Learn how SaaS leaders can use Performance Improvement Plans (PIPs) to build high-performing teams. Explore a structured, collaborative approach that drives accountability, improves outcomes, and protects long-term team culture and business performance.
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Performance Improvement Plans (PIPs) often carry a negative reputation as a “last stop” before termination. However, when properly designed and collaboratively implemented, PIPs can be powerful tools that help managers achieve positive outcomes – either by enabling genuine improvement or by creating smoother, lower-cost exits. The key is to treat a PIP not as a punishment, but as a communication and development plan. By clarifying expectations, fostering employee ownership of progress, and maintaining a fair, structured process, managers can turn a PIP into a win-win mechanism.
One of the greatest benefits of a well-crafted PIP is the crystal-clear clarification of performance expectations. Miscommunication or vague expectations often underlie performance issues. A proper PIP eliminates ambiguity by spelling out exactly where the employee is falling short and what standard is required going forward. Effective PIPs avoid generalities – instead of saying “improve your performance” they pinpoint specific gaps (e.g. missed sales targets or frequent missed deadlines) and provide concrete examples. This level of detail ensures the employee and manager have a shared understanding of the problem. Some managers find that a formal PIP is the first time an employee understands that their performance is unsatisfactory. By documenting the issues in writing and reviewing them together, the manager greatly reduces the chance of misunderstandings about what “good performance” looks like.
Clear communication in a PIP isn’t one-way—it should be a two-way dialogue. Managers should take time to discuss the expectations with the employee to confirm mutual understanding and agreement, rather than simply handing over a document. This is where the Situational Leadership® methodology can be especially effective. It encourages managers to tailor their leadership style to the readiness and needs of the individual—providing more direction or support depending on where the employee is in their development. This adaptive, collaborative approach helps ensure that goals are interpreted the same way by both parties and that any potential misunderstandings are addressed early. As the Society for Human Resource Management's (SHRM) article "When to Turn to PIPs and When to Skip Them" notes, “effective managers communicate clearly with the employee to give that employee a chance to improve.” In short, a PIP serves as a written roadmap for improvement: both parties can refer back to the documented expectations to stay aligned, preventing the kind of miscommunication or “surprise” that derails improvement efforts.
Accountability Through Employee-Led Tracking
A properly implemented PIP doesn’t just set expectations – it establishes accountability for meeting them. A best practice is to involve the employee in documenting their progress and tracking milestones, rather than the manager alone acting as scorekeeper. For example, the PIP can require the employee to maintain a weekly log of achievements related to their PIP goals and to report on these in regular check-ins. Tracking the employee’s achievements, challenges, feedback, and action steps using a shared PIP Template or tool creates transparency and shared responsibility for improvement. When employees take the lead in reporting their progress, they internalize the accountability, it’s not just the manager monitoring them, but the employee actively monitoring themselves.
This sense of agency, “I am in control of improving my performance and monitoring my growth” strengthens accountability. It also provides a sense of fairness: nothing is hidden, and the employee can see in writing that if they meet the spelled-out targets, they will successfully complete the PIP. In summary, joint documentation and tracking turn the PIP into a transparent project with the employee as a responsible participant, not a passive subject.
Improvement or Dignified Exit: Either Way, a Positive Outcome
When a PIP is run correctly, there are two possible outcomes – and both can be positive in their own way.
This is the ideal scenario: the employee grows in their role, and the manager avoids losing a team member. The benefit to the organization is not only retaining talent (and avoiding the costs of replacement) but also likely gaining a more engaged employee. After all, an employee who successfully completes a PIP has demonstrated perseverance and likely built new skills or habits. They often come out the other side with higher confidence and clarity in their role, which can translate into improved productivity and contribution to the team. In essence, a good PIP can help employees make positive improvements that benefit the business.
If the employee does not end up meeting the standard, a well-handled PIP paves the way for a smoother, more dignified exit. By the end of a thorough PIP process, there should be no surprises. The employee has been given clear expectations, support, and ample opportunities to improve, all documented along the way.
If they still fall short, they often recognize that the role is not a fit. In many cases, underperforming employees will choose to resign before an involuntary termination occurs, precisely because the PIP made the situation transparent. SHRM points out that allowing an employee to resign in such situations can “offer a more dignified exit for the employee and potentially reduce legal risks for the employer.” Rather than a sudden firing, the separation becomes a mutual understanding – the employee can frame it as a voluntary resignation (saving face and avoiding a “fired” mark on their record), and the employer avoids the ugliness of firing and possibly a wrongful termination claim.
