An HR Glossary for HR Terms

Glossary of Human Resources Management and Employee Benefit Terms

Performance Improvement

What is Performance Management?

Performance improvement is a strategy under the umbrella of performance management that helps employees achieve better performance and growth. Managers typically use performance improvement plans (PIPs) to help underperforming employees meet the organization’s standards and requirements, both in terms of productivity and behavior. This is called operational or individual performance improvement.

On the other hand, performance improvement also occurs at a:

Improvement plans at these levels are known as organizational performance improvement.

How Is Performance Improvement Measured?

Organizations can use various metrics to gauge performance improvement.

On an individual level, managers might track an employee’s progress over time using:

While the need for performance improvement is universal, the methods for measuring improvement vary. It is essential to recognize that the performance improvement plan structure is only effective if the performance issues in question can be resolved with a structured plan and time-sensitive goals.

For example, quantitative deficiencies like sales goals or production quotas lend themselves well to a performance improvement plan all it takes to track a goal is to measure whether or not the number is improving. Qualitiative matters like poor leadership or disrespectful behavior are much more challenging to fit into a structured plan and to track over time.

Why Is Performance Improvement Important?

For employees and managers to improve, they first need to identify the areas that need improvement. Performance improvement plans help teams understand what’s working and what isn’t, helping them the issues teams face helps companies find targeted solutions instead of relying on unfocused efforts to improve.

Performance improvement can lead to genuine benefits such as:

When Should You Use a Performance Improvement Plan?

Using a PIP to address poor performance is often a better solution than terminating an underperforming but valued employee. Instead of removing the employee and losing their future potential (along with the investment in recruiting and training them), these plans target any below-par performance or unacceptable behavior and provide a path for change.

Beneficial PIP Situations

Below are some instances where a PIP fits best:

PIP Situations to Avoid

On the contrary, implementing a PIP in the following situations may not be effective as expected:

Before undertaking a PIP, there should be a clear conversation and collaboration between the involved parties. Enforcing the drafted plan on an unknowing or unwilling employee often does more harm than good, causing performance improvement to fail before it even begins.

What Is the Time Frame for a Performance Improvement Plan?

A good performance improvement plan is time-bound—the employee concerned should meet the actionable objectives within the indicated timeframe, often 30 to 90 days. After the PIP time frame concludes, there should be a commitment to keep improving in the areas addressed.

What Type of Performance Issues Could Benefit from a Performance Improvement Plan?

A performance improvement plan is not a panacea for all unsatisfactory employee performance. For example, it’s better to address attendance-related issues and disruptive behaviors when they happen instead of waiting to bring them up in a formal review. This not only helps the employee with the issue, but also helps reiterate your organization’s standards to the employee’s coworkers.

Below are some performance issues that a comprehensive PIP may address:

Once performance gaps are identified, the formalized plan should have established objectives, clear actions or strategies, milestones, and measurable metrics to determine improvements. It is also crucial to set coaching sessions and regular meetings during the PIP time frame to keep track of progress.

Employees should understand that they must meet indicated PIP objectives to avoid the consequences. While management should give employees on a PIP every opportunity to improve with their full confidence and support, the stakes and timeline need to be clear in regard to demotion, reduced pay, or job loss.

What Is the Difference Between Quality Improvement and Performance Improvement?

Many people think quality improvement and performance improvement are the same, but there are some important differences.

Both processes adopt a systemic view in resolving problems, but they tackle different issues. Performance improvement addresses deficiencies in human performance, whereas quality improvement focuses on the organization’s processes and systems.

Quality improvement is more inclined to consider broader interventions to improve work conditions, environment, and available support.

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