What are Performance Improvement Plans? + 3 Good Alternatives

What is a Performance Improvement Plan (PIP)?

Definition and Purpose of a PIP

A Performance Improvement Plan (PIP) is one potential strategy used by employers to address employee performance issues and avoid contract termination before employee’s have had a chance to improve their performance.

Typically, an employee PIP outlines specific performance issues, sets measurable goals, and establishes a timeline for improvement, with the primary purpose of an employee PIP being to provide employees with a fair opportunity to address performance concerns. Long-term, they offer opportunities for employees to also develop their skills and advance in their position, laying the foundation for career growth.

Key Components of a PIP

An effective PIP should include several essential components:

• The plan must clearly define the performance issues being addressed and identify the desired performance outcomes.
• Employees should have realistic deadlines for improvement, and outlining available support resources such as coaching, mentorship, or training is crucial.
• Managers and team leaders should be assigned clear responsibilities for monitoring and supporting progress to ensure the plan is well-structured and achievable.

When and Why a PIP is Implemented

Employers typically implement a PIP when an employee’s performance falls below acceptable or required standards for a role. Because of the time it takes to create and monitor a PIP, the employee would usually also be consistently failing in their role despite previous feedback and support given on an informal or one-to-one basis.

A PIP is often used as a last step before termination, but it can also be a proactive tool to support employees who aren’t failing but simply struggling with meeting high levels of performance. By offering clear guidance and structured support, a PIP provides employees with a fair opportunity to improve their performance and continue contributing to the organization. In this way, a PIP is used by businesses to avoid the cost and complexities that come with employee turnover.

Creating an Effective Performance Improvement Plan

Setting Clear and Achievable Performance Goals

For a PIP to be successful, it must include clear and achievable goals that the employee has agreed to and is committed to achieving. These goals should align with the employee’s role, and be practical enough to achieve within the set timeline. It should be made possible to alter goals later if required, but well-set goals will typically be achievable even in changing circumstances.

Clearly defined PIP objectives also eliminate confusion and ensure both parties are aligned on expectations.

Defining Specific Areas of Improvement

Identifying specific areas of improvement is essential for success, as goals that are too vague or generalist are often less measurable or may be seen as unfair. This is a key step, as the internet is full of examples of employees being put on a PIP and worrying about their job security, believing that managers are already getting ready to fire them. Instead, by defining clear and reasonable factors that are being addressed, employees can stay engaged and won’t preemptively seek employment elsewhere.

For example, improving communication skills, meeting deadlines, or enhancing customer service are common areas addressed in PIPs, as opposed to more general or subjective areas such as punctuality or friendliness.

Establishing Measurable Outcomes

Easily measurable outcomes allow both employers and employees to track progress objectively over the timeline of a PIP. Therefore, setting clear performance metrics, such as meeting sales targets or reducing errors, ensures improvement is tangible and easily assessed. These PIP metrics should also be aligned with the company’s overall standards and values to ensure consistency in evaluation.

Setting a Realistic Timeline for Improvement

Establishing a reasonable timeframe for making improvements gives the employee ample opportunity to meet expectations and reduces the chance of claiming unfair treatment. While the timeline will vary depending on the complexity of the performance concerns, a typical PIP may range from 30 to 90 days. This timeline should be communicated clearly to ensure employees understand the urgency of meeting expectations.

Providing Necessary Resources and Support

Employers must offer support resources to help employees achieve the outlined goals, and these resources must be offered in such a way that makes them easily available. This may include ensuring that the employee receives additional training programs, mentorship, or improved access to tools and technology. If using a mentorship system, it can be just as important to find the right mentor for an employee on a PIP as it is to put the employee on a PIP in the first place, as the wrong mentor may lead to even more disillusionment or wrong behaviors.

Assigning Responsibilities for Monitoring Progress

A successful PIP requires consistent monitoring, including assigning a manager, supervisor, or HR representative to track progress and ensure accountability. Regular check-ins, performance reviews, and documented updates enable employers to provide ongoing support while assessing whether employees are meeting established objectives. This proactive approach can keep employees on track or give advance warning if an employee is unlikely to meet their objectives, thereby making the offboarding process easier.

