Performance Improvement Plans (or PIPs) often spark intense debate. Are they tools to help struggling employees succeed or thinly veiled strategies to protect employers in court? The answer depends on who you ask – and how the PIP is handled.
To unpack this issue, we asked Mari Bonthuis and Richard Reice, both partners at Sterlington to share their insights. Their conversation explores whether PIPs are a fair shot at redemption or a thinly veiled disguise.
Richard: As a labor and employment law partner and former CHRO, I can attest that PIPs are often used and abused. Their genesis can be traced to progressive discipline provisions in union labor agreements that require just cause for dismissal and mandate progressive discipline: verbal warning, then a written warning, then suspension, and if no improvement, discharge. PIPs were designed with the best of intentions to provide notice and opportunity for improvement to marginally performing, non-union, employees. Depending on the employer and manager, a PIP can equate to a pink slip or one last opportunity for success.
Mari: While that background is helpful Richard, I’m still astounded by how many PIPs are ineffective. Historically, union jobs have been in manufacturing and related industries or the service industry. These are jobs with concrete metrics and goals where performance can be measured. Are the car parts coming off the line on time and without error? Are the hotel rooms being thoroughly cleaned before a guest checks in? Now compare that to the kinds of jobs that our clients have: “SVP, Health Innovation,” “Senior Project Manager,” “Change Management & Strategy Lead.” Identifying concrete metrics and goals for these roles can be much more difficult. Add to that the fact that companies are continually reorganizing and reforming, so you have people with titles that say one thing, and responsibilities that are another, and they’re working for supervisors who may have had no say in hiring them, and sometime only marginal training in managing them.
Richard: Well Mari, the workplace has gotten complicated for sure. The rise of federal, state, and local anti-discrimination laws, such as those prohibiting sex, race, age, sexual orientation, discrimination, etc., and related litigation has fueled PIP culture. Employers like PIPs because it forces a manager to be disciplined, to focus their thoughts, articulate them, work with HR to document them and to communicate them to the employee. In other words, it provides notice (albeit at times too late), evidence of progressive discipline, and a narrative of the employee’s poor performance. That record is used to establish a legitimate, non-discriminatory basis for any adverse employment action taken against the employee, such as demotion, transfer, or discharge. Should an employee challenge the employer and allege discrimination, the PIP is the first line of the employer’s defense. This is why accuracy in a PIP is crucial. If an employer includes disingenuous claims, that PIP will come back to haunt the employer should the discharge be challenged.
Mari: Right! And this is when PIPs become problematic because they’re being used as a cover for termination, not as a means for improvement. Most employees are at will, which theoretically means the manager can terminate that employee without any reason whatsoever. But because employers are so scared of litigation, they create vague PIPs and use them as a way to force people out. Employers may think it provides them with a defense, but a badly done PIP can simply make litigation more expensive. If PIP is vague, inconsistent, or biased, it may fail to provide sufficient documentation to justify an adverse employment action. Employees who feel unfairly targeted may be more likely to file lawsuits alleging wrongful termination or discrimination. During litigation, ambiguities in the PIP can lead to prolonged legal battles, as courts scrutinize whether the PIP was genuinely intended to improve performance or merely to build a case for termination. This lack of clarity often requires employers to invest more heavily in legal defense.
Richard: At the root of all things PIP is the intention of the employer. Whether it is vested in its workforce and cognizant that it is often more efficient to engage in proper employee management and less expensive to turn around a non-performing employee than to fire and then hire anew. Imagine an earnest salesperson not hitting her numbers because she has trouble closing the sale. Her bosses have coached and provided her with additional resources or perhaps reduced targets, but there has been little improvement. Here, a logical next step is a PIP that sets forth hard targets, a plan to get there, assistance, and a clear warning of what happens if the sales rep continues to underperform. It may be a Hail Mary pass, but it is issued with good intentions. The best employers insist that managers meet regularly and conduct one-on-ones with their team, provide them with clear goals, guidance, and feedback and document those encounters. Additionally, they make the process as easy as possible for the manager because if it’s too burdensome, it won’t get done.
Mari: This example is emblematic of why the PIPs I see are problematic: they aren’t concrete. They have goals like “be a thought leader” or “demonstrate personal accountability.” This partly relates back to my point above about the difficulty of creating PIPs in the modern job. Coupling these goals with specific examples could, in theory, be helpful.
Richard: A PIP should never, ever be a surprise. An employee surprised by a PIP is an indication that their manager has failed them either because they are lazy, don’t like confrontation, or some other reason. Issuing a PIP to an employee who the employer intends to fire anyway, is a fact that may come out in discovery should there be litigation so we don’t recommend it. Better to be honest and cut ties, than be two-faced.
Mari: I 100% agree. PIPs that are used as cover for terminating an employee usually are a surprise. They create an enormous amount of stress for the employee, who is utterly confused about what they have done wrong. This, in turn, can actually affect the employee’s performance, leading to mistakes and lower productivity. Other employees who see PIPs misused to terminate colleagues who have no apparent problems can lose faith in the company’s management and the fairness of the process. At the end of the day, the damage done to the employee’s self-worth and confidence can take months or even years to get over.
Richard: PIPs can be a powerful tool when it comes to managing a workforce. But they are not a beginning. They may be the beginning of the end, but good management dictates that they be used honestly as part of managing a workforce from hire to fire. Doing so improves employer credibility with its employees and, if necessary, a judge or jury.
The Bottom Line on PIPs: Purpose and Execution Matter
PIPs are neither inherently fair nor flawed – they are tools. Their effectiveness depends on the employer’s intent and execution. When handled transparently and constructively, a PIP can help an employee succeed and restore trust in their role. However, when used as a thinly veiled path to termination, PIPs can backfire, eroding morale, triggering costly litigation, and undermining managerial credibility.
The key lies in clarity, honesty, and fairness. Employers must approach PIPs as a last, genuine effort to guide struggling employees, documenting realistic goals, and providing support. Surprises and ambiguity have no place in the process. Mismanaged PIPs hurt everyone but if managed well, they can serve as opportunities for growth and a more transparent workplace.
For further guidance, connect with Mari Bonthuis or Richard Reice, or explore our insights on employment matters like termination before a bonus or why an attorney should review your separation agreement.
