Performance Improvement Plans(PIP): A gold standard HR tool or an easy way to get rid of white-collar employees?
In market parlance, Performance Improvement Plans (PIP) are considered to be a regimented process for dealing with employees who are having recurring performance issues. When administered correctly, the exercise aims to chalk out tangible improvement areas, which an employee needs to work upon, in a stipulated time period.
Ideally, an employee and the concerned manager both sign on key result areas (KRA), deliverables, and timelines before a PIP commences. This is then followed by periodic reviews in the presence of the HR, where the employee and manager discuss progress and feedback.
Despite being a widely used and accepted HR tool, PIP has earned an awful reputation among employees across all sectors. It is often popularized by negative terms such as death sentence, black hole, and a mere corporate hoax that facilitates firing.
The Hush team spoke to four industry experts and a small group of employees from different backgrounds to evaluate the good, bad and ugly side of PIP.
To start with, a noticeable drop in an employee’s performance and poor work ratings trigger the process of PIP. “Circumstances like a change in supervision, change in working conditions or change in scope of work are examined as potential causes for the performance dip,” says Neha*, Global HR Head of an Engineering Company.
Sometimes, other factors such as fitment and skill issues validating the need for training can also be considered. However, PIP is seldom for skilling, according to Neha*.
As more companies are hiring from diverse backgrounds, managing performance is a greater task for managers. People with similar backgrounds and work experience may face fewer problems as compared to those with varied skill sets. In this context, people who are competent, but for some reason, flat in terms of performance are also considered for PIPs.
In some IT firms though, PIPs are solely tied to the rating system. Rohan* started as an entry-level employee and rose up to hold managerial roles in Accenture. For five years, he worked at various company offices across India.
“Employees who receive a D or an E rating are the ideal candidates for PIP. Hence, there is no way those employees could not see it coming,” he shares from his personal experience.
Ideally ranging between 30-90 days, PIP mandate that employees are monitored through weekly or bi-weekly reviews. 46-year-old Kamal Karanth speaks from his 18 years of experience as a Talent Specialist. Having previously written about it, he terms the PIP exercise as ‘a tool to push employees’.
“Many times it acts like an intimidation corner, where employees are observed under various lenses,” says Kamal, who also co-founded Xpheno, a Specialist Staffing Firm.
“In operations, administering PIP is teamwork as the employee is just another cog in the wheel. But in sales, where the achievable targets are rather tangible, it is a black and white situation with set consequences to follow,” Kamal adds.
Often failure to succeed in a PIP leads to transfer to lateral roles and in worst cases, termination.
Fair hearing v/s firing decisions
So are employees given a fair chance to express their concerns and file a rebuttal, if need be? Technically, yes, says Rajesh Singh, HR Head of KPIT Technologies.
In most PIP cases, honest feedback is sought before improvement areas are decided upon and conveyed to employees. “Though they have a right to disagree, their concurrence is not needed,” to administer the PIP,” adds Rajesh.
Employees have little or no chance to resist a PIP as it is a performance related intervention that is backed by data that proves poor performance. “If they decide to not adhere to the policy then they can face disciplinary action on account of misconduct,” says Neha*.
Most of the employees that Hush spoke to did not believe that they were given a reasonable chance to explain.
“PIP is the easiest way Indian companies get rid of white-collar employees. They should just call it a layoff instead,” shared Varun*, who resigned from a leading MNC after failing to launch a rebuttal.
“Though my targets were workable, I did not receive any help, support or coaching to improve my performance,” said Manjunath*, who works for a retail firm headquartered in the UK.
Explaining a worst case scenario where the decision to fire an employee was made beforehand, Aaron* shared, “My manager directly told me to start looking for other jobs when he told me about the PIP.” In such cases, the objective is to mostly to build documentation that justifies the resignation or termination.
The entire PIP administration phase, including the stringent monitoring, can be quite tedious and harsh. Many employees cited having been stripped of key project roles. “Instead, they kept piling all the low-end work on me,” shared Rithvik*, a management trainee working at an FMCG major.
Employees also shared having sat through reviews that were overwhelmingly negative.
Impacts employee morale
Hush also spoke to Vignesh*, a Senior Manager rank employee who works in the Information Technology Enabled Services (ITeS) sector. In his 24 years long career, he had had to undergo PIP twice. He shared his experience of having fought back both times.
“I took my first PIP, which had irrational goals and no timeline as such, as a challenge. Though I sought outside counsel to deal with it, it was mostly about taking success revenge”.
Whereas his second PIP was characterized by doable action plans. “In ten days, they provided me with some data points that I knew were no valid proof. But I accepted it anyway,” he says. “Though the manager himself was shocked about me being put on PIP, I told him to do his job while I do mine”.
