Let’s clear up something right away. When I talk about PIPs, I’m not referring to Gladys Knight. (For those that don’t know who Gladys Knight is, I can’t help you).
But PIPs are Performance Improvement Plans. They are typically a list of goals outlined by a company to an employee that the employee must accomplish over the next 30-90 days or the employee’s employment is terminated.
As an employment law attorney, I’ve seen a rise of such PIPs as a legitimate vehicle for companies to deal with employees they view as low performers.
Lately, though, I’ve been having some conversations with colleagues about whether PIPs are necessary in all instances and whether they’re more work than the risk they are trying to minimize.
A new Wall Street Journal article gets at this point noting that “in the messy business of getting rid of employees, the PIP is having a moment”.
According the article, PIPs are on the rise with 43.6 workers out of every 1000 being involved in formal performance procedures (which includes PIPs).
As a goal, PIPs aren’t a bad thing. They’re designed to ensure fairness to a process with the goal being to improve someone’s performance.
But as the WSJ article notes with a bit of snark, they can also be used to provide “legal cover from employment lawsuits or to cut costs without announcing layoffs” with one person describing them as an “oxymoron”.
From my perspective, they are a mixed bag. Done right, they can reduce the likelihood of some wrongful termination lawsuits. But if done poorly, with goals that are impossible to achieve or when used all the time, the PIPs can backfire. As the article notes, even if an employee completes a PIP, they are still likely to leave within the following year (either voluntarily or not).
One approach that I’ve seen (and that the article highlights) is dual option: Offer the employee a choice — either go on to a Performance Improvement Plan, or take a severance package (with a release of claims).
This approach is seeing an uptick in its usage as companies try to manage risk, while still trying to show poor performers the door.
PIPs are indeed having their day. Whether they continue or whether they evolve further as the workplace changes yet again remains to be seen.
Before you utilize a PIP, think about what you are trying to achieve and whether a PIP is the best way to achieve it. And be sure to talk with your legal counsel with any questions you may have.