Performance Improvement Plan (PIP): Steps & Best Practices

A Performance Improvement Plan (PIP) is a structured tool used to help employees overcome performance challenges and meet their goals. While often misunderstood as a step toward termination, a well-designed PIP is actually meant to support growth, offer clarity on expectations, and guide employees with actionable steps for improvement. 

In this blog, we’ll explore how PIPs work, when to use them, and how they can lead to stronger performance and retention.

What is a Performance Improvement Plan (PIP)?

To define a performance improvement plan (PIP), you should first understand its concept and relevance. PIP is usually a formal written document outlining the areas where your employee falls short of performance. They are usually constructive, but you will often find them raising concerns around transparency, fairness, and compliance with the laws for Indian labourers. 

The key objects of a PIP are:

• Identifying performance gaps
• Providing structured support and guidance
• Offering clear, time-bound goals for improvement
• Helping employees succeed rather than being a termination tool

When Should a Performance Improvement Plan Be Used?

After understanding performance improvement plans, let us dig into when you should implement them. 

You can tailor your performance improvement plan template to fit any problem. It primarily focuses on improving work quality, setting goals, and meeting increasing numbers. When implemented correctly, a pip performance improvement plan could work wonders for your struggling employees. 

It gives your employees instructions for improving and defining clear metrics to measure their performance improvement. To be more effective, you should frame your PIP with a sincere desire to help your employees improve their performance. Sometimes, it may make your employees nervous. Through this PIP, you, as your organizational manager, should be able to communicate your expectations, regular check-ins, and timely support your employees. All these aspects are crucial for boosting the morale of your employees. 

That being said, PIPs are not just for struggling employees. They can also support a structured position for employees who feel unfulfilled in your organization. A well-crafted PIP prepares your employees for transitioning to higher-level roles or moving laterally.  

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Steps to Create an Effective Performance Improvement Plan 

One of the key aspects of creating an effective performance improvement plan is identifying the root performance issues. It helps you set measurable goals and provides resources to your employees to improve their performance. Here is a detailed stepwise breakdown of creating an effective performance improvement plan: 

A. Identify Performance Issues

Your performance improvement plan or PIP should not be generic. Design it to be more individual-specific to correctly define an individual's performance lag. An employee showcasing a solid skillset but a lack of motivation requires a different approach than the employee with motivation rather than skills. You can leverage KPs, feedback, and reports to gather objective performance data for your employees. 

B. Set Clear & Measurable Goals

The next step in designing an effective performance improvement plan (PIP) is to set clear and measurable goals. Your list should include only realistic goals and objectives. 

You can leverage SMART criteria, which consist of Specific, Measurable, Achievable, Relevant, and Time-bound goals. In the end, you should align your individual employee goals with your organization's goals and objectives. 

C. Provide Structured Support & Resources

Shoring your employees' confidence and clarity is one of the most respectable ways of ensuring that your PIP process will be successful. You can emphasize the inclusion of additional training, consultation, and positive reinforcement of your organizational goals and objectives. Regular training and self-assessment can eliminate your employees' skill gaps. 

D. Define a Timeline & Checkpoints

Now, you have a performance improvement plan ready for your employees. Next, define a timeline for your employees to fulfil the preset objectives. You can then schedule regular checkpoints or check-ins on a weekly, biweekly, or monthly basis. Milestone-based progress tracking is a good way of letting your employees know what their hard work and success look like. 

E. Document Everything & Communicate Transparently

Documenting every employee's performance improvement plan is crucial to ensure HR compliance and clarity. Draft and curate your plan well by including all essential information, such as:

• Employee details 
• Concerned areas
• Goals and consequences 

Once you have documented your PIP, review it thoroughly to ensure the goals and objectives are attainable. You can also discuss it with your HR executives to verify compliance with your organizational policies. Your communication with your employees should be constructive and not punitive. 

Common Performance Improvement Plan Mistakes (And How to Avoid Them)

Common performance improvement plan mistakes include a lack of employee input, vague goals, insufficient resources, and a lack of adequate follow-up. Here's a more precise breakdown of the common performance improvement plan mistakes:

• PIP is used as a pre-termination step rather than a genuine improvement tool.
• Unrealistic expectations: Setting unachievable targets demotivates employees.
• Lack of manager involvement: Success depends on ongoing coaching and feedback.
• No clear consequences: Employees should understand what happens if expectations aren't met.
• Failure to track progress: Without structured follow-ups, PIPs lose effectiveness.

Example of a Performance Improvement Plan Template 

Below you will see an example of a PIP (Performance Improvement Plan) template: 

Performance Improvement Plan vs. Other Performance Management Strategies

Here are the fundamental differences between performance improvement plan and other performance management strategies: 

• PIP vs. Coaching Plans: Coaching is a long-term development tool, while PIPs are short-term structured plans
• PIP vs. Performance Reviews: Reviews assess past performance, while PIPs focus on immediate corrective action
• PIP vs. Training Programs: Training is for general skill-building, while a PIP is targeted for performance correction

What Happens After a Performance Improvement Plan?

After a performance improvement plan or PIP has been well communicated to your employees, you have a checklist to keep track of: 

• If the employee meets expectations:

✅ They resume regular duties with better clarity and performance.

• If partial improvement is shown:

🔄 The PIP may be extended with additional support.

• If performance doesn’t improve:

❌ The company may take further action, including termination.

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