Performance Improvement Plans: How to Manage Poor Performance Properly

Most business owners and managers don't enjoy managing poor performance.

Often, by the time they ask for HR advice, the problem has been going on for a while. A manager has had a few informal conversations, picked up unfinished work, reminded the employee of what needs to be done, and hoped things would improve.

Eventually, the business reaches a point where continuing with informal conversations is no longer enough, but moving straight to termination feels too severe. This is often where a Performance Improvement Plan, commonly called a PIP, becomes useful.

A well-managed PIP can bring structure to a situation that has become frustrating or unclear. It gives the employee a genuine opportunity to improve, while also allowing the business to set clear expectations and properly document what happens next.

The important part is how it is used.

What Is a Performance Improvement Plan (PIP)?

A Performance Improvement Plan is a structured process for addressing an employee's underperformance.

It should clearly explain:

• what aspect of the employee's performance is not meeting expectations

• what standard is expected

• what improvement needs to occur

• how improvement will be assessed

• what support the business will provide

• the timeframe for improvement

• what may happen if sufficient improvement is not achieved.

It sounds straightforward, but the quality of the plan depends heavily on the detail behind it.

Telling someone they need to "improve their attitude", "be more proactive" or "communicate better" provides very little direction.

Those descriptions may reflect a genuine concern, but they're too subjective to form the basis of a useful improvement plan.

The employee needs to understand what they are currently doing, what needs to happen differently and how both parties will know whether improvement has occurred.

For example, rather than saying an employee needs to "improve customer service", the concern may actually be that customer enquiries are regularly going unanswered for several days.

The expectation could then be defined more clearly, such as acknowledging customer enquiries within one business day and escalating matters that can't be resolved within an agreed timeframe.

That gives everyone something practical to work with.

A PIP Isn't The Starting Point For Every Problem

A mistake that businesses make is reaching for a formal PIP as soon as someone's performance slips.

Usually, there should already have been some management before the process becomes formal.

If an employee has missed one deadline after several years of reliable performance, they probably don't need a four week improvement plan. They may simply need a conversation about what happened.

Likewise, if a new employee is struggling because nobody properly explained the role, provided training or clarified priorities, putting them on a PIP may be addressing the wrong problem.

Before formalising the issue, take a moment to work out what is actually happening.

Is this a capability issue? Does the employee understand what is required? Have expectations changed? Is workload contributing? Has the employee been trained properly? Is there a pattern of underperformance, or are you responding to one isolated event?

There is also an important distinction between performance and conduct.

Someone consistently producing inaccurate work despite training and feedback may have a performance issue, whereas someone deliberately refusing a reasonable direction may be dealing with a conduct issue.

The appropriate process can be quite different, particularly where serious misconduct may be involved.

Getting that diagnosis right at the beginning matters.

A Performance Improvement Plan Supports HR Compliance

There is no general rule under the Fair Work system requiring an employer to put an employee on a PIP before employment can be terminated for poor performance.

However, employers should generally give employees an opportunity to address performance concerns before moving to dismissal.

The Fair Work Commission can consider whether an employee had previously been warned about unsatisfactory performance when determining whether a dismissal was harsh, unjust or unreasonable.

This is why the process around a PIP matters as much as the document itself.

If performance ultimately doesn't improve, the business should be able to demonstrate that the employee understood the concerns, was told what was expected, had an opportunity to respond and was given a reasonable opportunity to improve.

A PIP can help establish that structure, but simply having a document labelled "Performance Improvement Plan" doesn't in itself make a process fair.

Common Mistakes To Avoid

One of the problems we see with performance management is that the business has already decided what it wants the outcome to be.

The PIP is then created because the business believes they need to "go through the process" before terminating the employee.

If you are telling an employee they have an opportunity to improve, there needs to be a genuine opportunity for them to do exactly that.

Fair Work Commission decisions have criticised processes where warnings or outcomes appeared to have been determined before the employee had an opportunity to respond.

Another common problem is relying on vague criticism.

