How to Create an Effective Performance Improvement Plan

Want to build an effective team, retain high-performing employees, and make your business the best it can be? Implement a performance improvement plan.

At first glance, many managers may think that a performance improvement plan is only necessary as a form of discipline or to improve a glaring skill imbalance. But these plans can be used for so much more.

In this article, we help you understand exactly what a performance improvement plan is and how to implement it in your company.

What is a performance improvement plan?
Why use a performance improvement plan?
How to create an employee performance improvement plan
Examples of effective performance improvement plans

What is a performance improvement plan?

At its most basic, a performance improvement plan (or PIP for short) is a formal document that:

Defines an employee’s recurring performance issues and opportunities
Establishes goals they can work toward to build their skills
Sets a timeline for reaching said goals

Managers and HR departments often use PIPs to address an employee’s failure to meet specific job requirements or to correct behavior-related concerns.

In most cases, a PIP is a way to give an employee the opportunity to repair some aspect of their work activity before you let them go. But you can also roll out a PIP even when an employee is performing at their best or you see that they have the potential to do so.

In those cases, you’re not trying to build skills up to a basic level or rectify a behavioral issue. Instead, you’re trying to help the employee stretch, grow, and improve on a job well done.

When the performance improvement plan is rolled out in this latter manner, most businesses call it an employee development plan. Whatever name you give it, your goal is to help your employees improve the way they work.

Why use a performance improvement plan?

Coworkers working at shared in a community space

1) Improves engagement

The feedback and guidance you give in a performance improvement plan help your employees feel more valued and engaged in the business. It shows that you’re engaged in their growth and actively invested in seeing them improve.

This feeling motivates your team members to go above and beyond what you expect of them because they feel that they have a higher purpose — be it for their own well-being, the betterment of your clients and customers, or the success of your business.

2) Boosts morale

Creating a PIP for a disgruntled employee helps them build their skills, change their behavior, and also boosts morale — for the employee and for the team.

When your employees see that you’re willing to help them improve — rather than just firing them on the spot — they’ll be more likely to maintain a higher, and more stable, sense of overall morale.

With higher morale, your team will enjoy stronger bonds, a deeper sense of camaraderie, and a willingness to cooperate that wasn’t there before.

3) Raises job satisfaction

Engagement and morale are two important variables in the work-performance equation. Job satisfaction is another.

Rolling out a performance improvement plan gives employees something to work toward and provides a sense of fulfillment and enjoyment that may not have been there before.

4) Decreases turnover

As mentioned earlier in this article, creating a PIP for an employee is a way of helping them improve so you don’t have to let them go and then find someone to replace them (a.k.a. turnover).

When your turnover — and even your attrition — decrease, your team grows stronger, and your business improves. All of that from giving an employee the time and opportunity to improve the way they work!

5) Saves time and money

Recruiting and hiring top talent can be a time-consuming and costly process. You may find it better for your business to save time and money by minimizing employee turnover through the use of a performance improvement plan.

Helping a current team member improve the aspects of their job that are lacking is usually better (and less expensive) than firing them and then having to search for someone else to fill their position.

Using a PIP first also helps your business avoid the often long and drawn-out process of holding interviews, onboarding new hires, and training them to work at the appropriate level.

Yes, an existing employee on a PIP may need training of some type, but it will likely be less than the training necessary to onboard a new team member.

6) Reinforces company culture

Performance improvement plans also have the added benefit of reinforcing — and, in many cases, enhancing — your company culture.

They do this by:

Promoting a sense of accountability by setting certain standards that everyone must abide by (or face disciplinary measures)
Reassuring hard-working employees that your business appreciates their efforts
Establishing the precedent that everyone must pull their weight
Providing a safety net and support to employees that are struggling at their job

When you use PIPs correctly — not as a punishment, but as a way to improve — you may create the best company culture possible and forge strong employee/employer relationships in the process.

7) Enhances the review process

Regular employee reviews and evaluations are a great way to keep your team members performing at a high level.

But because performance reviews only come around every few months, the feedback can start to lose its poignancy and relevance as team members get lost in the day-to-day activity of their job.

