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Performance improvement plans (PIPs) are on the rise in the workplace, but some experts say they can do more harm than good.
An article published by the Wall Street Journal (WSJ) on November 29 offered some insight in the growing trend in the workplace where employees find themselves placed under an improvement plan structured with “hard-to-achieve goals” that often take between 30 and 90 days to complete.
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They are designed to track an employee’s underperformance and hopefully help them improve their output and work expectations. HR Acuity, an organization that aims to improve HR standards for companies in the US, specifically notes that PIPs are intended as a “constructive tool aimed at helping employees, rather than as a punitive measure,” with upper management setting clear, measurable goals and expectations, along with a defined timeline for improvement, including regular check-ins to assess progress.
The WJ noted that in it 2020 HR Acuity conducted a study and found that 33.4 people for every 1,000 employees had been placed on a PIP. The survey found that many of these employees had performance issues that needed to be addressed. In theory, PIPs seem useful, but some business experts argue they can put unnecessary pressure on employees to over-perform, as many fear being fired if they don’t meet the plan’s goals.
Many employees do not complete the PIP process.
Larry Gadea, the founder of the software company Envoy, which employs 250 people, uses PIPs in his organization. Gadea told WJ that he believes PIPs often stem from managers not setting clear expectations from the start. Gadea estimates that only 10% to 25% of employees placed on PIPs successfully navigate the process – a statistic echoed by several other CEOs and HR professionals.
PIPs should not be used as a paper trail to document an employee’s underperformance. It should be implemented after HR engages an employee to meet expectations for their role and discuss what they need to do to improve in certain areas. But some people believe this could be the first warning sign of a termination in the near future.
“However, I have absolutely seen PIPs actually used as a smokescreen to set up a future gunfight. It’s never fun when it happens, but it does happen,” one person said wrote in one ResetEra forum on this topic on November 30. “A PIP is a pink slip that gives you about three months to find a new job,” another user wrote.
A netizen claiming to hold a senior position at Best Buy claimed he was “forced” by upper management to put some employees on a PIP because they did not like or wanted to replace “some employees” with their preferred candidates. .” They added: “It was a method for them to help teams shape their vision without getting into trouble.”
PIPs (Performance Improvement Plans) pose a significant risk to African American workers terminated at almost double the rate of their white counterparts, according to a study by Virginia technology. Writer Securely Shamika, in a 2020 article for Mediumargued that PIPs are deliberately “weaponized” against black workers, often used to push them out of well-paying jobs. She suggested that this practice may be rooted in racial bias, disproportionately affecting black professionals.
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Companies must also take responsibility for underperformance, says Netflix CEO Marc Randolph.
In an article for Medium, published On February 14, Netflix CEO Marc Randolph wrote that PIPs were “cruel and unusual punishment,” noting how they were used as a shield to protect companies from wrongful termination suits.
“You are always told by HR/Legal to put someone on a plan before firing someone as HR and Legal’s job is to protect the company,” Randolph wrote. “They will happily subject ninety-nine people to a humiliating experience simply to prevent one person from suing the company.”
Randolph said they are a waste of time and that companies should also look at how they can improve internally to help their employees succeed, because he believes underperformance is “as much your fault as it is theirs.”
The CEO added: “Being asked to leave doesn’t mean you’re a bad person. . . usually that’s because they’re a poor fit for what you need, and that’s as much on you as it is on them.”
If dismissal is the real goal behind a PIP, Randolph advised HR teams to handle the situation with empathy, care and honesty. He urged companies to be generous with severance payments, stressing that the basic rule is to consider how long it will take for the individual to recover their income – something that is rarely achievable in just two weeks.
In addition, Randolph emphasized the importance of actually supporting the employee during his transition. HR needs to think about ways to help them find a role that better suits their specific strengths and weaknesses so they have the best chance to get on their feet.
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