Performance Improvement Plan (PIP) Template + complete guide

Alisa Mistry -

Performance improvement plans are exactly the sort of tools you hope you’ll never need to use. However, it’s likely that at some point in your career, you’ll have to deal with a team member not performing at the level they’re expected to.

In this guide, I’ll share some of the learnings I had from advising small companies over the last 10 years on how to address underperformance, with a specific focus on performance improvement plans — when you need them, how to put one together and what to expect as a result.

What is a performance improvement plan?

A Performance Improvement Plan (PIP) is a formal document that you can use to list an employee’s performance issues as well as the goals they have to achieve to meet your performance standards.

It usually includes an action plan and a deadline by which the team member is expected to have met all the improvement goals. If the goals aren’t met, this will likely result in a formal action or dismissal.

💡Small business tip – Performance Improvement Plans (PIPs) can be challenging to create, especially when you lack the time, resources, or knowledge. Small businesses often request PIPs in my day-to-day, but after addressing the PIP, I always ask if they have considered preventing these issues from arising in the first place. This can involve reviewing their hiring strategy or onboarding plan. The key is to ensure that every team member has the tools they need to succeed.

When should you use a performance improvement plan?

Putting someone on a performance improvement plan should really only be your last resort, assuming other, more informal methods didn’t help them get back on track.

It is only after observing that a team member is not acting on your feedback that you should go through a formal PIP process.

To start with, does the employee in question know that they’re underperforming?

At Charlie, we believe in continuous performance management, a process where feedback is exchanged not just during yearly performance reviews, but - literally - all the time.

It is very important that, before putting someone on a PIP, you have an honest conversation with them about their performance. This doesn’t have to be a formal meeting, you can just use one of your regular check-ins.

Be clear and communicate openly what it is that you are concerned about. This avoids any nasty shocks and helps to send the message that you are actually looking to help them improve their professional performance.

Have this conversation as soon as you notice their performance is not up to scratch. Don’t wait for the situation to go out of hand — performance issues tend to get bigger the more you ignore them. It is also your responsibility to be as open as possible with your struggling employees: after all, they rely on your feedback to grow and improve.

💡How to make this performance conversation happen at your small business

This may seem like a lot of work when you're already juggling multiple roles. You might be:

  • A founder handling HR admin because there's not enough work to justify hiring a full-time or part-time employee, yet you still need to address unexpected issues like underperformance.
  • An operations manager tasked with HR responsibilities without having concrete knowledge of how to tackle underperformance.
  • A CEO managing a small team, but struggling to find the time to create effective HR processes for performance management.

Regardless of your role, automation could be a valuable tool to save time and equip you with the right HR resources. Let’s break it down into four steps and see how automation can help:

  1. Find the Root Cause – This involves asking the right questions. With HR software, you don’t need to come up with questions on your own. For instance, CharlieHR provides ready-made templates crafted by HR experts. Some questions include: Is your employee experiencing personal issues? Are they struggling with time management or an increased workload? Asking these questions can help identify potential solutions.
  2. Share Your Feedback – Use the performance reviews tool to set review cycles where you can share your observations and ask for your team member’s input. You can also add 360-degree feedback to gather insights from their co-workers, creating a fair and comprehensive picture of their performance.
  3. Listen to Your Team Member – Schedule a meeting once everyone has completed their review. The app will remind you to do this, ensuring timely follow-up.
  4. Set Clear Expectations – After the meeting, you and your team member can work together to set clear goals to address any performance issues.

All of this can be managed directly through our HR software, reducing your workload and keeping all the info confidential.

Now that you’ve shared your feedback and set goals, you should allow some time for your employees to act on it. While this is not a formal review process, you should still be specific with them about what you expect:

  • What type of improvement are you wishing to see? Set an attainable target and use measurable metrics where possible to ensure your evaluation is not biased.
  • When will you check in with them again to see if they managed to achieve that improvement? Set a specific timeline for them to work on your feedback.

Then, the time comes to evaluate your team member’s performance again. Have they managed to improve their performance?

  • If yes, well done! Keep on having frequent and regular feedback conversations with them.
  • If not, this is unfortunately the time to put them on an employee performance improvement plan.

How to write a performance improvement plan + free template

If, despite your feedback and support, your team member was not able to improve their performance, it is time to put them on a performance improvement plan.

Usually, the person responsible for drafting the PIP is the employee’s manager.

So, what should a performance improvement plan include? A PIP should always include:

  • A list of duties or responsibilities where performance standards have not been met
  • Dates and examples of when these standards have not been met
  • Details of what is expected of the employee in terms of performance
  • A detailed description of actions that need to be taken to meet the right standards of performance
  • Information about what support you’re giving your team member to help them reach and maintain that standard (for example, additional training or mentoring)
  • A deadline by which these improvements will need to happen, plus at least one date for a check-in halfway through

Get the full Performance Improvement Plan Template that we use at Charlie by clicking here below.