As someone who has both undergone the procedure and put people on PIP himself, Vignesh* feels the exercise brings much agony to employees. “Though I went on a competing mode, I could not keep calm all the time. The thought of looking out for other opportunities crossed my mind more often than not.”
Since there is significant stereotyping associated with being put on PIP, the entire procedure tends to be administered secretively. “But the news manages to trickle out anyway,” adds Vignesh*.
In contemporary times, PIPs are also commonplace in Indian startups. We spoke to Dheeraj*, who underwent a PIP in one of the unicorn startup companies based in Bangalore.
“The HR practices at Indian startups are so shambolic that there was no one I could speak to after my manager put me on the PIP,” shares Dinesh*. “I knew they wanted me out when I was not given clear targets to follow during the PIP process,” he adds.
In many IT firms, PIPs are also used as an excuse to part ways with employees whenever their performance is below expectation in the Annual Review. The case is the same with regard to macro-economic reasons (of companies incurring losses) that lead to downsizing.
Neha* says, “It is a polite way of giving someone time to find their next job. Also, many employees choose to resign instead of going on 30 days PIP. Either way, the objective is met”.
Of biases and procedural fairness
In her 16 years of experience, Neha* has also come across personal biases of managers in choosing to put certain employees on PIP.
“In most cases, managers do not view this as an intervention tool, it is more of a last resort where they have mentally signed off on the resource,” she says.
However, according to Rajesh Singh, PIPs are still an opportunity that largely provides employees with “procedural fairness”.
While agreeing that managerial biases do exist, he opines they can be best avoided when PIP is executed as a calibrated exercise. “I personally make sure that I do not rest all key talent decisions and responsibilities on just one person”.
The way PIPs are stringently implemented also differs with different kinds of industries, according to Samarth*, an HR expert with two decades of work experience.
“The knowledge-based industries are more accommodating and give genuine chances for their employees to improve. But that is not the case with target driven organizations, which are quite aggressive on their employee expectations,” he said.
“The HR plays the role of a conscience keeper in this regard for they have the moral responsibility to ensure an employee gets a fair chance,” adds Samarath*.
Often these chances for improvement and investment in training are mostly dependent on the credibility and longevity (of experience) of an employee in the company.
Dismal success rate
Almost all the HR executives that Hush spoke to were skeptical of PIP being used as a successful tool to uplift employee performance. According to Kamal Karanth, “It is an important exercise if the intentions are true”.
Kamal and Neha* concur in capping the number of employees who fail a PIP or alternatively resign at a staggering 90 percent. Rajesh estimates this number to be at 80 percent.
Rajesh Singh feels that PIPs are till date, a very structured exercise of letting go of low performers. “However, it is difficult to say how much value it really adds,” he says.
These numbers speak for itself and reiterate the popular belief among employees that people rarely survive PIP. Kamal also believes that most companies do not document PIP data with at most seriousness.
“The guidance that companies need to give its struggling employees is supposed to be generous. But making time for employees is a greater challenge, especially in the current scenario where job-hopping so frequent. In this context, the inclination to help inevitably decreases and things do not get recorded properly”. However, both Neha* and Rajesh believe that proper documentation precedes a PIP and all the subsequent reviews are duly recorded.
In present times, many companies are trying to move away from the bell curve structure that mandates rating systems. Neha* feels this will make way for employees to course correct their performance through in-time feedback alone.
Samarth* lists three measures that companies can adopt to boost employee performance. “First, companies need to help their employees to understand their strengths. Second, they need to facilitate an ongoing dialogue on performance-related outcomes. Lastly, organizations should lead by showing what doing well in terms of performance looks like”.
Some of the employees Hush spoke also shared personal anecdotes of how PIP experiences in their career had a lasting impact on their personal life too.
Rithvik* says: “I ended up seeing a therapist by the time the PIP ended. Moreover, it left me shattered and I was scared because I did not know when to expect what in the other companies as well.”
Echoing other employee expectations, Manjunath* feels companies need to consider gathering 360-degree feedback on an employee’s performance before a PIP decision is made. “They also need to set realistic goals and provide necessary coaching that facilitates growth”.
“Most importantly, employees should be given an opportunity to debate whether they deserve to be placed on PIP,” opines Varun*.
As more companies look to embrace agile working structures and enhanced employee engagement, there is a greater need for HR tools like PIP to be implemented in more accountable and employee-friendly ways. Simple measures like avoiding hiring mistakes, facilitating continuous feedback and improving the way PIP are communicated and administered can go a long way in this regard.
We at team Hush hope that PIP are executed more objectively at workplaces (both in letter and philosophy) in the coming days.
*- Names changed on request to protect anonymity.