How to build and use a performance improvement plan

Executive overview

Managers who fire employees without first providing structured guidance have already failed in their role. A performance improvement plan (PIP) is a formal document that gives underperforming employees specific goals, a clear timeline, and the support needed to succeed.

If an employee fails, the manager has also failed — PIPs are the tool that closes that gap.

What a PIP contains

• Specific goals the employee must meet
• A timeline of one to three months to meet those goals
• Clear actions required to achieve the goals
• Explicit statement that the PIP is a final warning
• Consequence clause: continued failure may be treated as resignation

Benefits of using PIPs

• Creates a clear pathway for the employee to succeed
• Makes the employee accountable
• Identifies root causes of underperformance
• Reduces employee turnover
• Builds employee buy-in

Six steps to create a PIP

1. Use a standard template across all PIPs to avoid accusations of favoritism or discrimination
2. Document the issues — missed quotas, late work, inaccurate data, poor collaboration; track how far back problems stem
3. Identify underlying causes — personal circumstances or external blockers must be factored in; requires a three-way conversation with manager, employee, and HR
4. Set SMART goals — Specific, Measurable, Achievable, Relevant, Time-bound
5. Create a timeline with regular check-ins and ongoing support
6. Sign the document — both employee and manager sign to formalise accountability