A solution to this lack of input is to combine regular evaluations with a performance improvement plan. Doing so keeps the goals, objectives, actions, and metrics at the top of everyone’s mind so they don’t lose sight of what they need to do to improve.

If you choose to implement PIPs in this fashion, be sure to reassure your employees that they are not a punishment of any kind.

Instead, they are a way for each team member to build their skills and contribute to the company in greater ways.

How to create an employee performance improvement plan

performance improvement plan being discussed

1) Identify underlying issues

In this first step, try to identify and understand the underlying issues that the employee is facing.

You may have quality guidelines or standard operating procedures in place, but there could be fundamental obstacles that make those guidelines and standards difficult to achieve.

In other words, it could be more of a business problem than an employee problem. If you find that to be the case, don’t be afraid to address it right away and introduce a solution. Not only will the individual employee benefit, but your whole team will as well.

When you get to the core issue before you do anything else, the solution often presents itself making it easier to plan, write, and implement your performance improvement plan.

2) Talk to the employee

Before you start the process of creating a performance improvement plan, take some time to talk to the employee to see what’s going on.

This is a great way to get to the underlying issue they’re facing, and it can also help you understand whether the event that prompted thoughts of a PIP was a recurring thing or a one-time event.

If the latter, the situation may resolve itself and not require that you take any disciplinary action.

3) Set clear and achievable goals

There’s no way to know if your performance improvement plan is successful unless you set goals and benchmarks for your employee to meet.

These goals should be specific, clear, and achievable. In fact, it’s often better to set small, easy-to-measure goals rather than one or two big goals that are more difficult to measure.

Small, specific goals serve the purpose of providing a sense of accomplishment that isn’t there if you give the employee a main objective to shoot for without any intermediate steps (and successes to inspire them).

So, for example, avoid setting the goal for your employee to “get better at customer service.” They may wonder what better customer service looks like.

Instead, set small, clear, measurable goals — such as smiling, being patient, engaging in small talk, etc. — that add up to the kind of customer service you’re looking for.

4) Write your performance improvement plan

Woman writing her performance improvement plan

Now, it’s time to put pen to paper and write out the details of your performance improvement plan.

Be sure to include specifics, such as:

The performance issue you are addressing
The solution for improving
Goals to shoot for
Duration of PIP
Formal documentation of policies and standard operating procedures
Specific procedures put in place to deal with the issue
Team and individual responsibilities
And any other information that you and the employee need

Once you’ve finished composing the PIP, store the original in the employee’s personnel file. Then, make a copy and give it to the employee so they have something to refer to if they have questions or lose sight of their goals.

5) Monitor progress

After you turn the employee loose to work on the performance improvement plan, be sure to monitor their actions and behavior along the way.

Doing so can help you see if they’re making real progress, and it lets them know you’re serious about their improvement.

6) Review and revise the plan

During the writing of the performance improvement plan, you were encouraged to set a time limit during which the employee had the opportunity to work on and improve the issues involved.

Regardless of the duration, when that time period has elapsed, it’s time to examine the results.

Did the employee achieve the desired results? Did the PIP perform as intended? Was the issue resolved? Could the results be better?

Think of this as a repeat of step one, and try to get as full a sense of the underlying problem as possible.

If the employee has made progress, take the time to review and revise the plan so that they can continue improving. If the employee hasn’t made any progress, it may be time to investigate other options.

Examples of effective performance improvement plans

1) Productivity

Productivity is all about getting things done. Whether it’s the number of calls handled in an hour, reports completed by the end of the week, or projects brought to a successful conclusion, there are metrics for everything you do in your business.

If those metrics drop for a single employee (and don’t go back up fairly soon), it may be time to implement a performance improvement plan.

For example, let’s say an employee is responsible for guiding potential customers or clients through your company’s sales funnel. They start strong, but, after several months, their numbers start to drop, and they remain there for several more months.