Even if the employee doesn’t resign preemptively, the final stages of a PIP often involve a frank conversation where the manager and HR may offer the option of resignation in lieu of termination. This approach is commonly seen as a respectful alternative in cases of continued performance shortfalls. It allows the individual to maintain some dignity and can preserve a workable relationship (important if, for instance, you might encounter the person in the industry later or if they might be suitable for a different role in future). From the manager’s perspective, an amicable exit is far better than a protracted, contentious one. It’s also typically lower-cost – there may be no need for costly litigation or excessive severance if the process is handled fairly. In the 2024 Wall Street Journal article, "The Most Hated Way of Firing Someone Is More Popular Than Ever. It’s the Age of the PIP" one employment attorney noted that a PIP provides “written evidence that an employee received a fair warning before dismissal” which can be invaluable if any legal questions arise later. In other words, the PIP process itself is a safeguard: either it succeeds in improving the performance, or it creates a clear record that the employer “did the right thing” by the employee, making any eventual termination far more defensible.
Beyond the immediate outcomes for the individual employee, well-implemented PIPs carry wider benefits for the team and organization.
We’ve hinted at the legal protection aspect – by documenting performance issues and the employer’s attempts to help the employee improve, a PIP demonstrates fairness and due process. Should the situation lead to termination, the company has a paper trail to counter any claims of arbitrary or discriminatory firing. Many HR professionals live by the adage, “if it’s not in writing, it didn’t happen,” and a PIP ensures the performance issues are in writing. Moreover, as noted above, voluntary resignations prompted by a PIP can reduce legal risk further (and even relieve the employer from certain obligations like unemployment insurance in some jurisdictions). In sum, proper PIPs reduce the legal and financial risks associated with managing out poor performers.
Terminating an employee outright and hiring a replacement is expensive – recruiting, onboarding, and training a new hire can cost thousands of dollars and several months of lost productivity. If a PIP succeeds in turning around an employee’s performance, the company avoids those turnover costs. Even if the PIP does not salvage the employee, it may still lead to a lower-cost exit. Often, the PIP period is used to transition knowledge or duties gradually, so that if the employee leaves, the team is better prepared to pick up the slack. Additionally, some employers negotiate a shorter PIP or a modest severance in exchange for a resignation (as a “dignified exit” strategy), saving on paying a prolonged salary for an unproductive employee and on potential litigation or unemployment claims. From a purely dollars-and-cents perspective, addressing performance issues early via a PIP can be much cheaper than letting poor performance fester (which drags down results) or abruptly firing (which incurs replacement costs). As one legal insight from SHRM put it, a PIP that leads to improvement “avoid[s] the risk and disruption of terminating the employee – not to mention the cost of recruiting and training a replacement.”
When underperformance is handled in a fair, transparent manner, it sends a positive message to other team members: the organization supports people in getting better rather than just blaming or shaming them. This can boost overall morale and trust in management. Teams often know when someone is not pulling their weight; seeing the manager address it with a structured plan reassures high performers that standards matter (and that they won’t be stuck compensating indefinitely for a low performer). If the colleague improves, the team benefits from their improved contributions. If the colleague exits, the team sees that the issue was resolved appropriately. Either way, the team’s morale is likely to rise compared to the alternative scenarios of doing nothing (breeding resentment) or arbitrary firing (breeding fear). A culture that emphasizes coaching and second chances – but also holds people accountable – makes employees feel secure and valued. Far from being a dreaded HR formality, a well-run PIP can exemplify a company’s commitment to fairness, development, and high performance, which is the kind of environment in which most professionals do their best work.
Hand-in-hand with accountability comes the psychological impact of giving the employee ownership in the PIP process. Traditional, top-down PIPs often invoke fear and resentment – employees perceive them as a prelude to being fired and feel they have no control over the outcome. A collaborative approach flips that dynamic. When the employee helps shape the improvement plan and actively participates in tracking progress, they gain a sense of control and autonomy in what happens next. This can significantly change their mindset from defensiveness to determination.
