Firing an employee and hiring and training their replacement can come at a great financial cost for a business. Research indicates that it costs U.S. businesses $4,000 to hire a new employee, a statistic that doesn’t take into account the new employee’s salary, the possibility of a severance package for a former employee or the considerable amount of time that onboarding and training can take.
To counter this, many organizations implement performance improvement plans (PIPs) to attempt to improve the performance of underperforming employees. “A PIP should be used when poor performance has reached the point where negative employment action such as demotion or termination is the next step, and the organization wants to ensure that performance expectations have been made clear prior to doing so,” says Ivelices Thomas, CEO of HR & Beyond.
Firing employees is never easy, and it should be done only as a last resort. However, helping employees improve their performance with a PIP isn’t always as simple as it sounds. Here are some best practices to ensure that your organization’s PIPs help both managers and employees avoid having the ultimate difficult office conversation.
When drafting a PIP, managers should set clear expectations for improvement. They should be clear about the metrics the employee will be measured by. Managers should also consider the timetables they will be using, says Matthew Burr, owner of Burr Consulting. He recommends including specific action items that must be completed within a specific period of time, such as 30 days, 60 days or a year.
Burr also says that crafting a PIP shouldn’t be purely a matter of mandates. “There should be buy-in from the employee as well,” he says. “They should have an opportunity to have input in the process.” While managers don’t have to include all of the employee’s opinions, the input can help craft a PIP tailored for the employee’s needs.
Thomas says that whenever managers are thinking of implementing a PIP, they should turn to HR for guidance. “HR should always be a partner to the process,” she says. HR can provide guidance on whether a PIP is appropriate and can provide templates and documents that managers can reference when drafting a PIP. Once the document is drafted, HR can also work with the manager to ensure that it reflects the goals they have in mind.
HR’s role should continue during the implementation process. “HR can sit in on the conversation that occurs between management and the employee to ensure everyone is clear on the direction going forward,” Thomas says. The presence of a third party can help defuse tense situations, and HR can also serve as a mediator should issues arise.
Finally, managers should make sure that employees are held accountable for meeting the goals in their PIP. Burr says many PIP efforts don’t work as well as they should because managers don’t take the time to follow up. As part of your PIP, plan for annual follow-up meetings and be sure to track the employee’s process. “If you’re serious about this process, you need to take the initiative and set up the meetings,” Burr says.
Also, if the employee isn’t meeting the expectations set by their PIP, managers should resist the urge to provide wiggle room. Whatever action a manager takes — whether it’s termination or a demotion — must be taken decisively. “It just simply takes the bite out of a PIP if there are no true consequences,” Thomas says.