PIP: This Super Annoying Way Of Getting Fired Is On The Rise

Performance Improvement Plans (PIPs) are on the rise in the workplace, but they may be doing more harm than good, according to some experts. 

An article published by the Wall Street Journal (WSJ) on Nov. 29 offered some insight into the growing workplace trend where employees are placed under an improvement plan structured with “tough-to-achieve goals” that are often required to be completed between 30 and 90 days.

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They are designed to track an employee’s underperformance and hopefully help them improve their output and work expectations. HR Acuity, an organization that aims to improve HR standards for companies across the U.S., specifically notes that PIPs are meant to be a “constructive tool aimed at helping employees, rather than as a punitive measure,” where upper management sets clear, measurable goals and expectations, along with a defined timeline for improvement, including regular check-ins to assess progress.

The WSJ noted that in 2020 HR Acuity conducted a survey and found that 33.4 people for every 1,000 workers were placed on a PIP. The study found that many of these workers had performance issues that needed to be addressed. In theory, PIPs seem beneficial, but some business experts argue that they can place undue pressure on employees to overperform, as many fear termination if they don’t meet the goals outlined in the plan.

Many employees don’t make it through the PIP process. 

Larry Gadea, the founder of the software company Envoy, which employs 250 people, uses PIPs in his organization. Gadea told WSJ that he believes PIPs often stem from managers not setting clear expectations from the start. Gadea estimates that only 10% to 25% of employees placed on PIPs successfully navigate the process—a statistic echoed by several other CEOs and HR professionals.

PIPs shouldn’t be used as a paper trail to document an employee’s underperformance. It should be put in place after HR brings an employee in to meet and discuss expectations for their role and what they need to do to improve in certain areas. But some people believe it can be the first warning sign of termination in the near future. 

“I have absolutely seen PIPs used basically as a smokescreen to set up a future firing, though. It’s never fun when it happens but it does happen,” one person wrote in a ResetEra forum on the topic on Nov. 30. “A PIP is a pink slip that gives you about three months to find a new job,” another user penned. 

One netizen who claimed to be a higher-up at Best Buy alleged that he was “forced” into putting some employees on a PIP by upper management because they “did not like or wanted to replace” some of the workers “with their preferred candidates.” They added, “It was a method for them to shape teams to their vision without getting in trouble.”

PIPs (Performance Improvement Plans) pose a significant risk to African American employees, as they are terminated at nearly twice the rate of their white counterparts, according to a study by Virginia Tech. Writer Securely Shamika, in a 2020 article for Medium, argued that PIPs are deliberately “weaponized” against Black employees, often used to push them out of well-paying jobs. She suggested that this practice may be rooted in racial bias, disproportionately affecting Black professionals.

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Companies need to take accountability for underperformance, too, says Netflix CEO Marc Randolph.

In an article for Medium, published Feb. 14, Marc Randolph, the CEO of Netflix, wrote that PIPs were “cruel and unusual punishment,” noting how they were used as a shield to protect companies from wrongful termination lawsuits. 

“You will always be advised by HR/Legal that you need to put someone on a plan before you fire someone since it is HR and Legal’s job to protect the company,“ Randolph penned. “They will happily subject ninety-nine people to a degrading experience simply to keep one person from suing the company.”

Randolph said that they are a waste of time and that companies should also look at how they can improve internally to help their employees succeed as he believes underperformance “is as much your fault as theirs.” 

The CEO added, “Being asked to leave doesn’t mean that they are a bad person . . . it’s usually because they are a bad match for what you need, and that’s on you as much as it is on them.”

If termination is the true objective behind a PIP, Randolph advised HR teams to handle the situation with empathy, care, and fairness. He urged for companies to be generous with severance, emphasizing that the basic rule of thumb is to consider how long it will take the individual to restore their income—something that is rarely achievable within just two weeks.

Additionally, Randolph stressed the importance of genuinely supporting the employee during their transition. HR should think about ways to help them find a role that better matches their specific strengths and weaknesses, ensuring that they have the best chance of landing on their feet.

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