Experts emphasize that PIPs should empower employees and be collaborative with the employee feeling supported rather than isolated. In practice, that means managers should solicit the employee’s perspective when identifying root causes for problems and when brainstorming solutions. For instance, ask the employee: What do you think is hindering your performance, and what ideas do you have to improve? Involving them in diagnosing issues and crafting the action plan gives them ownership of both the problem and the solution. Psychologically, we know that people commit more to goals they have helped set. Thus, a co-created PIP is far more motivating than an imposed one. It signals that the organization wants the employee to succeed (since they are investing time in a plan) and that the employee has a say in how they will reach success.
Another powerful aspect of giving employees ownership is reducing the anxiety and stigma often associated with PIPs. Instead of feeling like a passive defendant on trial, the employee plays the role of an active project manager of their own improvement. This sense of control can alleviate the feelings of helplessness that often come when someone is put “on notice.” It also encourages a “growth mindset” the employee can see the PIP as an opportunity to learn and grow with management’s support, rather than a punishment. Indeed, a well-structured PIP implemented in a supportive way can signal to colleagues that continuous improvement is part of the culture, which removes some of the shame an employee might feel. Co-workers see that the person is working through a structured plan (with help) as opposed to being publicly shamed. All of this contributes to a healthier psychological environment where the employee is more likely to engage positively with the PIP. In short, giving employees a degree of ownership and control in the PIP process taps into their intrinsic motivation and can transform a demoralizing experience into a genuinely developmental one.
Common Pitfalls and How to Avoid Them
To realize these benefits, managers must implement PIPs thoughtfully. Unfortunately, there are some common mistakes that undermine PIP effectiveness. Here are frequent pitfalls managers encounter with PIPs – and how to avoid them:
A vague PIP is an ineffective PIP. Stating that an employee’s performance is “unsatisfactory” without detailed specifics leaves them guessing what to do. Avoid imprecise language (e.g. “Improve your attitude” or “Work harder”). Instead, be extremely specific about the performance issues (what behaviors or results are below standard, with dates or data) and exactly what improvement is expected. For example, rather than “increase sales,” you might say “achieve at least X% of your $25,000 monthly sales target in the next 60 days.” Specificity sets the employee up for success by removing ambiguity.
Sometimes managers, out of frustration, set PIP goals that are virtually unattainable (“improve from 50% to 100% in one month”). This can doom the PIP from the start and destroy trust. Ensure that improvement objectives are challenging yet realistic and achievable within the timeframe. This often means using the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound) for each goal. Ask yourself if a reasonable person in that role could meet the targets with hard work and the provided support. If not, adjust the goals. A PIP is not a trick or a test – it’s a genuine opportunity to improve, so the targets must be credible.
A PIP is not just a list of demands on the employee; it should also document what support the manager and company will provide to help meet those demands. A common mistake is failing to offer training, coaching, or tools that address the root causes of poor performance. To avoid this, include a section in the PIP outlining support (e.g. “Manager will provide weekly coaching on X,” “Company will fund advanced Excel training course,” or schedule pairing the employee with a mentor). Then follow through on these commitments. An employee can’t succeed if they feel set up to fail – if skill gaps or resource issues are part of the problem, they must be addressed as part of the plan. Offering robust support also shows the employee that the organization is invested in their improvement, which can increase their motivation to change.
Treating a PIP as a one-way proclamation (“sign here, and fix these things by yourself”) is a serious misstep. When managers deliver a PIP by email or simply read it off without discussion, they miss the chance to get the employee’s buy-in and insights. Avoid administering a PIP in a cold or impersonal way. Instead, hold a face-to-face meeting (with HR present if appropriate) to introduce the PIP. Encourage the employee to ask questions and even take a day or two to digest the plan and come back with input. If the employee raises genuine concerns or clarifications, be willing to adjust the plan (within reason). This dialogue signals that the PIP is a collaborative effort, not an ambush. As one expert noted, don’t consider the initial PIP meeting “the last word” – the employee may come back with questions, which is a good sign that they care and want to improve.
Managers are human, and dealing with poor performance can be frustrating. But letting that frustration show in a PIP process is a mistake. Scolding, shaming, or displaying anger will only put the employee on the defensive or crush their morale. Also, some managers avoid frank discussions because they fear hurting the employee’s feelings, resulting in a too-gentle PIP that downplays issues. Both extremes are problematic. Maintain a calm, professional tone throughout the PIP process – be direct but supportive. Deliver constructive feedback without personal attacks. Pick a time for the PIP meeting when you (the manager) are level-headed, not right after a major incident when emotions run high. By being calm and factual, you keep the focus on improvement, not punishment. Likewise, be honest about deficiencies; sugarcoating helps no one. The employee is likely already stressed; your demeanor should be firm but encouraging, reinforcing that the goal is to help them succeed if possible.