Communication during the PIP Process

Open and Transparent Communication with the Employee

Effective communication is vital during the PIP process, with lines of communication being kept open between all parties throughout. Employers should first hold an initial meeting to explain and discuss the reasons for the PIP, discuss expectations, and outline available support resources. Then, by fostering open dialogue throughout the PIP period, managers can create a supportive environment that encourages employees to seek out help and engage positively with the process.

Documenting Conversations and Agreements

Documenting all PIP-related conversations and agreements is essential not only for ensuring clarity but also accountability. Detailed records should be kept that outline the discussed objectives, expectations, and deadlines, but also record the employee’s thoughts, promises, and reactions. This helps to mitigate misunderstandings and protect both the employer and the employee in case of disputes later on.

Providing Regular Feedback and Coaching

Providing frequent feedback throughout the PIP process is crucial, and managers should schedule regular meetings to review progress, offer constructive feedback, and address employee concerns. By maintaining ongoing dialogue, employers can identify potential challenges early and provide additional support as needed.

Keeping the Employee Motivated Throughout the Process

A PIP can be stressful for employees who may feel that the situation is already hopeless, making motivation an essential factor to consider. Managers should take care to provide positive reinforcement when progress is made and emphasize the employee’s potential for success at all times. Encouragement helps employees remain engaged and committed to achieving their performance goals.

Monitoring Progress and Evaluation

Tracking Progress Against Set Objectives

Tracking progress against established performance metrics is essential for assessing the employee’s improvement. Regular reviews, combined with clear documentation of achievements measured in as unbiased and quantifiable a way as possible, should provide the foundation for a transparent record of the employee’s progress throughout the PIP period.

Adjusting the Plan if Necessary

If unexpected challenges arise, managers may need to adjust the PIP to better align with employee needs or achievable outcomes. Strong communication during a PIP may highlight better ways to support an employee, so flexibility can help keep both employer and employee on track to make realistic performance improvements.

Conducting Regular Check-Ins and Reviews

Consistent check-ins are crucial to ensuring the PIP stays on track. Managers should hold scheduled review meetings to assess progress, provide guidance, and offer additional resources if necessary. While meeting in a formal setting too often may overburden an employee or cause undue stress, regular checkups of varying forms can demonstrate the employer’s commitment to helping the employee succeed.

Identifying Barriers to Success and Finding Solutions

If performance issues persist, managers should work with employees to quickly identify potential sticking points or barriers to improvement. Whether it’s skill gaps, resource limitations, or workplace challenges, addressing these issues early can improve the likelihood of PIP success or provide a clearer route towards offboarding.

Role of Managers and HR in PIP

Manager’s Responsibility in Implementing a PIP

Managers play a critical role in developing, communicating, and enforcing PIPs at each step of the process and must be held accountable for the success of a PIP in the same way as the employees themselves. They must provide clear expectations, offer guidance throughout the process, and document all progress, with managers adopting a coaching mindset to foster growth and improvement rather than using a PIP as a punitive tool.

HR’s Role in Overseeing the Process and Providing Guidance

HR professionals are essential for ensuring PIPs are implemented fairly and consistently across organizations. HR teams will generally be called in to guide managers in structuring plans, tracking progress, and ensuring compliance with company policies and legal standards (as the issue of PIPs may conflict with acceptable processes around employee termination and treatment in various legal jurisdictions). HR may also act as mediators if disputes arise.

Ensuring Fairness and Consistency Throughout the PIP Process

To maintain fairness, employers must apply PIPs consistently across all departments and levels. Using standardized criteria for initiating and evaluating PIPs ensures employees in all roles are treated equally and minimizes the risk of bias.

Potential Outcomes of a PIP

Successful Performance Improvement and Continuation in Role

The aim of a well-structured PIP is for the employee to successfully meet performance expectations and continue in their current role. The hope is that when employees respond positively to feedback, apply provided resources, and demonstrate measurable improvements, they may regain the employer’s confidence.

