The Small Business Guide to Performance Improvement Plans

A PIP isn’t punishment. It’s a written plan that outlines where an employee is falling short, what improvement looks like, and how you’ll support them over a set period of time. When used properly, it helps employees get back on track and helps employers document performance concerns in a legally sound way.

What is PIP (Performance Improvement Plan) and Why Small Businesses Need One

A Performance Improvement Plan is a short-term, written agreement that explains:

• The specific performance problems.
• The measurable goals the employee must meet.
• The timeline for improvement.
• The support you’ll provide.

For small businesses—where HR departments are often nonexistent—having clear documentation matters. Written records can help you:

• Avoid wrongful termination claims.
• Show that expectations were reasonable and consistent.
• Demonstrate that the employee was given a fair chance.
• Prevent misunderstandings or “I didn’t know” moments.

PIPs also create structure in situations where emotions often run high. Instead of vague frustrations, you identify concrete steps and deadlines.

How to Make a Strong PIP

1. Identify Clear, Measurable Issues

Avoid general statements like “bad attitude” or “needs improvement.” Spell out the exact behaviors or results that need fixing, such as: “Arrived late 6 times in the last 30 days.” or “Customer follow-up calls not completed within the required 48 hours.”

2. Define What Success Looks Like

Employees should know exactly what they need to do to succeed. For example: “Arrive on time for all scheduled shifts for the next 60 days.” and “Respond to all customer inquiries within 48 hours for 8 consecutive weeks.”

3. Set a Realistic Timeline

Most PIPs last 30, 60, or 90 days, depending on the issue. Serious misconduct is not something a PIP is meant to fix; performance issues are.

4. Offer Support, Not Surveillance

A PIP should show you're invested in helping the employee grow, not just documenting their exit. Support may include:

• Regular check-ins.
• Training or shadowing.
• Clarifying job duties.
• Additional tools or resources.

5. Document Everything

This is your legal safety net. Keep the full PIP, notes from check-in meetings, emails summarizing progress, as well as any examples of improved or continued poor performance.

Questions SMBs Should Be Asking Before Starting A PIP

Before you launch a Performance Improvement Plan, take a moment to assess whether it’s the right move:

• Is the performance issue clear and documented? Do you have specific examples—not just frustration?
• Have I communicated expectations before now? Would the employee say they knew what was expected?
• Is the PIP fair and measurable? Are the goals realistic based on the role and workload?
• Could this be misinterpreted as retaliation or bias? Would a Legal Pro say my reasoning is consistent with how I treat other employees?

These questions help ensure your PIP strengthens—not weakens—your legal footing.

What to Do Next

To roll out a PIP that protects your business and gives your employee a real chance to improve:

• Create a simple written PIP. You may even use a template.
• Schedule weekly check-ins. Short, consistent meetings help you track progress and document support.
• Keep detailed notes. Save copies of the PIP, meeting summaries, and any updates—this documentation is crucial if you need to decide next steps.
• Evaluate the outcome fairly. If the employee meets the goals, acknowledge it. If not, you’ll have solid documentation for discipline or termination.

A well-crafted PIP brings structure and clarity—giving your employee a real chance to succeed and protecting your business every step of the way.