Perhaps the most common pitfall is treating a PIP as a box-checking exercise – issuing the document and then not actively managing the process. This can happen if a manager’s mind is already made up to fire the person, or if they simply get busy and neglect the check-ins. It’s demoralizing for an employee to be put on a plan and then left adrift with no feedback until the end. To avoid this, follow the plan’s timeline rigorously. Conduct the scheduled check-in meetings and document each one. If the plan says 60 days, don’t ignore the employee for 60 days – work with them continuously. Also, stay open-minded to the possibility of improvement; don’t sabotage the PIP by withholding praise when progress is made. A savvy manager will recognize and reinforce any successful progress during the PIP to encourage the employee’s continued improvement. Even if ultimately the improvement is insufficient, you want to be able to show (to the employee and perhaps to a court or HR review) that you gave every reasonable chance and support. Consistency and good faith effort are key.
By avoiding these common mistakes, managers greatly increase the odds that a PIP will be fair, effective, and viewed as a legitimate developmental effort rather than a cynical paper trail. In essence, treat the underperformer the way you would want to be treated if the roles were reversed – with clarity, fairness, and respect – and you’ll likely steer clear of most PIP pitfalls.
To pull everything together, it’s worth looking at the structure of a strong PIP document. A recommended PIP template will include several key components that encapsulate the points discussed above: clear expectations, specific goals, support measures, and a plan for tracking progress. Below is an example of a PIP format that a manager might use:
Figure: Sample structure of a Performance Improvement Plan. This template lays out the employee’s role expectations, specific areas of concern, and concrete improvement goals with measurable milestones. A well-structured PIP clearly defines what “success” looks like and how progress will be measured over a defined period.
As the sample illustrates, a comprehensive PIP document typically contains:
Employee’s name, position, manager’s name, and the start and end dates of the PIP. Defining the time frame (often 30, 60, or 90 days) is important to create urgency and a clear deadline for improvement. It also states the review period and sets the expectation that performance will be evaluated at the end of this window (though it may be extended if there is some progress).
A brief summary of what satisfactory performance in the role looks like. This section is essentially the baseline standard the employee is expected to meet. For example, it might list key job duties or targets (e.g. “Consistently meet sales targets; maintain customer satisfaction rating of X; comply with all project deadlines”). This reminds all parties of the yardstick against which the employee is being measured.
Specific performance deficiencies or behaviors that are not up to standard. This is where the manager itemizes the issues to be fixed, with concrete examples. In the sample figure, for instance, the areas of concern included “not meeting sales targets” and “spending insufficient time on prospecting” – these are clear, observable issues. Listing them ensures there is no confusion about which aspects of performance need improvement. Each concern should tie back to the role expectations above.
For each area of concern, the PIP outlines one or more improvement goals or required actions. These goals should be measurable and time-bound. A good template uses a two-column format: one column for the goal description and one for the specific metric or milestone. In the sample, goals like “Cold calling new prospects weekly” have a corresponding measurable target (“10 hours per week”) to eliminate guesswork. Similarly, “Bring in new clients monthly” might be paired with “Set up 6 meetings per week” as a milestone, and so on. This structured approach makes it very clear what success looks like (e.g. the employee will be evaluated against whether they achieved these numbers). Always ensure these targets are aligned with the level of improvement needed – essentially, they are the bridge from the current state to the desired state.
A section detailing what support will be provided to help the employee achieve the goals. This could include training sessions, coaching meetings, shadowing opportunities, tools or software, adjustments in workload, etc. For example: “Manager will meet with employee every Monday to provide feedback on sales pitches,” or “Company will enroll employee in Advanced Excel course by [date].” Including this shows the plan is two-sided – not just “you must improve” but also “we will help you improve.” It aligns with best practices that focus on support and root causes (if lack of skill is an issue, training is offered; if workload is an issue, priorities are adjusted).
A list of scheduled meeting dates (and possibly times) for formal check-ins during the PIP period. These are calendar commitments for both manager and employee. This removes any ambiguity about when progress will be reviewed and prevents “out of sight, out of mind” syndrome. It also gives the employee mini-deadlines to work toward – e.g. by the first check-in, perhaps goal A should be trending upward. In each meeting, the manager and employee will discuss status on each goal (this is where RYG ratings or notes can be logged). Having the schedule in writing also signals how serious the process is.
