Replacing nonperforming employees is costly and traumatic, both for employers and employees. But allowing a bad situation to fester is worse; it can cause the problem to spread by undermining morale or by creating the impression that management doesn’t care. Performance improvement plans (PIPs), when executed properly, can help you avoid all that.
The American National Standards Institute (ANSI), which oversees the creation, promulgation and use of thousands of norms and guidelines that directly impact businesses in nearly every sector, has guidelines for creating these plans within its broader performance management standard. The ANSI standard describes a performance improvement plan as “a process used to resolve persistent performance problems in accordance with a documented procedure.” It also states that a PIP “provides a vehicle for open dialog and consistent feedback,” and features both conversation and documentation.
Assumptions you may have made about the sources of nonperformance can be put to the test through the PIP process. For example, a problem you assume is due to a simple lack of effort on the employee’s part might in fact be due to inadequate training, poorly communicated expectations, or health or personal problems that require accommodation.
The PIP process involves a series of formal steps that will help you uncover the source of the problem and then effectively address it.
You will need to create (or borrow and customize) a document that lays out the whole process. According to the ANSI standard, the first step is to document the performance issues. That document should include the following elements:
- Employee information,
- Relevant dates,
- Description of the performance discrepancy or gap,
- Description of expected performance,
- Description of actual performance,
- Description of consequences,
- Plan of action,
- Signatures of the manager and the employee, and an
- Evaluation of the plan of action and overall performance plan.
Suppose the issue is spotty attendance and tardiness. The documentation would include details of when these infractions occurred, a summary of the attendance policy, the employee’s paid time off allotment, and any formal warnings the employee has already received.
Before sitting down with the employee to present the documentation, you need to have developed a provisional plan of action to address the problem. The plan is provisional because you might learn something in the course of the meeting that would suggest an alternative path.
Your goal in the meeting isn’t simply to point out the problem, but to seek understanding and to encourage the employee to own the issue, according to a primer put out by the Society for Human Resource Management (SHRM).
The action plan should also feature specific measurable goals to turn the situation around. For a straightforward issue like attendance, the goal could be as simple as having a perfect attendance record until a scheduled follow-up meeting, perhaps three months in the future. (This assumes there’s no underlying health or similar issue that needs to be taken into account.)
When setting goals for more complicated performance issues, such as problems with the quality of the employee’s work, you’ll need to determine whether the employee needs additional resources in order to improve. You’ll also need to be clear about the specific quality issues so that improvement can be measured.
Finally, the plan should spell out specific consequences for a failure to meet the goals. For example, says SHRM, if termination may result from certain actions, this should be clearly communicated in writing.
For quality control purposes, it’s good to share the performance plan with a colleague who might spot problems or have ideas on how to improve it. If you have an internal HR team, of course, you should work closely with them.
When the plan is ready, it’s time to meet with the employee. Remember, the goal is two-way communication; employees need to understand it’s their responsibility as much as it’s yours to make this a dialog. The ANSI standard states that “effective feedback should be timely, constructive, specific and balanced, and should include both positive and development information based on what the employee did or did not do.”
Focus on Behaviors
The ANSI standard also stresses the importance of not critiquing “personal characteristics,” but focusing instead on behaviors and how those behaviors “are linked to effective versus ineffective performance.” (The same advice is applicable to any time you’re providing employee feedback, of course.)
As noted, you might learn from your conversation with the employee subject to the PIP that you didn’t fully understand the issues at hand, and therefore need to fine-tune the performance plan. When you have presented the final version, both you and the employee should sign it.
The plan should lay out the schedule for follow-up meetings at which employee progress — or lack thereof — toward achieving enumerated goals is discussed. Ideally, goals will have been achieved, or at least significant movement in that direction, will have occurred. That provides an opportunity for positive, motivational feedback.
In the other scenario — no or limited progress — you will be guided by the action plan that you established at the outset. The outcome might be to give the employee a final chance (with a date set for the next meeting) to achieve goals. Alternatively, you might conclude that the employee is better suited to another job within your organization or that termination is the best course of action.
Whatever happens, by using the PIP process, you may be able to:
- Ensure that employees with performance issues are treated consistently,
- Construct a straightforward roadmap of how to handle the situation,
- Maximize the possibility of retaining an employee who might otherwise have been terminated, and
- Prevent an employee who ultimately does have to be terminated from feeling like the victim of a capricious or discriminatory act, therefore minimizing the likelihood of litigation.
Of course a PIP isn’t always the appropriate course of action. But when it’s used successfully, you may salvage an otherwise good employee who simply needs redirection. In the end, improving your existing resources is likely to be far more cost effective than starting over with a new employee.
Members of SHRM.org can find a great deal of information there about how to flesh out a performance improvement plan.