Performance improvement plans are tools employers can use to identify areas of inadequate employee performance. PIPs can also establish a path employees can follow to boost their ability to meet expected performance standards. A plan's ultimate goal is to enable an employee to reach his best performance level, which is key to any business reaching optimum performance.


The first reason for developing a PIP is to identify substandard performance of an employee and help the worker recognize that his performance isn't meeting expectations. Plans are tailored to address specific performance deficiencies an employee is displaying. Secondly, a plan provides a method to develop a systematic improvement program, which may include formal coaching or on-the-job training.


The third reason for a PIP involves gathering the information necessary to document substandard performance. Employers aren't always in a position to know the exact strengths and weaknesses a particular employee is displaying. A good strategy may be to design a plan that documents performance over a specific period of time. The fourth reason involves gathering feedback concerning a particular employee's performance. This may come from the employee being evaluated or from supervisors who are assigned to monitor employee performance.


The fifth reason for a developing a PIP is to identify employee behaviors that are contributing to substandard work performance. An employee may be habitually coming in late for work or skipping required training sessions. Sixth, placing an employee on a fair plan signals to other employees that the company is serious about maintaining acceptable levels of job performance. Substandard performance from one employee has the potential to spread if unchecked.

Skills and Ability

The seventh reason for a PIP centers around the idea of helping employees realize their own potential. Even though an employee has been displaying substandard performance, the plan can help the employee improve on the skills he already has and show how he can gain new ones. The eighth reason involves identifying whether the employee has the skills to accomplish the job. The plan may help the employer identify the need to reassign an employee to a task he is better suited for.

Bottom Line

The ninth reason for implementing a PIP is to ensure every effort to improve performance, as required by an employment contract or other legal requirement, has been met before letting an employee go. A well-documented plan can be essential in protecting the employer from a lawsuit. The last and most important reason for implementing a plan is to encourage employees to work at their optimum performance level, since this can help increase the company's production levels and profits.