What is a performance improvement plan (PIP)?

A performance improvement plan (PIP) is a formal document that outlines specific areas where an employee is underperforming and provides a structured path to help them improve. It typically includes clear goals, measurable expectations, a timeline for progress, and support resources such as training or coaching.

For small business owners, a PIP isn’t about paperwork—it’s about giving a struggling team member a fair, constructive opportunity to get back on track. When implemented correctly, a PIP can save a valuable employee, reduce turnover, and improve team morale. With Homebase, you can keep track of employee schedules, attendance, task performance, and manager notes to help inform and support PIP efforts.

When to use a PIP

Not every issue requires a formal improvement plan. A PIP is typically appropriate when informal feedback hasn’t resolved performance problems, and the next step is either significant improvement or a transition out of the role.

Consider using a PIP when:

• An employee is consistently missing shifts, arriving late, or leaving early
• Tasks are completed incorrectly or below quality standards
• Customer complaints are linked to specific behaviors
• There’s a pattern of poor communication or teamwork
• The employee has already received verbal or written feedback

A PIP helps document your efforts to support the employee while also protecting your business in case termination becomes necessary.

Key elements of a performance improvement plan

An effective PIP should be structured, specific, and collaborative. Here’s what to include:

• Overview of the issue - Start by summarizing the performance concerns. Be factual, not emotional, and include examples (e.g., missed five scheduled shifts in the last six weeks).
• Performance expectations - Clearly state what standard needs to be met. This could relate to attendance, task completion, customer interaction, or productivity benchmarks.
• Improvement goals - Break down the expectations into actionable goals (e.g., arrive on time for all scheduled shifts over the next 30 days).
• Timeline and milestones - Set a defined period for improvement—commonly 30, 60, or 90 days—and include checkpoints along the way.
• Support and resources - Offer tools to help the employee improve, like additional training, mentorship, or clearer procedures.
• Consequences of non-compliance - Be transparent about what will happen if progress isn’t made, whether it’s a role reassignment, demotion, or termination.
• Signatures - Have the employee and their manager sign the document to acknowledge understanding and agreement.

How to introduce a PIP the right way

Introducing a performance improvement plan can be sensitive. Approach it as a collaborative effort—not a punishment.

Best practices include:

• Have a private, respectful conversation. Explain that the PIP is an opportunity, not a final warning. Focus on your desire to help them succeed.
• Be specific and objective. Stick to facts and documented issues rather than personal opinions or vague feedback.
• Listen to the employee’s perspective. There may be underlying issues—training gaps, personal struggles, or miscommunication—that you can help address.
• Create a supportive environment. Make it clear that you’re invested in their success and will provide guidance along the way.

How to monitor progress

Tracking improvement is essential to determine whether the PIP is working. Use scheduling, task management, and shift feedback tools to evaluate progress.

Checkpoints might include:

• On-time arrival for every shift
• Completion of daily closing duties
• Improved customer service ratings
• Fewer mistakes or complaints logged
• Positive peer feedback or team engagement

Document everything along the way. If the employee meets expectations, celebrate the success and remove the PIP. If not, you’ll have a record that shows you gave them every opportunity to improve.

When a PIP doesn’t work

Despite your best efforts, not every performance improvement plan leads to success. If the employee fails to meet the goals outlined, it may be time to make a change.

This could mean:

• Reassigning the employee to a better-fit role
• Reducing hours or responsibilities
• Ending the employment relationship professionally and respectfully

Because the PIP process is documented, it helps protect your business legally and ethically.

How Homebase helps support performance improvement

Homebase provides the tools small business owners need to monitor and manage employee performance. From scheduling and time tracking to shift notes and manager messaging, you can spot issues early—and support employees who need help.

With Homebase, you can:

• Track attendance and punctuality
• Record shift performance and feedback
• Maintain notes and documentation for employee evaluations
• Assign training tasks to support improvement goals
• Communicate clearly with employees throughout the process

Explore Homebase Hiring and Onboarding to build a better-performing team, support struggling employees with structure and care, and protect your business every step of the way.