A manager might have become frustrated because an employee "doesn't take ownership", but when asked for examples, there is very little documentation. The manager may be completely justified in their concern, but the employee still needs enough information to understand what they are being asked to change.

Then there are PIPs that are simply unrealistic.

Giving someone two weeks to correct a performance issue that developed over twelve months may not provide a meaningful opportunity to improve.

Equally, allowing a process to drift for months without clear review points can create uncertainty for everyone involved.

The timeframe needs to make sense for the issue.

Some improvements can be demonstrated quickly. Attendance, meeting deadlines or following a particular procedure may become measurable almost immediately. Other issues, particularly those involving capability, technical skills or management effectiveness, may need longer before meaningful improvement can be assessed.

Support Needs To Be Genuine

A PIP shouldn't simply tell an employee to improve and then leave them to work out how.

Consider what reasonable support could help them meet the required standard.

That might involve refresher training, clearer instructions, additional feedback, access to procedures, job shadowing, regular meetings with their manager or clarification of priorities.

Support doesn't mean lowering reasonable standards or doing the employee's job for them. It means removing unnecessary ambiguity and giving them a fair opportunity to demonstrate that they can perform the role.

Regular check ins are particularly important.

If a PIP runs for six weeks, waiting until the final day to tell the employee they have been doing something incorrectly for the entire period defeats much of the purpose.

Discuss progress as you go. Tell them what is improving and where there is still a gap, and record the important points from those conversations.

This creates a much clearer process for the employee and a much better record for the business.

How to Track Progress

Measuring progress doesn’t have to be complicated. Use simple, relevant tools that align with the employee’s role and responsibilities. The goals should be specific enough that, at the end of the process, you are not arguing over whether someone has "improved enough":

• Role-specific KPIs - Link performance goals to tangible business outcomes, like sales targets, project completion rates, or accuracy metrics.

• Customer feedback - For client-facing roles, tools like Net Promoter Scores (NPS)* or direct client feedback can highlight improvements in service or communication.

• Training outcomes - If you’ve provided extra support, check whether it’s translating into better performance. Look at assessment results, skill application, or on-the-job changes.

• 360-degree feedback - Get a balanced view by collecting input from colleagues, managers, and even clients where appropriate. This can highlight improvements (or issues) that others are seeing too.

*Net Promoter Scores: Customers are asked one key question: "On a scale of 0 to 10...."

Based on their response, customers are grouped into three categories:

• Promoters (9–10): Love your service, likely to refer others

• Passives (7–8): Satisfied, but not enthusiastic

• Detractors (0–6): Unhappy and could harm your reputation through negative word-of-mouth

A quick sense check before starting a PIP

Before putting an employee on a Performance Improvement Plan, ask yourself:

• Can I clearly explain the performance gap using specific examples?

• Has the employee previously been told there is a concern?

• Is the expected standard reasonable and understood?

• Is this genuinely a performance issue rather than misconduct or another workplace issue?

• Am I genuinely open to the employee improving and remaining in the business?

• Can I clearly measure whether improvement occurs?

If several of those answers are unclear, there is probably some work to do before starting the formal process.

Final Thoughts

Performance problems are much easier to manage when expectations are clear and concerns are addressed early.

A Performance Improvement Plan can be an excellent tool when informal management has not been enough and the employee needs a more structured opportunity to improve. It creates clarity for the employee, discipline for the manager and a clear record of what has been discussed and agreed.

But the document is only one part of the process.

The real work is in identifying the right issue, setting reasonable expectations, having direct conversations, providing appropriate support and following through consistently.

Done properly, a PIP gives an employee a genuine opportunity to turn their performance around.

If they can't, the business is also in a much better position to make an informed and fair decision about what happens next.

If you are dealing with an employee performance issue and are unsure whether a PIP is the right next step, we can help you assess the situation, structure the process and make sure you are approaching it fairly and practically.

Book a free discovery call today, and let’s make managing HR the least of your worries. 

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Need help? Contact us today - sandra@hrconsultingtas.com.au or 0408 408 225  

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