All of this requires effort from both the employee and employer, so upon successful completion of a PIP, it should be just as important to recognize or reward all parties involved for their hard work as well as enjoy the benefits of renewed engagement, improved skills, and increased productivity.

Failure to Meet Expectations and Potential Consequences

Despite best efforts, it’s true that some employees may fail to meet the objectives outlined in the PIP, for whatever reasons. When performance standards are not achieved, employers may face difficult decisions, including extending the PIP, adjusting performance goals, or implementing disciplinary measures.

Failure should also be reviewed and analyzed just as much as success, with missed objectives providing valuable insights into how to improve PIP processes going forward.

Next Steps Following a PIP (e.g., Termination or Reassignment)

If performance does not improve despite the resources and opportunities provided, employers may need to take further action. This could include termination, role reassignment, or demotion to a position that better aligns with the employee’s skills.

While termination is often a last resort, having a clear process in place ensures fairness and minimizes disruption within the team.

Legal Considerations in a PIP

Avoiding Potential Legal Issues During the PIP Process

To reduce the risk of legal complications, employers should ensure employee PIPs are structured fairly and applied consistently across the entire workforce. Clearly defining performance concerns, outlining objective criteria, and offering reasonable timelines help demonstrate fairness.

Engaging in respectful communication and documenting support efforts reduces the risk of claims related to discrimination or unfair treatment.

Complying with Labor Laws and Regulations

Employers must ensure their PIPs comply with applicable labor laws and employment regulations in operational jurisdictions. Labor laws may dictate how employees are trained or terminated, so termination decisions in the event of unsuccessful PIPs must still  align with contract terms.

Equally, performance evaluations need to be unbiased, and employees cannot be targeted unfairly for factors outside of their control. Consulting with HR professionals or legal experts, particularly when working in unfamiliar locations, can help ensure compliance and mitigate risks.

The 3 Biggest Benefits of a Performance Improvement Plan

Supporting Employee Development and Growth

A well-executed PIP provides employees with not just a fix but also clear guidance on how to improve beyond what’s expected and succeed in their roles. By offering training, mentorship, or access to resources, employers create opportunities for skill development and career progression.

Employees understand the value of a career development-centered approach to employer-employee relationships (94% of employees asked in one study said they would stay longer as a company that prioritized development), so those who successfully complete a PIP should be remembered for the valuable skills they learn that improve their long-term performance.

Aligning Employee Performance with Company Goals

PIPs ensure employees understand how their individual performance contributes to the organization’s broader objectives. High-quality, targeted training that connects workers and company objectives leads to verifiable improvements in terms of employee effectiveness, so by outlining specific performance targets tied to company goals, businesses encourage better alignment between employee efforts and organizational success.

Creating a Structured Process for Addressing Performance Issues

Implementing a clear and structured PIP process ensures performance concerns and personnel issues are managed consistently. One study dealing with formal performance review processes found that companies with this kind of process generally saw up to 15% less employee turnover, highlighting the benefit in terms of not just enhanced effectiveness, but also the potential for reductions in terms of inefficiency and uncertainty.

Establishing defined steps, timelines, and evaluation criteria enables managers to handle performance concerns objectively in a way that keeps all employees engaged and optimistic. This structure not only promotes fairness but also strengthens long-term employee trust in company processes.

The 3 Most Common Challenges of Performance Improvement Plans

Managing Resistance or Defensiveness from Employees

Some employees may respond defensively or resist participation in a PIP, particularly if they don’t believe that it is anything more than a formality before inevitable termination. Employers can reduce this resistance by fostering open communication, explaining the purpose of the PIP as a tool for growth, and emphasizing the support available to help the employee succeed. Building trust must be a first priority, and through empathy and positive reinforcement, proper encourage will help mitigate defensiveness.

Balancing Fairness with the Need for Performance Standards

Employers must strike a balance between providing fair opportunities for improvement and maintaining clear performance standards. Finding the right balance is difficult, as offering too much leniency may reduce accountability, while excessive pressure may discourage employees. In this way, employees must be a part of any discussion around expectations so they will understand what is expected and why.