To improve productivity and to help the employee boost their numbers back up to acceptable levels, you might implement a performance improvement plan with the following components:

Specific goal: Grow successful sales
Objectives: Increase sales to company average and then to previous individual high
Actions: Improve customer service, increase return calls, implement new forms of contact, etc.
Metrics: Customers brought successfully through the sales funnel

You may also choose to address the issue of productivity more specifically in both the individual and your team by:

Improving the work environment
Establishing quiet hours
Administering personality tests to find out each team member’s specific skills
Setting daily goals
Emphasizing organization
Providing the right tools for the job

For more information on improving productivity in your business, take a few minutes to read the following articles from the Sling blog:

Workplace Productivity: 8 Ways To Help Your Team Get Things Done
Working From Home: How To Overcome Distractions & Boost Productivity

2) Work quality

Like productivity, quality can be measured by specific metrics within your business. If those metrics start to fall, it may be time to implement a performance improvement plan that helps them start to rise again.

For example, let’s say a writer on your staff is starting to allow typos to creep into their work, is forgetting certain requisite sections, and is not composing at their previous level.

To improve work quality and to help the employee write at the level you know they’re capable of, you may want to implement a performance improvement plan with the following components:

Specific goal: 1) No typos 2) No incorrect formatting 3) No missing sections
Objectives: Increase the quality of writing and reduce work required at subsequent levels of the production process
Actions: 1) Provide more time for a single project 2) Minimize distractions 3) Provide tools and training necessary to streamline composition
Metrics: 1) A minimum of X instances for goal one 2) Zero instances of goals two and three

One of the best ways to improve work quality and ensure that everything gets done correctly is to implement a checklist.

It doesn’t matter what the job is — brewing a cup of coffee, onboarding new employees, or cleaning a restaurant — checklists will help your team members do everything required of them and perform their job at the highest level possible.

It may take a bit of extra work on your part (or the part of your HR department) to put together an effective checklist, but the rewards — improved quality, productivity, and engagement — are often well worth the effort.

3) Employee/customer interaction

Employee/customer interactions are the lifeblood of your company.

If clients start to complain about the attitude or assistance they receive from a specific employee — or the team as a whole — it might be time to implement a PIP.

For example, let’s say that customer ratings and feedback for a particular team member are consistently well below the company average.

To improve employee/customer interactions and to help the employee provide the best customer service possible, you can implement a performance improvement plan with the following components:

Specific goals: 1) Improve interactions with customers 2) Work to raise customer ratings to company average or above
Objectives: Increase customer retention, engagement, and satisfaction
Actions: 1) Give customers more time and work closely with them to resolve problems 2) Attend customer service training
Metrics: 1) Customer churn rate 2) Customer satisfaction score

For more information on building an effective customer service program in your business, check out these articles from the Sling blog:

4) Behavior

Poor behavior at work is usually a sign of some underlying issue that affects motivation, engagement, attitude, and happiness.

If an employee starts to arrive late and exhibit a negative attitude at work — and continues to do so after you talk to them about what’s going on in their life — it may be time to implement a performance improvement plan with the following components:

Specific goals: Cease improper behaviors entirely
Objectives: 1) Arrive on time 2) Treat others with respect 3) Exhibit a positive attitude at work
Actions: Go through appropriate workplace behavior training
Metrics: 1) Per attendance policy, arrive no more than five minutes late every day 2) Talk to coworkers who were finding it difficult to interact with offending employee

As mentioned earlier, poor behavior is usually a sign of something else going on in the employee’s life so it may take a bit of digging to get to the heart of the matter.

It may even require that you provide a bit more work-life balance so the employee can deal with the issues that are causing the behavior.

Whatever solutions you choose, it’s usually better to try to address and improve the behavior instead of letting them go at the first signs of distress.

For more ways to increase employee happiness and motivation in your business, take a few minutes to read these articles from the Sling blog:

Improve employee performance with Sling

Woman working on her performance improvement plan

For your performance improvement plan to be successful, you must find time to focus on the details involved. Workforce management software, like Sling, can help.

The Sling app can help you carve out time during the busy workday to discuss, examine, build, and refine your PIP so that you can achieve the best results the first time through.

But that’s not the only thing Sling can do. With Sling, you can conduct all of your workforce management activities in one place instead of cobbling together separate apps that don’t integrate well with each other.

For more resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com today.

Last Updated: January 2023

This content is for informational purposes and is not intended as legal, tax, HR or any other professional advice. Please contact an attorney or other professional for specific advice.

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