8 Steps for Effective Performance Improvement Plans

Performance improvement plans (PIPs) have gotten a bad rap, primarily because they haven’t been used in the right way, said James McDonald, SHRM-SCP, a partner in the Irvine, Calif., and Tampa, Fla., offices of Fisher Phillips. 

The Wall Street Journal wrote in 2024 that PIPs are “the most hated way of firing someone” and that they are “dreaded” by managers and workers. The article cited “not ideal” PIPs, including one directing the employee to “raise the bar” as its sole recommendation.   

But PIPs remain a useful tool for employers, McDonald said while speaking at SHRM25 in San Diego.

How-to Guide: Performance Improvement Plans

“When drafted properly, a PIP notifies an employee that work performance isn’t meeting expectations and gives that employee time to step up performance,” he said. “PIPs also provide documentation that the worker was warned about their performance. PIPs can salvage good employees. If structured properly, they can provide employees with a chance to improve.”  

PIPs are often derided as being a cover for terminating employees and being designed to protect the employer from lawsuits.  

“Well, yeah, employers are right to protect themselves with PIPs,” McDonald said. “They provide documentation for termination should improvement not occur. They are also helpful in defending lawsuits. Plaintiffs’ lawyers will say that their client was fired unlawfully and no one told them that they weren’t doing a good job. They can only assume that they were fired because of age or race or disability. To win an employment lawsuit today, you have to show that you did the right thing. I like to be able to send back a PIP.”

Toolkit: Managing Employee Performance

8 Elements of an Effective PIP

PIPs are not always handled effectively, McDonald said. He provided the following eight points for how to implement them appropriately.   

1. Identify specific incidents in which performance has fallen short.

General termssuch as “be open-minded” or “has a bad attitude” are not helpful, he said. Instead, focus on specific examples such as a list of dates the employee was late for work or “failing to meet sales targets in March, April and May.” 

Explain as much as you can in detail, McDonald said: “Don’t just summarize. Try to list measurable examples of poor performance.” 

2. Specify instructions for how performance must improve.

Guidance for improvement must be tied to specific examples of shortcomings, he said. Examples would be: “No more unexcused absences” or “Must meet monthly sales targets.” 

The goals must be reasonable and attainable, he said, because “PIPs can only be focused on things the employee can control.” 

3. Provide a reasonable time frame to improve performance.

PIPs need to be a minimum of 30 days, but 60 or 90 days is more customary, McDonald said. “Don’t put someone on a three-year PIP,” he said. On the other hand, give the employee enough time to improve.   

4. Give notice of the consequences for failing to improve.

Ordinarily, the consequences of not improving are termination of employment or demotion, McDonald said. “Whatever it is, it has to be stated,” he said. “The goal is to be fair and transparent to the employee. There should also be language in the PIP that states that management reserves the right to terminate the PIP sooner if the worker is not improving. Give yourself that flexibility. It should also be clear that the PIP does not affect at-will employment.”  

5. Reserve the right to extend the PIP period.

Sometimes, employees show promise but are not quite there yet. To reward them, you can extend the PIP period to see if they improve satisfactorily, he said. In addition, “you should extend the PIP if the employee goes on a leave of absence or takes a significant amount of time off,” McDonald added.  

6. Have the employee sign to confirm receipt of the PIP.

To gain buy-in, it is important to have the employee acknowledge receipt of the PIP. The best-case scenario is that the employee accepts the PIP and tries hard to improve, McDonald said. He noted that the PIP is no less valid if the employee refuses to sign it. “It’s just as binding as if they signed it,” he said. 

7. Don’t allow the employee to block the PIP.

If the employee attempts to block the PIP by filing a workers’ compensation claim, going on medical leave, or complaining about harassment or labor violations, proceed with the PIP anyway, McDonald said. If you have evidence of misconduct or poor performance before the PIP, a retaliation claim will be weak, he said.   

“If you fail to give the PIP on account of blocking conduct, you will lose the ability to issue effective PIPs in the future,” he said. “Employees will know that if they are getting a PIP, they just have to make a complaint or go on leave.”   

8. Provide regular check-ins. 

Regular feedback from the supervisor during the PIP period is important, McDonald said. Check-ins should be scheduled weekly or biweekly. A written summary of each meeting should be given to the employee.  

“If the manager cannot commit to that check-in and feedback process, don’t start the PIP,” McDonald said. “It’ll look like you’re just papering the file to get rid of the person.”