Chapter Two: Performance Improvement Plans (PIPs) 101
From PIP to RIF: A four-part series tackling People & Culture topics for all markets
Hey! I’m Morgan and I’m a Vice President with Bessemer Venture Partners investing in healthcare and life sciences. I’m also in medical school. This newsletter is an evolving collection of what I’m learning as I translate between the worlds of venture capital, technology, and biomedicine. You can subscribe for free to follow my journey:
And… we’re back! After a brief hiatus, Carmela Krantz of Woven HR and I are excited to share the second installment of our four-part series on People & Culture. As a refresher, this series aims to distill People & Culture topics, techniques, and tools for our contemporary environment.
As People & Culture topics continue to capture material board-level airtime for most startups (and all companies, for that matter), getting these dynamics right remains table stakes for success — oftentimes taking priority over product-market fit or hitting revenue milestones. After all, people are the most important asset of any company.
In this piece, we’ll be discussing Performance Improvement Plans (PIPs).
So what is a Performance Improvement Plan (PIP)? PIPs are tools that help managers address employee performance and productivity deficiencies in a structured way. PIPs are typically deployed after a series of unsuccessful feedback conversations that do not result in improvement.
In our last post, Carmela and I talked about Feedback Conversations as the first step in an intervention pertaining to employee performance. Put simply, a feedback conversation is a conversation where people share information in anticipation of a better outcome. Feedback conversations are the “first-line intervention” for addressing employee performance issues. Though developing a feedback practice that is ongoing and specific is more likely to be successful than relying on PIPs alone, there is always a chance that these conversations don’t go well or don’t result in the improvement a manager was hoping to see. In these cases, it may make sense to progress to the Performance Improvement Plan.
Below we outline the Six Rules of the Performance Improvement Plans. At the end, we also provide a downloadable template for drafting an actionable PIP.
Rule #1: No surprises
Rule #1 of PIPs is NO SURPRISES. Before issuing a PIP, it’s important to engage in the feedback conversation process first, and along the way, make sure the person understands that if they do not improve, the next step will be a PIP. TLDR, when issuing a PIP, it shouldn’t be a surprise.
Rule #2: Clarify the objective
Like feedback conversations, PIPs are all about clarity and getting into the specifics. Does the person understand the objective? Do they know what performance is falling short in very specific terms? Do they comprehend the impact on the company, their team, and customers? For example:
How might failing to push code on time have a negative impact on the work of other engineers?
When sales reps do not meet quota consistently, how does this impact company performance against Key Performance Indicators (KPIs)?
When a sales development representative does not meet their outbound prospect outreach targets, how does this behavior impact the sales pipeline and downstream KPIs?
So, the employee should leave the PIP conversation with a clear understanding of where they’re falling short, how this impacts the company, their team, and potential customers, as well as what their manager expects will improve in order to get back on track performance-wise.
Rule #3: Don’t pile on
Be systematic in how you talk about performance for a PIP. Using a PIP template such as the one we have provided below is a great way to stay on track without piling on. In the template, you’ll want to answer a number of key questions:
What is the PIP about? Is it a competency-based PIP? Is it about work product? Is it pertaining to teamwork, professionalism, alignment with company values, or something else?
What are the most important issues?
What are the root causes vs. the outcomes?
Write the PIP based on the most important places where the employee is falling short. Though it may be tempting to “throw in the kitchen sink” and share other feedback on your mind, don’t dilute the key message(s) by piling on.
Rule #4: Define the success criteria and set a specific duration
Make clear what success looks like under the PIP and set a specific duration — all PIPs must be time-bound. Over the duration of the PIP, how will the employee understand if they are making progress, and at the end of the period, how will they know if they are successful? Make the criteria as specific as possible. Reverting to our earlier example: “Pushing your code on X schedule on a consistent basis without missing any milestones” is a performance success criterion.
There are many people in this world who might advise that once you're on a PIP, you're going to be on it forever, and you can't slip. This is poor PIP hygiene. Essential to utilizing PIPs is actually giving people an opportunity to improve and demonstrate that they can perform at the improved level consistently. If they can, great. If they slip, you should have a feedback conversation with them. If they slip consistently, they should understand from the original PIP that if they don't deliver on the success criteria consistently, they run the risk of “further disciplinary action up to and including termination.”
So, the initial PIP should have some level of optimism in the subtext that if the employee does what is identified in the PIP and seeks out their manager for help along the way, there is the belief they can get better and move past whatever performance issue is present. If they don't, obviously, the manager should escalate the performance improvement process, and depending on how severe the lack of improvement is, it may mean the employee will be terminated as part of this PIP. It’s critical that the person walks out the conversation feeling like their manager and the company is invested in their improvement (barring something like theft or insubordination), for which you’d fire someone immediately. This leads us to Rule #5.
Rule # 5: Show Support
We’ll be brief in this section but can’t underscore this one enough. It's really important that the person leaves the PIP conversation thinking, “I can do this.” “I've got support.” “I understand what the criteria are.” “I understand how I'm going to be evaluated.” Being put on a PIP can be deflating, so employees need to feel like there’s a reason for optimism in order to put energy into improving.
Rule #6: Follow Up
After delivering the PIP, it’s important that the manager follows up when they say they will. Few things are worse than an employee being left hanging after their manager or boss put them on a PIP. During the PIP, it’s common to schedule informal check-ins on a recurring basis (we like weekly), depending on the severity and length of the PIP. During each of these check-ins, the manager should document the conversation and add it to the employee’s file. These check-in conversations should mirror the structure of the PIP in that they should be action-oriented and measurable. Check out our piece on Feedback Conversations for best practices on how to have effective check-in conversations.
Other options instead of a PIP
If the manager doesn't think that an employee can actually improve on a PIP, there are other alternatives, which we lovingly call “improve or remove.” Every option discussed thus far, including this one, requires honest conversation and a partner in Human Resources (HR), People & Culture, and/or leadership.
Here’s how the “improve or remove” conversations can go:
“I can put you on a PIP, but I don’t think it’s going to make a difference because your performance deficiencies are severe.”
“I can put you on a PIP, but I don’t get the sense that you want to do the work to improve.”
Or some version of the above tailored to the specific instance. In the “improve or remove” scenario, we appreciate that this style of direct conversation offers dignity, empowers the employee to play an active role in the solution or next steps, and maintains reality. As part of the conversation, if appropriate, the manager can offer that they will give the employee a couple of weeks to begin looking for another job.
Signing the PIP
When issuing a PIP, ideally the employee and manager both sign it; however, legally, employees do not have to sign it. Some employees refuse, and that’s okay. If an employee refuses to sign a PIP, it does not negate the fact that the PIP was written and delivered, and the manager needs to make sure they document exactly what transpired in the conversation should the employee refuse to sign.
Before extending a PIP, the manager may consider consulting the Human Resources department to get feedback on the PIP and approach. If it’s an early-stage company with no HR function, the information may need to be escalated to the CEO or COO depending on the organizational structure. Any documentation pertaining to how the PIP conversation went, whether the employee signed, and any concerns should be shared back with HR or the appropriate CXO immediately after the conversation.
To conclude this piece, we wanted to offer a template for Performance Improvement Plans. You can download it here.
While nobody likes delivering or receiving a PIP, when performed following these guidelines, there can be a path to improvement while keeping relationships intact. In our next post, we’ll be covering another meaty topic: “Reductions in Force (RIF): Everything You’ve Always Wanted to Know.” For a longer form version of the PIP template or for more context on Carmela’s work, check out Woven’s website.
Thanks for reading!
Morgan and Carmela
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