The Employers’ Guide to setting up a Performance Improvement Plan

Getting the Performance Improvement Plan right is vital to being successful in improving employee performance and being able to rely on following it as a fair and reasonable process. 

Some of these steps are similar to our ‘Employers’ Guide to Performance Issues’, which sets out further steps for meeting with and talking to your employee about their performance, and what happens when you cannot resolve performance issues with your employee.

Set out below are the steps which you should take if you have performance concerns about an employee, and wish to set up a formal Performance Improvement Plan (often referred to as a “PIP”) for them.

A PIP is a plan implemented by the employer, in consultation with the employee, setting up a series of goals or standards an employee should meet within a certain period of time, to help them improve their performance.

1. You should consult the employment agreement to see if there are any specific requirements for dealing with performance issues and you should comply with those as well as the steps below.
2. You need to advise the employee that you are going to carry out a performance review and give them a time and place of the meeting. Advise them that they can have a support person/representative attend any meetings and assist them with the process.
3. At the meeting you need to go over their performance with them and review their progress to date. You should cover all aspects of their performance i.e. the good as well as the alleged poor performance.
4. For those matters which are not up to standard you should specify what those are. You should specify how they are deficient.
5. Tell them how they need to improve. You need to be careful with these standards to ensure that they are the ones which you expect all staff to meet and you are not singling out this particular employee for onerous requirements.
6. This is where a Performance Improvement Plan (“PIP”) can be valuable to specify exactly how the employee needs to improve.
7. You should tell the employee that you want to set up a PIP to help them improve their performance.
8. You should tell the employee that the PIP will take place for a certain period of time, for example, 8 weeks. The time period you give will depend on the circumstances, including how you are asking the employee to improve and how long this might reasonably take.
9. You should include specific targets or KPIs in the PIP where possible. This makes it easier to measure the employee’s performance against specific goals.
10. You should consider whether the employee might need additional training or coaching to meet those standards, and how you could provide that to them. You may want to give additional time in the PIP if training or coaching is required.
11. You should allow the employee to give their feedback on the PIP to make sure they agree on the performance standards and targets that you expect.
12. You should record the PIP in a written document, so it is clear what the expectations are for the employee. The employer and employee should sign and date the PIP, once it is agreed.
13. You should then set up regular review meetings to review their performance against the PIP, for example, weekly review meetings.
14. You should tell them that they can have a support person at the review meetings.
15. You should monitor each aspect of their deficient performance in the periods between the meetings.
16. You should keep careful notes of how they are performing, what they are doing well, and what is not up to standard.
17. At each meeting, you should again set out how they are deficient, and how they are performing. You should ask for any explanation about why they have not met the standards you have set.
18. At the end of the PIP period, the employee may have improved their performance. You should then tell them that the performance issues are resolved and the PIP is no longer necessary.
19. If the employee has not yet reached the standards in the PIP, you might decide that further training or time is needed. You could then extend out the PIP timeframe to allow for additional time to improve, e.g. a further 30 days.
20. If the employee has not met the standards within the PIP, you may consider other courses of action available to you, making sure you meet your good faith obligations to avoid costly personal grievances being raised against you. Please see our Employers’ Guide to Performance Issues for further information.

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