The PIP should plainly state what will happen if the employee does not meet the improvement goals by the end of the plan. Typically, this is a statement that failure to improve to the stated level may result in further disciplinary action up to and including termination. In the sample template, it is clearly noted that failing the PIP will result in termination of employment. This might feel stark, but it’s important for legal clarity and to impress upon the employee the gravity of the situation. There should be no uncertainty on this point – the employee needs to know the stakes. At the same time, the tone of the PIP remains hopeful and focused on improvement; consequences are listed as a standard protocol, not a threat.
Finally, an area for the employee and manager (and sometimes an HR representative) to sign and date the PIP, acknowledging that it has been reviewed and understood. Getting the employee’s signature is ideal (it signifies they have received the plan). If they refuse to sign, the manager can note the refusal; the plan still proceeds. In practice, most employees will sign, especially if the PIP has been reviewed in conversation. Both parties should keep a copy. The signature process underscores that this is a formal, agreed-upon plan.
This structured template acts as a step-by-step contract for improvement. It clarifies expectations, responsibilities, and timelines for everyone involved. Managers can refer to it during check-ins to keep discussions objective (“As per our plan, your goal was X; currently you’re at Y; let’s talk about how to close that gap before the next meeting”). Employees can use it as a checklist and diary (“What have I done this week toward Goal 1, Goal 2, etc.?”). Many organizations provide standardized PIP forms or templates for consistency. What matters most is that all the above elements are covered in some form – this ensures the plan is comprehensive.
In terms of progress tracking, the template provides the skeleton, but managers and employees will fill in the flesh during the PIP duration. At each check-in, it’s wise to document the status of each goal (e.g., note if the employee met the interim milestone or how far off they were). If you’re using a scoring or color system, update that in the document. For example, after a month, you might annotate: “Goal 1: Yellow – cold-calling increased to 7 hours/week, short of 10-hour target; will provide additional prospect list to help reach goal.” These notes serve two purposes: they inform the employee of where they stand in real-time, and they create a continuing written record of the process. If the employee improves, these notes show the positive trajectory. If not, they demonstrate that the employer monitored progress and gave feedback along the way. Remember, a PIP is as much about the process as the result – thorough documentation of the journey is what makes the outcome (whether retention or termination) more justified and smooth.
In a professional team management context, a well-designed Performance Improvement Plan is far from just an HR formality or a pretext to termination – it is a coaching tool and a safeguard. By clarifying expectations, we eliminate confusion. By engaging the employee in documentation and tracking, we create accountability and buy-in. By providing support and maintaining a collaborative tone, we give the employee a fair chance and some control over their fate. All of these elements greatly increase the likelihood of a positive outcome: either the employee’s performance rebounds to the benefit of the individual and team, or a mutual understanding is reached that it’s best to part ways, and that separation is handled professionally and with dignity.
For managers, embracing PIPs as a constructive process can improve your team’s culture. It demonstrates that you are willing to invest in an employee’s success and that you value open communication and fairness. Even if ultimately an employee must leave, doing so via a well-run PIP leaves a trail of respect – the rest of your team sees that underperformance is addressed, but always with professionalism and empathy. Meanwhile, you protect your organization by documenting the process and reducing legal ambiguities. In the end, the effective use of PIPs helps managers fulfill two core responsibilities: developing their people to their full potential and ensuring the team meets its performance standards. Done right, a Performance Improvement Plan is not a dreaded HR requirement, but a strategic management tool that can turn a struggling employee into a success story – or gracefully resolve the situation if the turnaround doesn’t materialize.
Key takeaway: Don’t fear the PIP – improve it. With clarity, collaboration, and commitment, a performance improvement plan can be a lever for positive change and a shield against future problems, rather than a mere paperwork exercise. By following the best practices outlined above, professional managers can transform PIPs from a “most hated” protocol into an opportunity for coaching, accountability, and ultimately progress, whether that progress means a rehabilitated employee or a mutually respectful parting of ways.
As a final resource, I’ve distilled these elements into a PIP Template you can use with your team. It’s a one-page sheet in Excel format to track progress, add notes and create accountability. Feel free to download it and even customize it for your organization’s needs.
Use the PIP as a lever for positive change and a shield against future problems.
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