eliminates the requirement for new job interviews and training sessions. Although the employee getting PIP may require training, it will be less than that required of a new employee.

#4. Enhancement of abilities

In order to stay up with the growth and expansion of your firm, your employees’ abilities may need to increase and extend as well.

You may not need to hire new staff if your performance improvement plan identifies areas where more education and training would be most beneficial to your present employees.

#5. Raise Your Expectations

A performance improvement plan allows you to take a good hard look at your current standards and determine which ones should be improved.

However, employees should know of the new business benchmarks due to the increased standards.

#6. Employee Retention:

You want to keep as many of your valuable employees as possible because hiring new personnel is time-consuming and costly.

Performance improvement programs help you keep your current employees by identifying ways to increase their performance and job happiness.

The fact that you’re putting together a strategy will also demonstrate to your current employees that you’re concerned about their job satisfaction.

When a performance improvement plan is in place, it can be utilized as a guide for when staff is having difficulties.

#7. Assessment of Reward

The assessment of awards is one of the most appealing aspects of performance improvement plans (at least for employees).

Incentives can be a fantastic method to boost productivity, performance, and overall morale.

Performance improvement plans can aid in determining which rewards are most appropriate for certain objectives.

#8. Make the most of employee abilities

One of the most valuable advantages of performance development plans is the knowledge they provide into the strengths and shortcomings of your staff.

Following a review of the plan, you may wish to give some staff more responsibilities and provide further training to others.

#9. To Demonstrate Empathy

Employees’ poor performance is not exclusive to their work activities. Issues in their personal lives might sometimes impair their professional effort.

You may discover these concerns when you work with your employee to develop a performance improvement plan.

If necessary, you can adjust the employee’s workload and schedule and document these changes in the performance improvement plan. You can also refer the employee to employee help services that are available.

#10. To Resolve Disappointments

Employees may perform poorly because they are not okay with anything that is happening within the organization. A freshly released policy or a conflict with a coworker might all serve as triggers.

Starting a performance improvement plan allows you to talk about their expectations and can lead to an early resolution of issues that are affecting performance.

#11. Improve the relationship between the employer and the employee

The purpose of performance improvement programs is to assist employees in achieving a targeted level of performance. This is an investment in your employees’ well-being.

#12. To discover resource shortages

Setting up performance improvement plans necessitates an examination of the resources required by employees to carry out their responsibilities.

These assessments will assist you in determining whether your firm is experiencing a resource gap that is affecting an employee’s performance.