What Exactly is a Performance Improvement Plan (PIP)?

Once a term only known by human resources professionals and some managers, performance improvement plans have suddenly become a trending topic.

A recent post by a software development engineer at Amazon has gone viral on LinkedIn after sharing his manager put him on a performance improvement plan after requesting an internal transfer.

The viral posts led to other professionals sharing their experiences about performance improvement plans, which led some to ask: Is there a “PIP” culture at Amazon?

Here is everything you might want to know about performance improvement plans.

What is a Performance Improvement Plan?

A performance improvement plan is a formal document that explains recurring performance issues and what an employee needs to change to get back on track. Effective performance improvement plans outline concrete steps an employee can take to improve and regain good standing.

Managers might also use performance improvement plans to align professional expectations with an employee.

If an employee does not improve after the process, the company might move them to another team or fire them.

What does a Performance Improvement Plan Look Like?

Performance improvement plans can be thought of as a probation period.

The manager or company’s human resources team will set precise objectives or goals they believe are necessary to demonstrate improved productivity and give a timeline for completion.

A useful and effective performance improvement plan will generally explain in detail the issues or behaviors that caused problems, corrective actions or goals an employee should achieve to show progress, and meetings or resources available for additional support.

How Long is a Performance Improvement Plan?

Performance improvement plans should give employees enough time to achieve success. Like effective goals, they should be specific, measurable, achievable, relevant and timely.

Performance improvement plans usually last 90 days but can be as short as 30 or 60 days, depending on the improvements suggested.

A performance improvement plan with a shorter deadline might be best to address professionalism issues, such as attendance, communication, quality errors or work output.

What Does it Mean if a Workplace has a “PIP Culture”?

Performance improvement plans have a bad reputation because some managers or companies have a track record of using them poorly.

Some employers have controversial workplace policies to identify low-performers. For example, a company might ask managers to rank the performance of every member on their team against one another in a process sometimes called “stack-ranking.” The company might then place the lowest-ranked team members on a performance improvement plan. This could seem unfair if a team is full of high-performers, as some will need to be ranked lower than others.

Other companies might fire a certain number or percentile of employees each year.

Amazon is well-known for its attempts to identify what it believes to be its lowest performers for performance improvement plans, job retraining or termination.

Employees should recognize that a performance improvement plan is an opportunity to understand their role. A company that really wants to fire you would just do so instead of taking the time to create a plan to help you improve.

Do you have to Sign a Performance Improvement Plan?

Your manager might ask you to sign a performance improvement plan. It should not be seen as an admission of poor performance. Instead, it is typically used by a company’s human resources team to ensure you understand what you need to do to improve and that your manager clearly outlines the plan to you.

Not signing the performance improvement plan could be viewed as refusing to improve, leading to termination.

How to Respond to a Performance Improvement Plan

A performance improvement plan is an opportunity to get clarity about what your manager and company believe you need to do to improve and grow.

Take the time to discuss and thoroughly read the performance improvement plan, especially before signing the document. If there are any things you do not understand or disagree with, make sure you bring them up.

While you are on your performance improvement plan, check-in with your manager regularly. Seek feedback and report any progress you have made. Many employees have earned promotions or even raises after a performance improvement plan because they took charge of their performance and now understood what was expected of them.

The Bottom Line

Performance improvement plans can be stressful, but professionals should understand the plan can be an opportunity to get back on track at work. Companies take the time to formally document recurring trends they believe could be changed to align expectations for the role, which can guide productive work going forward.

Performance improvement plans are not necessarily an indication a worker will be fired.

The story was adapted from an article on the Teamblind blog.