How to turn struggles into success with performance improvement plans (PIPs)

Maintaining high performance standards is crucial in today’s dynamic business environment. It ensures that companies remain competitive, meet customer expectations, and drive innovation.

However, there are times when employees may struggle to meet and maintain these standards. This is where Performance Improvement Plans (PIPs) come into play. In many workplaces, PIPs are a structured way to address performance issues while fostering a supportive and collaborative environment.

While some leaders see PIPs as an annoying final hurdle to jump before ‘getting rid’ of a low performer, strong leaders believe that with a mutual clarity of gaps and a shared willingness to improve – that success is well within reach.

What is a Performance Improvement Plan?

A Performance Improvement Plan (PIP) is a formal document that outlines specific areas where an employee’s performance needs improvement. It includes clear objectives, timelines, and the support that will be provided to help the employee meet these goals. The primary aim of a PIP is not to punish; but to provide a structured pathway for employees to enhance their performance and succeed in their roles.

When and How are PIPs Used?

PIPs are a tool for leaders to use, however sometimes there can be confusion as to when and how to use them.

When to Use a PIP:

1. Consistent underperformance: When an employee consistently fails to meet performance standards despite informal feedback, support and coaching.
2. Specific incidents: Following specific incidents of poor performance that significantly impact the team or business.
3. Developmental needs: When an employee shows potential but requires structured guidance to reach their full capabilities and desired performance levels.

How to Implement a PIP:

1. Identify the issues: Clearly identify the performance issues. This should be based on objective data and specific examples. Performance issues will be different for each employee. Ai Group's Workplace Advice Line can help with developing an approach suited to an employee’s individual circumstances.
2. Develop the plan: Create a detailed plan that outlines the performance issues, the expected standards, and the steps the employee needs to take to improve. Include measurable goals and a realistic timeline. Employers can access our How to Write SMART Goals and Objectives resource for further support.
3. Communicate with the employee: Hold a meeting with the employee to discuss the PIP. Ensure the conversation is constructive and supportive. Explain the reasons for the PIP, the expectations, and the support that will be provided. Ensure procedural fairness is upheld. 
4. Provide support: Offer the necessary resources, training, and support to help the employee succeed. This could include mentoring, additional training, or adjustments to their workload. Understand any mitigating circumstances that could be impacting performance.
5. Monitor progress: Regularly review the employee’s progress against the PIP. Provide ongoing feedback and adjust the plan if necessary.

Working in Partnership with the Employee

A key aspect of a successful PIP is the partnership between the employer and the employee. This collaborative approach ensures that the employee feels supported and motivated to improve. Here are some strategies to foster this partnership:

1. Open communication: Maintain open and honest communication throughout the process. Encourage the employee to share their thoughts and concerns.
2. Empathy and understanding: Show empathy and understanding. Recognise that performance issues can be stressful, and that the employee may need time to adjust.
3. Positive reinforcement: Celebrate small wins and improvements. Positive reinforcement can boost the employee’s confidence and motivation.
4. Flexibility: Be flexible and willing to adjust the PIP if necessary. If the employee is making genuine efforts but struggling with certain aspects, consider modifying the plan to better suit their needs.

Employer considerations

When implementing a Performance Improvement Plan (PIP), employers need to consider several legal and industrial relations aspects, particularly those outlined in the Fair Work Act 2009 and the National Employment Standards (NES). Here are some key considerations:

Fair Work Act 2009

• Procedural fairness: Employers must ensure that the PIP process is fair and transparent. This includes providing the employee with clear information about the performance issues, the expected improvements, and the timeframe for achieving these improvements.
• Right to a support person: During meetings related to the PIP, employees have the right to have a support person present.
• Unfair dismissal Protections: If the PIP leads to termination, employers must ensure that the dismissal is not harsh, unjust, or unreasonable. This includes providing the employee with a reasonable opportunity to improve their performance.

National Employment Standards (NES)

• Requests for flexible working arrangements: Raising performance issues with an employee may bring to light personal circumstances that are impacting on the employee’s work performance, such as an underlying medical issue or family and domestic violence. In these cases, an employee may want to request a change to working arrangements under the NES.
• Notice of termination: If the PIP results in termination, the employer must provide the employee with the appropriate notice period or payment in lieu of notice, as specified in the NES.

General Best Practices

• Clear Documentation: The PIP should be well-documented, outlining specific performance issues, expected improvements, and the consequences of not meeting the expectations.
• Regular Reviews: Employers should conduct regular reviews during the PIP period to provide feedback and support to the employee.
• Consistency: Apply the PIP process consistently across all employees to avoid claims of discrimination or unfair treatment.

By adhering to these guidelines, employers can manage performance issues effectively while complying with Australian employment laws.

PIPs are catalysts for growth and improvement

Performance Improvement Plans are not just tools for addressing performance issues; they are catalysts for employee growth and development. By fostering a collaborative and supportive environment, employers can unlock their team’s full potential.

In Australia, where fair treatment and employee support are paramount, a cooperative approach to PIPs is crucial. Ultimately, the success of a PIP lies in the partnership and mutual respect between employer and employee, driving both towards sustained and meaningful progress. PIPs are not the easy way out and they are certainly not a ‘short cut’ to termination. They may just be the one thing that can steer your employee back on the road to success.

Further information

For assistance with your workplace matters, Members of Ai Group can contact us or call our Workplace Advice Line on 1300 55 66 77 for further information. Ai Group has an extensive performance management section offering members a range of tools, resources and support to optimise and manage performance. 

Managing Termination Handbook

Ai Group's Managing Termination of Employment Handbook is a comprehensive and practical guide designed to assist employers avoid expensive claims dealing with dismissal from employment, through practical advice and case examples.

Ai Group's Managing Termination of Employment Handbook includes the following topics:

• An overview of the national unfair dismissal regime under the Fair Work Act 2009
• A step-by-step process to help you manage poor performance and misconduct, including conducting investigations
• Guidelines for developing a company disciplinary procedure
• Examination of general protections and unlawful termination under the Fair Work Act 2009, including failure to give notice or provide redundancy pay, as well as dismissal for certain discriminatory reasons
• Sample documentation.

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