Ensuring Consistency Across the Organization in PIP Implementation

To maintain fairness and legal compliance, businesses should apply PIPs consistently across all teams and departments, regardless of individual standing or level. Establishing standardized guidelines for initiating, documenting, and evaluating PIPs reduces the risk of bias or favoritism, but this means that providing proper manager training can ensure consistent application throughout the organization.

3 Key Alternatives to a PIP

While a Performance Improvement Plan (PIP) can be an effective tool in many cases, it isn’t always the most appropriate response to employee underperformance. In fact, research increasingly shows that a more personalized and developmental approach to employee performance development often leads to better outcomes, both for the employee and the business. Whether the challenge lies in larger skill gaps, job misalignment, or balancing consistency with personalization, the following alternatives may offer more proactive and human-centered solutions.

Coaching and Mentorship

Coaching or mentoring programs can provide a more constructive and informal alternative to a formal PIP, particularly when an employee’s challenges are rooted in confidence, communication, or workplace adjustment rather than outright performance deficiencies.

Coaching as a tool in itself focuses on goal setting, accountability, and skill enhancement, while mentorship would more likely focus on fostering ongoing development through knowledge-sharing and support from a more experienced colleague.

A 2023 study by the International Coaching Federation found that 86% of companies using coaching reported positive returns, with measurable improvements in employee productivity and engagement. By pairing underperforming employees with trusted mentors or certified coaches, organizations can create a safe space for honest conversations, targeted skill-building, and self-driven growth. This approach not only avoids the stigma often associated with formal discipline but also builds a culture of continuous learning and support.

However, risks remain in pairing the employee with the right coach or mentor, as this kind of structure relies heavily on experienced employees acting in the best interests of the employee and company. Furthermore, the risk of personality clashes remains, so HR or management leaders should continue to closely monitor the situation.

When framed as a developmental opportunity, coaching can increase morale and strengthen an employee’s long-term connection to the company, as well as boost the mentor/coach’s sense of shared responsibility in the future of their organization.

Targeted Training and Development

In many cases, performance issues stem from a lack of proper training or mistakes made in the training system rather than a lack of effort on the employees part. Instead of moving directly to a PIP, companies should first consider whether the employee has been adequately equipped to succeed in their role. Targeted training programs, development workshops, or upskilling initiatives can close specific knowledge gaps and build confidence, often leading to quick and sustainable improvements in performance.

Investing in employee training, whether that’s through a technical certification, soft skills course, or time management workshop, keeps employees up-to-date with industry trends and signals that the organization values its people and is committed to their growth. It also allows managers to address specific areas of concern with measurable, practical solutions before resorting to more formal intervention.

Collaboration between HR, direct managers, and the employee is key to identifying blind spots as well as the right tools, resources, and learning formats needed to ensure progress is achievable and aligned with business needs.

Role Realignment

Sometimes, an employee’s poor performance is less about competence and more about compatibility with their current role. When there’s a misalignment between an employee’s strengths and their day-to-day responsibilities, reassignment to a different position or department may be a more effective alternative than a PIP. This strategy is particularly useful in dynamic organizations where talent mobility is encouraged and roles evolve quickly, or in those where the overall goals of a company have changed over time.

For example, a technically skilled employee who struggles with client-facing communication may thrive in a behind-the-scenes role that capitalizes on their analytical strengths. Similarly, someone underperforming in a high-pressure sales role might find renewed motivation and success in a strategic support position. Companies naturally evolve as they grow, opening up new opportunities for employees to pursue fields that interest them, so reassigning an employee can not only salvage their potential but also reduce the cost of turnover and recruitment by leveraging existing internal talent in new ways.

Successful role realignment depends on healthy internal mobility frameworks and clear communication of expectations. Managers should work closely with HR to assess the employee’s competencies, career goals, and potential fit in other roles. When handled transparently and supportively, reassignment can be a win-win for everyone involved.