It’s not very often that the mainstream media dives into a specific HR practice to see what is actually happening with it. The Wall Street Journal did so this past week for the surprising topic of “performance improvement plans (PIPs),” something that I suspect most would see as one of the least interesting practices in management.
The reporters Lauren Weber and Chip Cutter made it interesting by essentially asking a provocative question: Do these plans do what they are supposed to do—that is, improve anyone’s performance?
Just to step back a bit, I have been surprised at how ubiquitous these plans are. I have an exercise I often do with virtual classes we teach around the world, which begins with an employee whose performance is struggling. Almost without exception, managers everywhere say, “put them on a PIP.” My sense is that many and perhaps most of these managers think the employee is done then. They don’t seem aware of what happens next: How do we decide if performance has improved enough to keep the person and if not, should we do anything other than fire them?
My sense is that the basic and sensible idea behind a PIP is to provide some clarity: This is what we want you to do, we don’t think you are doing it, and we want to see progress in those items. Hard to argue with any of that if we think the cause of performance problems is a lack of self-awareness or a lack of motivation: I didn’t realize my work wasn’t acceptable or I thought I didn’t need to work harder, but now I know. In this sense, it is surprising the plans don’t work better and that they don’t improve performance enough for the employee to stay on the job because those problems seem pretty common.
What the WSJ reporters were suggesting is that in practice, PIPs don’t seem to work because the employer has already decided to fire the person. Then it is largely a pro forma exercise designed to protect the employer against lawsuits if—and possibly when—the employer is fired. To be more precise, if someone is suing for unfair dismissal, the employer’s defense is to show that they had a good, performance-related reason as to why the person was dismissed that was documented in the PIP that they gave that person a chance to improve. The PIP is there to provide legal cover for the dismissal that is forthcoming.
Are they right about that? It is a pretty expensive mistake to fire someone and of course, really painful for the employee. It suggests at a minimum we did a bad job of hiring. One piece of evidence suggesting that employers do often decide to fire people before putting them on a PIP would be whether employees survive and come out of them. To the extent that they do not, is it because they could not or would not improve, or were they fired because the employer was simply not interested in seeing whether performance improved? In other words, they decided to fire the person and then put them on a PIP.
I wonder what you think the answer there is. It is really troubling if it is the case that these plans are just an exercise in heading off lawsuits. I have no doubt that there are many cases where the employer has decided to fire them before the plan is even put in place, and the higher up in the organization the employee under the PIP is, the more likely that decision had already been made. The reason, it seems to me, is that many people and especially more senior executives have the Jack Welch “A Player, B Player C Player” view of employees and performance: If you are performing badly, it is because of who you are. We aren’t going to change that, so we might as well get rid of you.
But there is a third explanation here, that it may require work to figure out why performance is not so good and some help to get the poor performing employee up to standard. It may also require some critical thinking especially with managerial roles. We might not be willing to make that effort. I have a sense this is especially the case for managerial and executive employees. How often have you heard something like “I always felt I waited too long to fire someone” from leaders? I think the reality may be, I waited too long to do anything about a lack of performance, but when I did, my thought was just to fire them.
In managerial work, projects may not succeed for lots of reasons that have nothing to do with the manager. The strategy might be bad, the amount of support may not have been enough, there may be internal constraints getting in the way, and so forth. Are we willing to think through those issues clearly and objectively Or is it easier to just assume the employee does not have what it takes to succeed, so let’s move on to try out a new person. It is expensive and unfair if we don’t give those issues fair consideration, but it is easier to blame the person and move on.
One thing that might help us avoid just using PIPs as a protective shield is to give managers some sense as to how costly it is to fire someone. Those include not only the costs of hiring a new person, the disruptions among the current employees, the effort required to get that new person up to speed, but also the potential litigation costs of doing so. That might push us to make better decisions and let PIPs do what they are supposed to do.
Peter Cappelli
George W. Taylor Professor of Management
Director – Center for Human Resources for the The Wharton School
