What is a Performance Improvement Plan?

A PIP is a written document used by employers to manage and coach an underperforming employee. They typically detail performance deficiencies and list specific goals that the underperforming employee must achieve within a specified timeframe. Through a PIP, employers can address repeated behavioral issues and/or follow up on prior counseling, warnings, or disciplinary actions by providing the employee with clear performance expectations and, importantly, a concrete plan to follow to bring their performance up to the level that’s expected.

Benefits of Using a Plan

There are many potential benefits from using PIPs. By making a concerted effort to help an employee improve their performance, employers may prevent employee turnover. A PIP can enhance communication between the employer and employee. Through a detailed plan and close performance monitoring, PIPs can even help employers identify areas in which they need to add or modify their processes or create/add training to help their employees perform better more broadly.

Additionally, recording performance information in detail and all steps taken to improve the employee’s performance may help employers avoid liability issues if they subsequently choose to end the employment relationship.

When to Consider a Performance Improvement Plan

A PIP isn’t a substitution for a disciplinary action, nor is it used for one-time errors or policy violations. An employer typically puts an employee on a PIP after giving the employee notice of their performance issues and some level of coaching/counseling to improve the deficiencies, which may be in an informal conversation, or in a more formal written notice. If the performance issues continue after the coaching or counseling, that’s when a PIP may be useful.

Before implementing a PIP, an employee’s supervisor or manager should show that:

• They provided guidance or coaching and communicated clear expectations to the employee;
• The employee received the feedback; and
• That the interactions were documented.

Additionally, employers should consider the likelihood of improvement if the employee is put on a plan. For example, certain performance issues related to specific and objective goals, such as quotas, quality ratings, sales, etc. may lend themselves to the goal-oriented PIP approach, while other performance issues (e.g., behavioral issues) might not.

Creating and Implementing the Plan

Often, initial performance discussions involve only the employee’s manager. Implementing a PIP, however, usually includes both the manager and the human resources department.

There isn’t one ideal format for a PIP. Depending on the circumstances, employers may use a plan with more or less detail, but, regardless of the format, the plan should provide clear information to the employee about:

• The identified performance deficiencies ;
• The employer’s efforts to coach the employee towards improvement; and
• Concrete steps the employee must take in order to bring their performance to the expected level.

This may include, for example, detailed information on the following:

• The specific areas of concern or poor performance that require immediate improvement, e.g., productivity, time management, inappropriate workplace behavior, poor work product, etc.
• Previous discussions, training, counseling and/or discipline related to the employee’s performance, including dates, participants, subject matter, etc.
• Improvement goals related to the areas of concern/poor performance.
• Specific and concrete steps to help the employee reach their improvement goals.
• Resources available to the employee to help them meet their goals (e.g., management support, training materials and activities, etc.).
• Steps the employer will take to monitor the employee’s progress in meeting the plan’s objectives, which may include timelines and progress checkpoints.
• The potential consequences of failing to satisfy the PIP’s requirements.

Employers should include specific and objective examples of the employee’s performance issues. For example, if the employee is having trouble with time management, the employer should identify missed deadlines, note when the job was completed, if at all, and even describe the importance of meeting deadlines as it relates to the employers’ business.

• Performance Improvement Plan 

When crafting the plan, employers should ensure that the goals and objects of the plan are realistic and achievable. If the employee fails to improve, a PIP can provide good evidence that the employee was given appropriate counseling, coaching and opportunities to improve their performance in the event of litigation. However, while a PIP generally doesn’t constitute an adverse employment action, if a PIP sets unrealistic goals, an employee may argue that they were set up to fail and use the PIP as evidence of unlawful retaliatory or discriminatory intent.

The duration of a PIP is generally between 30 and 90 days depending on the employee’s position, the specific performance issues, and the timeline for improving performance. The employer should monitor the employee’s progress on the PIP. This can be done through a variety of ways, depending on the circumstances. For example, employers may require employees to copy their supervisors on relevant communications or attend meetings where the employee can check in with their supervisor and report on their progress toward the stated goals.

Employers should document meetings and communications during the PIP period and track whether the employee is improving and meeting their goals.

The PIP should clearly explain the consequences for failing to meet the plan’s goals and/or sufficiently improve their performance, including further disciplinary action up to and including termination.

If Performance Improves

If the employee responds positively to the plan and they achieve the plan goals, employers should recognize the employee’s success and maintain the employment relationship. If performance improves quickly, the employer may even end the PIP before the expiration of the plan; however, the employer should also clearly communicate that continued good performance is expected.

If Performance Doesn’t Improve

If performance doesn’t improve, employers may choose to extend the plan to offer more time to succeed. This may be warranted if the employee demonstrates that they are committed to improvement but haven’t quite hit their goals. In other cases, further discipline or termination may be warranted.

Generally, an employer should not terminate an employee on a PIP before the PIP period ends and the employer concludes that the employee failed to sufficiently improve their performance and/or achieve the goals articulated in the plan. If the employee is terminated before the PIP period ends, the employee could argue that the PIP and the performance issues identified in it were a pretext for discrimination.

However, the PIP should clearly state that it does not alter the employee’s at-will employment status and that the employer maintains the right to terminate employment before the completion of the PIP, which may be warranted under certain exceptional circumstances. Employers should consult with legal counsel before terminating an employee who is currently on a PIP.

Recordkeeping

A PIP is generally added to the employee’s personnel file where it is stored for the duration of employment plus four years, consistent with California’s record retention requirements.