Free Performance Improvement Plan Template – copy/paste

To make it easier, and if you'd like to copy this on another document, we've also included the PDF's content below:

Performance Improvement Plan Agreement

  • Team member name: xxx
  • Manager name: xxx
  • Date: xxx

Performance Improvement Plan Content

  • Target area: you can include several – detail specific Duties / Responsibilities where performance standards have not been met
  • Performance concern: Tease out the specifics of your focus area in a little more detail
  • Expected standard of performance: Detail what is expected of the employee in terms of their performance (i.e. S.M.A.R.T. goals)
  • Agreed improvement action: Detail what actions need to be taken to meet expected standard of performance
  • Support: Detail what has been agreed in terms of support (incl. additional coaching and/or training) to achieve the expected standard of performance
  • Review date: xx/xx/xx
  • Review notes: Detail improvement made and any future commitments and any future/negotiated review dates
  • Date to achieve expected standard: xxx

This can be added to your performance review in Charlie, as we outlined above, but you can also save the template whenever you need to use it – keeping everything in one place.

How to conduct a performance improvement plan meeting

After drafting your PIP, you must discuss it with the team member in question in a meeting:

  1. Let them know why you are putting them on a performance improvement plan (for example because they were not able to act on your previous feedback).
  2. Be supportive: tell them you are there to help them meet the goals in the PIP.
  3. Go through every element of the plan with them and give them the opportunity to ask questions or challenge any statements about their past performance. Of course, the final word is yours, but you should listen to what they have to say.
  4. Get their input on what actions they will have to take to get back to the level of performance expected of them.
  5. Ensure the expectations set in the PIP are clear as well as what they need to do to meet them.
  6. Make it clear that this is a formal process to be taken seriously: they need to step up their performance.

These are always hard conversations to have, but be as transparent as possible with your team members. They need to understand what is going on and what is expected of them to have a chance of passing their PIP.

You will need to have another performance improvement plan meeting at the end of the PIP period, when you will discuss whether the team member managed to meet their targets or not. We’re sharing more information on this below.

If you don't really feel confident sitting in one of these meetings by yourself, perhaps it's a good idea to ask a professional to be by your side – this is something I can help with, along with my CIPD-qualified colleagues. Find out more here.

How long does a performance improvement plan last?

How long a performance improvement plan lasts depends on how much time the employee will need to meet the performance improvement targets set in their PIP.

When setting your deadline, make sure it’s realistic and that you give your team members enough time to be able to meet the targets. On the other hand, keep the deadline in line with your general expectations in terms of performance at your company. You’ll want it to be doable, but also not too easy — your standards should remain high as a way to respect high-performers in your team.

One thing you can do to support the person on the PIP is to set up a couple of checkpoint meetings before the deadline to check on their progress and help them with any blockers.

What happens if your employee fails a performance improvement plan?

At the end of the performance improvement plan period, you will meet again with your team member to discuss their performance and whether they achieved the goals you set in the PIP.

If the answer is yes, then you can tell them they have passed their PIP. Make sure you set clear expectations about what performance standards will be expected from them going forward, and keep giving them regular feedback.

If the answer is no, and your team member failed to meet the expectations outlined in the plan, you may decide to terminate their employment (check out our guide on how to fire someone like a grownup).

These decisions are always hard: you have to take into account your employee’s well-being but also what is right for your business. On top of that, you need to ensure you stay compliant.

How can you prevent performance issues from happening again?

In my experience working with hundreds of small businesses, underperformance often stems from issues in how companies manage their performance processes.

We’ve already discussed the importance of onboarding, feedback and continuous performance management. If you don't assess your team’s performance regularly and consistently, you leave room for underperformance to become a significant issue.

That’s why I always recommend that companies, no matter their size, establish a performance review process like the one we outlined earlier. This process needs to be conducted regularly for every team member. For example, at Charlie, we hold weekly one-on-one meetings between line managers and team members, and we also have performance review cycles twice a year to discuss and agree on opportunities for promotions and pay raises.

💡How to make performance reviews happen at your small business

You can start with something simple and build your performance management process in steps:

Remember that, in the long run, having regular performance reviews for your team members will:

  • Keep the lines of communication open and steer team members away from underperforming.
  • Allow you to stay informed about your team members' lives and whether they're struggling at and outside of work to give them adequate support.
  • Help you avoid drastic decisions such as implementing performance improvement plans.
  • Keep your employees engaged and reduce turnover, minimising the need for frequent hiring.
  • Foster a team that works well together, feels confident that their personal development is valued, and strives to be high performers.

If you’re concerned about the admin workload that could happen when setting up your reviews, Charlie’s HR software can help. With Charlie’s Performance Reviews, you can choose the right review format from our ready-made templates and roll out recurring reviews to your team with a few clicks.