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How to Create Performance Improvement Plans

Hiring a new employee and onboarding them into your company culture can be one of the best parts of your job as a supervisor.

However, things don’t always go according to plan when dealing with people. So, what do you do when your new hire isn’t doing the job well?

If your thoughts rush ahead to termination, stop! With a little planning, counseling and action, there is opportunity with a performance improvement plan.

What is a Performance Improvement Plan?

A Performance Improvement Plan, also known as a PIP, is a plan to improve employee performance. It further aligns the employee with the goals and assignments of the role.

Performance improvement plans can serve multiple purposes. Depending on the organization, it may be a required action to counsel an under-performing employee.

PIPs ensure that you have a paper trail documenting what was communicated to your employee and when. This can be useful for liability reasons, but it goes much further than that.

When you take the time to sit down and create a PIP for your employee, you’re making sure that you are communicating the role’s expectations and giving your employee a chance to rise to the challenge.

When is it Time to Write a Performance Improvement Plan?

Another big question employers have is, ”When is it time to put together an employee action plan?” It really depends on the situation.

Generally, you should avoid putting newer employees on a performance improvement plan. The term “newer” can be nebulous and it depends on your industry. Employers should generally wait at least 3 months before they take corrective action in writing.

Examine Your Motives

You want to be very clear about why you are considering a performance improvement plan for an employee. If their underperformance comes down to a simple personality difference, you may want to consider other options, rather than trying to re-align their style through corrective action.

Keep in mind that there could be many reasons why an employee may be underperforming. Perhaps the job requirements weren’t clearly explained, or perhaps the role itself needs some tweaking. Did you train the employee yourself? If the answer is no, you may want to examine other sources of information before taking any further corrective steps.

The employee could also be unclear about the role’s expectations or overall functions. Perhaps personal problems are also interfering with their ability to focus on their job.

Regardless of the actual (or suspected) reason for employee underperformance, you as a professional must take the time to analyze and coach an employee before delivering an improvement plan.

When It’s Not Working

You’ve done your due diligence and talked to your employee. You’ve offered a little counsel, constructive feedback and repeated this process two, three, four times…what now?

It may be time to sit your employee down and work on a plan for change. After all, you’re more than likely responsible for delivering on and achieving your own goals for the role, and weak links in the chain will need to be addressed.

Reasons to Use a Performance Improvement Plan Instead of Termination

It’s best to be forthcoming and address the issue of termination versus an improvement plan. Take the time to assure your employee that many reasons went into choosing a PIP over termination.

The first big advantage is overall cost. Terminating and then recruiting, training and onboarding a new employee all cost money. It’s much less expensive to retain and improve a current employee than it is to hire a new one.

The second big advantage PIPs have is workplace morale. Not only will the decision to terminate affect the employee’s morale, but it will likely have repercussions on other employees too. Employees who have gone through the PIP process and stayed with the company may even become more loyal workers in the long run.

How to Write a Performance Improvement Plan

How should you write a performance improvement plan? Here are a few things to include as you’re putting it together.

What Your Plan Should Include

The specifics will depend on your industry, of course, but there are a few general guidelines that you want to always include and take the time to be transparent about.

Be Clear

The first and most important thing is to be clear. Your employee is very likely to seize up and suspect the worst when you tell them that you need to meet to discuss a plan for improving performance.

It may help to be completely straightforward and address the “legal firing” issue. Many companies mandate PIPs as a step before termination because they want to protect themselves from lawsuits. If this is not the case for your company, it may help to try and reassure your employee.

Being honest and straightforward is also a great way to start the performance evaluation process. You want to be clear with your employee about what you’ve been observing, what the role’s expectations are and what the next steps will be.

Be Concise

Along with being clear, it’s best to keep the PIP as concise as possible. Giving your employee too many areas for improvement will likely result in no measurable improvement in any of them. Employees may get overwhelmed, discouraged and even decide to quit, which is what you don’t want.

Instead, try targeting two or three specific areas that you want to see improvement in. Concentrated efforts can often show the biggest results.

Be Measurable

Your performance improvement plan needs to have measurable objectives. You’ll need to include specific areas to see improvement in, as well as state what will constitute an improvement.

Sometimes this is easy, as in tardiness. If the employee is struggling with timeliness, a simple measure would be, “Employee needs to be on time 85% of days worked.”

Some performance areas, such as too many customer complaints or making too many mistakes, can be a bit hazier. Even in these grayer areas, however, you’ll need to set clear markers for improvement. You could say, “No more than two customer complaints per week.” or, “No more than three errors per shift.”

Just be sure to keep your measures reasonable, as well as attainable. The last thing you want to do is set goals that are unrealistic.

Be Timely

You’ll also want to lay out a clear timeline for your employee performance improvement plan. Both you and your employee should have a clear understanding of what improvement is expected by when.

Be sure to set a realistic timeline and give them a reasonable amount of time to adjust their actions. Many actions come from unconscious habit patterns, so give your employees time to break the cycle and retrain their habits.

Performance Improvement Plan Template

If there’s no standard company form or outline, your PIP template can have variation. The performance improvement template below addresses the needed elements of an employee action plan.

Performance Improvement Plan Example


{Employee Name}


Job Title:

Hire Date:

Performance Action Plan

This letter certifies that you are being notified of your Performance Improvement Plan (PIP). The improvement plan outlined below has been created as a response to the duties of the {Job Title} role.

After {number} verbal counselings, you have unfortunately, not demonstrated the full level of capability that your role requires. It is {Company Name}’s hope that this plan will help you get back on track and demonstrate capability.

Areas Where Improvement is Needed:

  1. {Area 1}
  2. {Area 2}
  3. {Area 3}
  4. Etc.

Specific Goals for Improvement:

  1. {Goal 1}
  2. {Goal 2}
  3. {Goal 3}
  4. Etc.

Improvement Deadline: {Target Date}

Please let me know if you have any questions or need clarification. Thank you!

Best wishes going forward,

{Manager’s signature}

I have received a copy of the above Performance Improvement Plan, and I have a clear understanding of what is expected of me.

{Employee Signature}

Formats for performance improvement reviews can range from casual, to this more formal sample PIP for managers. Don’t forget that you can always create your own template using  Google Forms or Microsoft Word.

After You Give the Performance Improvement Plan

After you hand your employee the PIP, do your best to follow up promptly. Be communicative. Let them know that you’re happy to answer any questions along the way, and that you may be checking in on their PIP progress regularly.

Your employees aren’t going to be happy about a performance improvement plan, but with a little work and a few simple steps, you can turn it into an effective win for you both.