What is Performance Improvement Plan (PIP)?
A formal, documented process that outlines specific performance deficiencies, improvement targets, support measures, and a timeline for an underperforming employee.
Detailed Explanation
A Performance Improvement Plan is a structured intervention used when an employee's performance falls below acceptable standards despite informal feedback and coaching. It formally documents the specific areas of underperformance (with evidence), the expected performance standards, the measurable improvement targets, the support and resources that will be provided (training, coaching, mentoring), the review schedule and milestones, the timeframe for improvement (typically 30-90 days), and the potential consequences if improvement is not achieved. A PIP serves dual purposes: it gives the employee a genuine, supported opportunity to improve, and it creates the documentation trail required for fair and legally defensible performance management under Australian employment law.
Why It Matters
Addressing underperformance is one of the most difficult but important management responsibilities. A PIP provides a fair, transparent, and legally sound framework for managing this process. It protects the employee's right to a reasonable opportunity to improve and protects the employer by demonstrating procedural fairness.
Example
A sales manager places an underperforming account executive on a 60-day PIP after six months of missing targets despite coaching. The PIP specifies that they must achieve 80% of their monthly target, complete 15 client meetings per week, and submit call reports daily. Weekly check-ins are scheduled, and additional sales training is provided. The account executive meets all targets by week 6 and is formally removed from the PIP with documented recognition of the improvement.
Related Terms
An ongoing process of setting expectations, monitoring progress, providing feedback, and developing employees to achieve organisational and individual goals.
A structured model that guides leaders in developing their team members' skills, performance, and potential through regular coaching conversations.
The obligation of an individual or team to accept responsibility for their activities, decisions, and outcomes, and to report on them transparently.
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