By: Hugh Secord, B.A., M.B.A., CHRP. This article originally appeared in Canadian Labour Relations and Employment Law Topics. © CCH Canadian Limited.

Introduction
A performance improvement plan (PIP) is established when an individual is not meeting the minimum acceptable standards required of his/her position on a consistent basis. It involves a formal meeting between the individual and his/her supervisor/manager, and may include participation by a Human Resources (HR) representative, where warranted. The result of the meeting is a written action plan with specific goals and objectives and/or behavioural expectations.

A PIP can be an effective interim tool in organizations where the overall performance management process is not well developed. On the other hand, if an organization has a solid performance management process, a PIP may be redundant. When managers are well-trained and have the discipline to manage the performance of their subordinates on a continuous basis, employees always ought to be aware of where they stand in relation to the expectations and objectives of their roles.

Establishing a PIP
HR practitioners asked to introduce a performance management process for the first time, or faced with the prospect of having to rehabilitate an existing system, should consider starting with establishing PIPs for weak performers. By doing so, they may be able to showcase the tools HR can provide. This builds credibility and will help "sell" the overall performance process.

A PIP is not used in lieu of discipline in cases of culpable misconduct, where sanctions, including written reprimands, final warnings, and/or the termination of employment, may be warranted, based on a single incident of misconduct, or a repeated pattern demonstrating an individual's failure to abide by common rules set out for the protection of the company and its stakeholders (such as those found in a code of conduct). Rather, the PIP is designed to address situations where the person's overall performance in the role is wanting, or where there is a persistent failure to follow a specific practice or established protocols.

At times, an individual's performance may be reduced due to unforeseen external causes. Typically, such lapses in performance are short-lived and are treated as aberrations. When this occurs, the individual's supervisor/manager should meet and discuss any concerns with the person. Such discussions should be documented. However, human behaviour being what it is (i.e., unpredictable), these discussions are not always effective.

Where an individual's performance is persistently below standard for a prolonged period of time, and there have been attempts to counsel the employee and offer assistance, then the establishment of a PIP is indicated.

The PIP is generally a final step in attempting to correct performance issues or unwanted behaviours. In part, it is intended as a final warning to the individual that if there are not immediate and sustained improvements in his/her performance, the company will have to end the employment relationship. It is usually established to cover a 90-day period. However, if the employee has long service, an extension may be appropriate, provided there is evidence of an effort to improve and some measurable changes. An extension may also be appropriate in cases where responsibilities are complex, and it is reasonable to expect that the employee will need more time to demonstrate a sustained change for the better.

Setting Goals and Objectives
PIPs deal with performance issues related to a person's job responsibilities and/or the required competencies. A job responsibility may be outlined specifically in the person's job description, be described as part of the annual performance objectives, be an obligation under a policy or procedure, or be a general responsibility associated with the level of responsibility (such as submitting expense reports). Responsibilities can usually be described in terms of measurable outputs.

For example, a PIP may be established for salaried individuals in the following circumstances:

• persistent absenteeism (including tardiness);
• failure to submit reports (including expense reports) on a timely basis;
• failure to complete assignments on a timely basis;
• failure to return calls or respond to inquiries in a timely fashion; and
• any other failure to achieve measurable objectives or to meet the reasonable standard of performance.
  
  Note that in each of these instances, the performance issue is measurable. Therefore, the PIP should indicate the recent record of performance and the expectation in measurable terms, which can be illustrated as follows:

Responsibility: Maintain Regular Attendance
YTD—Missed 14 days in 10 instances = 7% absenteeism rate.

Goal—Maintain company average of 3% or no more than 3 days in the next 90-day period.

Responsibility: Submission of Expense Reports
YTD—All expense reports outstanding from May 2007 to date inclusively.

Goal—Bring expense reporting up-to-date by December 15, and thereafter to submit expense reports monthly by the second Thursday of each month.

In other instances, the performance issue may involve a competency or expected behaviour that may be difficult to quantify. A competency may be a defined skill or an expected behaviour (e.g., to provide leadership in the direction of employees in his/her area of responsibility). Nevertheless, such behaviours are observable and can be properly included in the PIP. Ideally, the action expected should be a positive action to rehabilitate a skill, rather than a negative step to extinguish a bad practice.

For example, if the employee is experiencing difficulties in customer relations, the appropriate action plan would not be expressed as "stop making demeaning or sarcastic remarks to customers", even though the company obviously wants those behaviours to stop. Instead, the action plan should require the employee "to attend a two-day customer relations course on Dec. 12 to 13, and report to his/her manager on Dec. 14 to discuss what he/she has learned".

In some cases, the individual may need to be coached continuously throughout the 90-day period. In these cases, the manager should require the individual to report the effect of the coaching on a bi-weekly basis.

Duration
PIPs are typically established for a 90-day period. The PIP may be replaced with a subsequent plan for an additional 90-day period in cases where there has been an effort on the part of the individual to make the necessary changes in his/her performance, and there has been notable improvement (though the actual results may fall short of the full expectations), and/or where there are significant mitigating factors, such as job complexity or long tenure. PIPs are not normally initiated for employees who have been hired on a probationary status.

Steps
1.A PIP will usually be initiated after the individual's supervisor/manager has had two or more documented counselling sessions to discuss his/her performance shortcomings. The specific number of counselling sessions will vary, depending on the type of issue and the years of service of the individual.

2.The supervisor/manager will meet with an HR representative to discuss the specific issues and draft a PIP (on the forms provided by HR) for the individual.

3.A meeting is held with the individual to:

• discuss his/her performance record in specific and, whenever possible, measurable terms;
• identify improvement goals in clear, measurable terms;
• agree upon specific action steps to be taken with time lines;
• identify any potential mitigating factors influencing the individual's performance;
• establish milestones to check progress; and
• agree on a follow-up date to evaluate if the required improvements have been made.

4.No later than the working day following the meeting the individual will be given a finalized copy of the agreed upon PIP (on the forms provided by HR) with a cover letter explaining the consequences of failing to meet the agreed-upon improvement milestones, and offering encouragement and support to the individual.

5.On a weekly basis, the supervisor/manager will check on the individual's progress. Whenever a specific milestone has been established, the supervisor/manager must follow up with the individual to ensure it has been met. Meetings with the individual are always documented.

6.Whenever the individual is required to attend a training course to improve a skill or learn a behaviour, the supervisor/manager will meet with the individual on the following day to discuss what was learned and how it will be applied to the job.

7.If there are early indications that the individual is not applying the required effort or is otherwise failing to meet the agreed-upon goals/objectives, he/she must be reminded of the potential consequences.

8.Two or three days prior to the expiry of the 90-day period, the supervisor/manager should meet with the HR representative to discuss the individual's progress and the likely consequences. If the termination of the individual's employment is indicated, the HR representative will ensure that the appropriate approvals are secured and a proper package is prepared for the individual.

9.At the end of the 90-day period, at a time arranged in the initial meeting, the supervisor/manager will meet with the individual and review the results of the plan. If the individual has met the goals and objectives, the supervisor/manager should acknowledge the effort verbally and follow-up in writing. If good progress has been made, the supervisor/manager, in consultation with the HR representative, may extend the PIP for an additional 90-day period. If no effort has been made or progress indicated, the individual will be terminated.

10.The HR department will determine when the termination may be for cause or when a severance package is appropriate.

Used properly, PIPs generally have a high success rate. They provide tremendous value, because instead of rushing to terminate the employee, the company needs to make only a relatively small investment in time and effort in order to save a potentially valuable resource.

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