Skip the PIP

By Alexander Klibaner

May. 28, 2008

With the exception of Donald Trump, employers usually do not enjoy firing an employee. Sometimes, though, parting ways is the right thing to do, and introducing a formal process that merely forestalls an inevitable result seems straight out of Dilbert. So, I offer five arguments for employers to consider before placing employees on performance improvement plans, or PIPs:

1. It’s Not Fair to the Employee
    Despite its name, a performance improvement plan, like probation, is supposed to inform the employee in SMART (Specific, Measurable, Action, Results, Time-bound) format that performance needs to improve dramatically and that his or her job is in jeopardy.

Of course, most managers regularly provide informal feedback to employees. When an informal discussion does not work, a perceived problem can be addressed at a regular performance review or a specially scheduled one. Thus, by the time an employee is placed on a PIP, almost always there’s a manager who has concluded that the usual avenues for improvement are not going to generate the desired results.

With the manager having lost confidence in the employee, the PIP does not typically do the employee any good. It might even hurt the employee’s chances of landing a job with another employer. (The employer will most likely avoid contradicting the written PIP even with a neutral reference, and the PIP might come up at an interview in discussing the circumstances of the employee’s departure.) The PIP therefore makes it harder for the underperforming employee to move on.

2. A PIP Puts the Employer in a Box
    A PIP documents the reasons for termination, establishing that the employer’s legitimate business needs were not being met and that the employee was given a last chance. Indeed, PIPs have helped employers successfully defend lawsuits and have become a prevalent best practice in human resource management. In addition, the SMART format protects employers from their own managers’ possible illegal prejudices.

While important, these benefits should be weighed against a PIP’s appropriateness. Sometimes the real culprit underlying poor performance defies the SMART format, whether it is a communication breakdown, a personality conflict or simply an employee’s lack of enthusiasm for the job.

Moreover, a PIP’s time frame, which typically is 30 to 90 days, forces the employer to evaluate the employee yet again. Even worse, the artificial deadline may not correlate to the employer’s business goals or the actual time needed for an employee to improve, and it undoubtedly postpones the search for a replacement employee.

3. Doublespeak Complicates
    Because PIPs focus on future performance objectives, and no one wants to hear that his or her job is on the line, it’s easy for employees to focus only on the positive message that the PIP is about working together to improve performance. The manager, however, may view the PIP as a formality on the path to termination, given whatever it was that brought the manager one step away from firing the employee. Besides, to the extent a PIP masks the actual causes of a manager’s past, subjective displeasure by focusing on future performance, the PIP steers an employee away from the actual criteria that may be necessary for that manager’s long-term satisfaction.

4. The Employee Will Strike Back
    Those employees who get defensive could use the PIP to fight back. For example, the employee might challenge the PIP’s criteria or the adequacy of the company’s training. Even employees with no legal protections for their own incompetence might file complaints, causing employers to worry about evoking a retaliation claim. Unfortunately, all too often a PIP transforms the firing of an at-will employee into a painfully complicated ritual.

5. There Are Better Ways to Terminate Employees Than Through a PIP
    Once an employer is ready to initiate a PIP and fire the employee, the employer might as well look for ways to part amicably. Under the best of circumstances, former employees can become new customers, vendors, referral sources and goodwill ambassadors.

To encourage that result, employers should consider offering employees the option of resigning instead of going through a PIP. When documenting performance is desired, performance reviews can accomplish everything a PIP can and more. They document the employee’s past performance against objective as well as subjective criteria and, if needed, can offer expectations for necessary immediate improvements. If it is not time for a regular review, employers can schedule a special midyear performance review and state the reason for it.

Moreover, if an employer is willing to put up with a 30- to 90-day PIP, that employer can consider giving 30 to 90 days’ notice or offer a severance package (in exchange for a general release of claims, of course) that gives the employee an opportunity to find another job. If an employee finds a comparable job, it will mitigate his or her potential damages. And, if the employee does sue, that special performance review will come in handy.

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