Implementing a performance improvement plan isn't a good sign for the employee or the employer, mainly because it requires additional work and oversight to justify keeping an employee on staff. PIPs aren't required, but they often satisfy an employer's obligation to provide the tools necessary to make employees successful. Three PIP outcomes are possible: resignation, termination and retention.

Performance Management

Several components comprise an organization's performance management system. The job description contains an outline of the essential functions of a job, and performance standards describe how the employee must perform those functions to meet or exceed the employer's expectations. Informal appraisal can include constructive feedback, verbal counseling or pat-on-the-back compliments. Formal evaluations generally are performance evaluations or performance appraisals that supervisors conduct annually. After a supervisor prepares the performance appraisal document, she typically meets with the employee to review the ratings.

Performance Improvement Plan

For annual appraisals that reveal significant performance deficiencies, some employers have another step in the performance management system designed to improve employee performance. A performance improvement plan gives an employee a second chance to raise his performance levels. Some supervisors see PIPs as a last-ditch effort to retain the employee by outlining specific steps and goals the employee must complete to keep his job and not be fired for poor performance.

PIP Details

Many PIPs are relatively short-term -- 30, 60 or 90 days -- and they address specific areas for improvement. For example, an employee whose excessive absenteeism causes her to miss deadlines and fall behind on her work might be given 30 days to show that she's dependable. Likewise, a sales rep who neglects customer follow-up and loses repeat sales, might receive PIP coaching to improve her consultative sales techniques. Some PIPs evaluate employees' progress at regular intervals and others wait until the end of the PIP to conduct another performance appraisal. HR best practices suggest monitoring PIPs to advise employees of their progress along the way. If the employee's initial performance rating didn't justify a salary increase, the employer might consider an increase when the employee proves she can improve.

Employee Refusal

When an employee is notified that his annual performance appraisal doesn't meet the company's expectations and that he will be put on a PIP, he has the option to dispute the overall appraisal and refuse to agree to the conditions of a PIP. In most cases, an employer interprets this as the employee's refusal to improve his job performance and would then make the PIP a condition of continued employment. This outcome amounts to the employee choosing between his job and the PIP.

Unsuccessful PIP Conclusion

When an employee who is on a PIP cannot improve despite one-on-one guidance and coaching, it's probably wise to end the working relationship. This conclusion might be upon mutual agreement, as in the employee and employer both realize that the job isn't a good fit for the employee's skill sets. Given the circumstances, allowing the employee to resign is a favorable outcome because it prevents the employee from adding a termination to his employment record. Some employers simply advise the employee that he failed to meet the PIP guidelines and terminate him for poor performance.

Successful PIP Conclusion

A successful outcome occurs when the employee raises her performance rating, meets all the requirements of the PIP and her job performance is back on track. In this case, a successful outcome means continued employment and, possibly, a salary increase. An added benefit of this outcome is that the employee senses her employer is genuinely interested in her success. It also preserves the employer-employee relationship and saves the company expenses associated with employee turnover.