It is the talk of the town amid mass layoffs across tech companies. Seen as the “excuse” by tech giants to manage expenses, performance improvement plan or PIP, which is supposed to help employees, has garnered a negative connotation.
Last year, Google came up with new ranking metrics to identify low-performing employees and ease them out of the company. Employees rated as poor performers under the new “ranking and performance improvement plan” could have been shown the door.
Similarly, Meta ranked approximately 7,000 employees as “subpar” in recent performance reviews. Addressing the recent performance reviews handed out to employees, a Meta spokesperson told The Wall Street Journal: “We’ve always had a goal-based culture of high performance, and our review process is intended to incentivise long-term thinking and high-quality work while helping employees get actionable feedback.”
Most of the laid-off employees alleged that firings were not based on performance as they recently received productivity-led bonuses. Nevertheless, most people aren't aware what actually the purpose of PIP is.
What is PIP?
Take an example of a salesperson who has to achieve at least Rs 1 lakh of sales weekly but fails to do so consistently. The manager and HR will step in to gauge the problem, share feedback and monitor the improvement thereafter.
According to experts, normally it is used as a corrective action where the employees need to show their value to the organisation.
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“In layman's terms, it is like showing a yellow card in a game of football where s/he needs to avoid another yellow card before the person is asked to leave in a stipulated time frame,” said Sumit Kumar, founder and director of HR consultancy firm Headsup Corporation.
Can PIP backfire?
Sara Schneider, a talent acquisition recruiter, who had spent three years at Meta, described her time at the company as "amazing" and praised her colleagues for their hard work and dedication. Taking to LinkedIn, she also noted that the layoffs were not performance-based, and many top performers were let go alongside her.
Though PIP is designed to help employees improve their performance, there are instances where it can backfire and have unintended consequences.
For instance, when PIP is not clear or specific enough, it can be difficult for the employee to understand what they need to do to improve, said Nilesh Satpute, founder and CEO of cloud services firm Applied Cloud Computing.
Further, he said if the expectations outlined in the PIP are unrealistic or unachievable, the employee may become demotivated and feel like they are set up to fail. This in turn can lead to feelings of anxiety, stress and low morale. Eventually, employees sometimes resign themselves.
Besides, the support of the manager is also significant. Satpute pointed out that if the employee does not receive the necessary support from their manager or HR department during the PIP process, they may feel like the process is unfair or that they are being targeted. “This can lead to feelings of resentment and a lack of trust in the organisation.”
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Can you be fired via PIP?
Employers have complete discretion that enables them to terminate the employment of a person who consistently performs poorly, said Neeti Sharma, co-founder and president, TeamLease Edtech.
She said most employers offer details of PIP and cause for termination during the initial phase of employment or even in the contract or offer letter. “There is no law governing PIP and it is completely up to the discretion of the organisation.”
However, Sharma said most organisations will try to retain the employee by helping them upskill or offering mentoring and other solutions as hiring is an expensive and time-consuming process. “An employee who already understands internal processes is a valuable asset,” she said.
How to approach PIP?
Employees need to remember the model of CAGR—Clarity, Attitude, Goal-Orientation and Robustness—while approaching PIP.
Explaining CAGR, Kamalika Bhattacharya, co-founder and CEO of SaaS firm QuoDeck, said knowing what is to be achieved is the first step—Clarity. “Employees should ask questions and seek clarification wherever there is ambiguity.”
Second, she said employees must approach the entire process with positivity. Companies look for ‘Attitude’ as well during the evaluation for PIP. “It is important to stay positive and engaged during the process, even if it feels like an uphill battle.”
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Third, employees must focus strongly on tracking and achieving the target—Goal Orientation. Employees should also keep detailed records of their progress and be prepared to provide evidence of their accomplishments if necessary, Bhattacharya added.
Lastly, employees must make sure that they are showing the initiative to excel in the set tasks, by robustly preparing and upskilling if required. “This is what we call Robustness,” Bhattacharya said.
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