Performance improvement plans (PIPs), often presented as a tool to help employees improve their performance, may actually be a ticking time bomb used by managers to lay off workers. According to human resources expert Anna Tavis, these plans rarely lead to improved performance and are instead used as an excuse to terminate employment while protecting companies from potential lawsuits.
The use of performance improvement plans is on the rise among corporations looking to subtly lay off workers under the guise of performance assessment. These plans typically offer employees a 30 to 90-day window to improve their performance. However, surviving this period is often unlikely, as PIPs are increasingly being used as legal coverage for companies to avoid wrongful termination lawsuits.
Anna Tavis, a former human resources executive on Wall Street and currently at NYU, referred to PIPs as an ‘oxymoron.’ “It’s a cover-up. It’s window dressing,” Tavis told the Wall Street Journal. “None of these performance improvement plans lead to improving performance. It’s an excuse to walk you out of the door and say: ‘We gave you an opportunity. You didn’t perform, and off you go.'”
Despite their widespread use, PIPs are a contentious issue among managers. Some believe that they are often rolled out due to management’s failure to set expectations early on. Larry Gadea, Founder of Envoy, estimates that only 10 to 25 percent of employees survive performance reviews. “A lot of the time, they’re done,” he said. “They’re burned out, they need a break. And now you’re asking them to work harder.”
Employees are largely critical of PIPs and often claim they are used unfairly against them. Patrick McGah, a former research scientist at Amazon’s PrimeAir, shared that he was unjustly placed on a ‘Focus’ plan in 2021 with vague feedback about needing to ‘raise the bar.’
Former CEO of Yext, Howard Lerman, expressed a similar sentiment about PIPs. He described them as just a legal tactic for the company to warn an employee about termination. “I will always fire someone right away because it is better for us and it is absolutely better for them,” Lerman said.
Despite these tactics, employees are finding ways to buy time and secure their employment while looking for new opportunities. One increasingly popular strategy is filing for a leave of absence under the federally-protected Family and Medical Leave Act. This pauses the PIP, giving employees time to job-hunt without a resume gap and providing some protection from termination upon their return.
The rise of performance improvement plans (PIPs) as a tool for corporate layoffs raises questions about their true purpose and effectiveness. Critics like Anna Tavis suggest that they are not so much about improving performance, but rather a legal cover for companies to protect themselves from wrongful termination lawsuits. This approach can be seen as part of a broader trend where corporations are increasingly looking for ways to cut costs and streamline their operations, often at the expense of employees.
The issue with PIPs is that they often set unrealistic expectations for improvement within a short timeframe. According to Larry Gadea, founder of Envoy, only 10 to 25 percent of employees under PIPs actually survive the review period. This statistic underscores the severity of these plans and suggests that they might be more about dismissal than development.
Employee experiences like those of Patrick McGah point to the subjective and vague nature of these plans. Being told to ‘raise the bar’ without clear guidance on how to do so sets employees up for failure, further supporting the argument that PIPs are often used as a pretext for termination.
However, it’s important to note that despite the growing criticism and controversy surrounding PIPs, they continue to be widely used across various industries. This suggests a need for more transparent and supportive performance management processes that truly help employees improve, rather than serving as a veiled stepping stone towards termination.
Another concerning trend is that employees are having to resort to federally-protected leaves of absence to buy time when placed on PIPs. This tactic, while providing a temporary solution, reinforces the problematic nature of PIPs and their impact on employee wellbeing and job security.
In an era where employee satisfaction and talent retention are more important than ever, corporations may need to rethink their use of PIPs. The current approach not only impacts individual employees but could also have long-term implications on a company’s reputation as an employer and its overall corporate culture. It’s a reminder that performance management should be about genuine improvement and growth, rather than a tool for cost-cutting.
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