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8 Min. Read

Performance Plan – What Is It and How to Write the Plan

Performance Plan

Successful business owners must know how to manage a struggling employee. The easiest approach is to lay them off or reprimand them—but this won’t get you very far.

Instead, you need to help them develop their skills. One of the best ways to do so is to create a performance plan.

This article will discuss the ins and outs of performance plans.

Table of Contents

What Is a Performance Plan?

Benefits of a Performance Improvement Plan

How Do You Structure a Performance Plan?

Performance Plan Example

Key Takeaways

Frequently Asked Questions

What Is a Performance Plan?

Another name for a performance plan is a performance improvement plan (PIP). This document explains the specific goals for your employees. It can also outline various problems that curb their progress in certain areas.

An employee performance plan usually has a bad reputation. Why? Because it can indicate impending termination. However, its purpose isn’t to scare workers. Rather, a performance plan aims to encourage employees to improve their skills.

Make Productivity A Priority

Benefits of a Performance Improvement Plan

There are many reasons you should consider adding PIPs to your employee management program. These include:

Setting Clear Goals

Goals are the baseline of performance improvement plans. They outline the strategy your employees need for a week, month, or entire year. Clear goals also help set expectations and address other critical issues.

Keeping Your Team on the Same Page

The key to helping your staff optimise their performance levels is to challenge them. You shouldn’t underestimate or overuse your most talented people. Likewise, you shouldn’t burden struggling employees with overwhelming tasks.

A performance plan will help you strike the perfect balance. It familiarises you with your staff’s strengths and weaknesses, so you know how large of a workload they can handle. This way, everyone stays on the same page and aligns with your desired goals.

Diversifying Tasks

Some tasks are easy. Others require you to stretch your team’s resources and skill sets. An employee performance improvement plan tells you which tasks are easy and which are demanding. It helps create a manageable work environment to promote career growth.

Motivating Your Employees

Managers and owners sometimes underappreciated their employees, causing them to quit their jobs. They don’t feel they’re on the same team, and they have no sense of accomplishment in their everyday duties.

A robust work performance plan helps bridge this gap. This smart framework allows you to keep your staff up-to-date on your projects. It also tells them how they’ve contributed to the company, making them proud of their work and more likely to expand their knowledge.

Saving Money and Time

You’ve found a company in your industry to thrive in and be profitable in. One of the things you need to minimise is staff turnover. The more people you can keep on your staff, the less time and finances you’ll lose.

That’s where a performance plan comes into play. They help your employees perform better. This way, there are no expenses associated with layoffs and recruitment.  

If your PIP helps your staff solve their performance issues, you won’t need to provide additional support or recruit new employees. Even though team members with PIPs need instructions, it’s much less than the training required for new staff members.

More Constructive Than Reviews

There are many ways to manage low performance, but some are less effective than others. For example, a performance review is rarely beneficial. Some people react inappropriately to it, even if your goal is just to provide feedback.

They’re also considered inaccurate. They can provide a distorted picture of your team, messing with your improvement plans. As a result, employees may dismiss reviews and fail to improve their job performance.

By contrast, performance plans are a great strategy. They accurately tell your team members what they’re doing wrong and how they can improve.

Their purpose is clearly framed, and your employees seldom view them as a rebuke. They become encouraged to address their weak points and contribute to your company’s growth by using their strengths.

Identifying Risks

Some employees might underperform or struggle to find motivation. You need to take the right approach to resolve the problem. The only way to do so is to determine the cause.

That’s where you can use your PIP. It can tell you why your team members are struggling. Whether it’s too much work or mental health issues, a PIP can reveal more information than a conversation.

Wholesome Company Culture

Performance plans lead to success because they promote accountability. A good PIP will define expectations and consequences. This makes your company culture more wholesome.

Hard-working and diligent team members feel appreciated, as they know their effort isn’t taken for granted. PIPs remind the rest of the staff to work on improving their performance.

A particular employee who’s fallen behind knows their employer and manager are there for them if they feel overwhelmed. They’ve listed measurable objectives and suggestions in their PIPs, so everyone knows how to accomplish company goals.

Remember that PIPs aren’t just used for problematic team members. They can be just as effective for ambitious people who want to climb the career ladder but aren’t sure how to do so.

You can use PIPs for employees who wish to move laterally and try different positions in your organisation. A detailed PIP tells them what they’re expected to display in order to qualify for another post.

Overall, PIPs help your staff feel valued. Employees become confident their employer will support them in reaching career goals and their full potential. At the same time, they let you streamline your workforce with motivated employees.

How Do You Structure a Performance Plan?

Performance plans typically have the following structure:

Identifying Behavioural or Performance Problems

You want to develop a PIP because you have some employee issues. They can stem from behaviour-related or performance-related matters, or both. When creating your PIP, you should first identify the problems your team needs to tackle.

Explaining Expected Behaviour and Performance

Besides identifying problems, you should also explain your expectations or set measurable goals.

For instance, if you assess work performance by meeting task quotas, highlight the quota each employee should reach. This gives them an improvement basis, allowing them to stay on track more easily.

Helpful Suggestions

After setting a goal, you should provide helpful suggestions for improvement. These suggestions generally include manuals, physical tools, and additional training.

Schedule Meetings

This section should tell your staff when you want to meet with them for a progress assessment. It doesn’t have to be specific—it could be loosely defined, so employees can be more flexible and have enough time to upgrade their skills. The key is not to cause additional stress because they may already feel a lot of pressure.

Potential Consequences

All PIPs must have an improvement time frame. Explain them in your plan while mentioning what happens if your team doesn’t meet expectations.

Don’t forget to talk about your employees’ strengths and remind them to build upon those strengths. Also, clarify that the purpose of your PIP is to see them improve, not lose their confidence. Set a deadline your team member believes they can meet. This way, the PIP benefits everyone.

Performance Plan Example

Here’s what your PIP could look like:

Performance or Behavioural Problem

You missed two deadlines last week and received three complaints from the customer support department. You also failed to respond to an HR email sent three days ago.

Expected Performance or Behaviour

We expect you to manage your workload and meet deadlines. We also need you to prioritise tasks, cooperate with other departments, and respond to emails promptly.


Consult our human resources on improving your approach to projects. Also, create a to-do list to remind yourself of daily duties. Finally, attend our productivity seminar next week.


Failure to meet all deadlines in the next month and respond to emails the same day you receive them will result in a final warning. If the performance/behaviour issues continue, you can expect termination.

Key Takeaways

There are no strict formats for writing a performance plan. Each point of your plan should be clear, and your staff should know how to implement the PIP from the get-go.

Once your PIP takes effect, your management team should monitor the employees. They should schedule regular check-ins to keep track of an employee’s progress.

Ensure your team meets all deadlines and is applying your suggestions. Also, encourage your staff to self-report their performance. Don’t forget to ask how their plan has helped them grow.

When used correctly, your PIP can take your workforce to another level. 

FAQs on Performance Plans

What are the elements of a performance plan?

A PIP should contain the following elements:

  • Behavioural/performance issue it’s addressing
  • Expected performance
  • Suggestions for improvement
  • Consequences

What is the goal of a performance plan?

A PIP can have many desired goals. For example, it can help employees fulfil their obligations on time. It can encourage them to communicate with other departments more effectively. And it can increase productivity.

What is an individual performance plan?

An individual PIP is a strategy to help establish the expected performance and employee productivity. It also supports their performance evaluation.