A Performance Improvement Plan (PIP) is either the most useful management tool in your kit or the final step toward a lawsuit. Which one depends entirely on how it's structured, documented, and communicated. Most small-business managers get PIPs half-right — enough to frustrate the employee but not enough to protect the business if things go sideways.

This is the framework we walk our clients through when performance issues stop being "let's have another conversation" and start being "we need to make this formal." It's the same template we use when drafting PIPs for clients across the country.

The single most important rule: a PIP is not a tool to "create a paper trail to fire someone." It's a real, good-faith chance to improve. If you go in planning to fail them, you're creating pretextual evidence — and a plaintiff's lawyer will shred it in discovery.

When to use a PIP (and when not to)

Use a PIP when:

• There's a specific, measurable performance gap you can describe in concrete terms
• The employee has been coached informally at least once before, with documentation
• You genuinely believe improvement is possible within 30-90 days
• The issues are performance-related, not conduct or misconduct
• You've ruled out factors outside the employee's control (unclear expectations, bad training, lack of tools, a disability that needs accommodation)

Don't use a PIP when:

• Serious misconduct is involved — harassment, theft, fraud, safety violations. Those skip PIPs and go straight to investigation + termination.
• You've already decided you want them gone. That's not a PIP, that's a scripted exit — and the law knows the difference.
• The problem is a skill or training gap the company hasn't addressed. Training comes first.
• The employee has requested an accommodation that hasn't been answered. That's an ADA interactive-process issue, not a performance issue.

The anatomy of a good PIP

Every PIP should have these 6 components. Skip any one and the document weakens legally:

1. Specific performance gaps

Describe the gap in measurable, behavioral terms. Not: "Needs to improve communication." Yes: "Has missed the Friday weekly report deadline in 6 of the last 10 weeks. Project-status emails to clients have been delayed more than 48 hours in 4 documented instances since Jan 15."

2. Expected standard

What does "meeting expectations" look like, concretely? Again, measurable. Not: "Better attention to detail." Yes: "Deliverables submitted by their stated due date. Fewer than 2 factual or formatting errors per deliverable. Weekly reports delivered by 5pm every Friday."

3. Specific support you'll provide

Critical — this is what distinguishes a real PIP from a setup. Commit to:

• Weekly or bi-weekly check-ins for the duration of the plan
• Resources: training, tools, a mentor, access to templates, clearer documentation
• Clarified priorities — often underperformance is rooted in unclear priorities from the manager
• Removal of blockers — what's in the way of the employee succeeding?

If the PIP has no support section, or the support is "come to me when you have questions," it's a sham plan. Everyone — including a future jury — can see that.

4. Timeline

Standard is 30, 60, or 90 days, with milestone check-ins. Shorter than 30 days is generally not defensible unless the issue is urgent (safety) or the employee is in a short probationary period. Longer than 90 days and it stops being a PIP and becomes chronic coaching.

Our default: 60 days, with a mid-point check at day 30. Long enough to give a real chance, short enough to force momentum.

5. Consequences

Plain-language statement: "Failure to meet the standards outlined above during this PIP period may result in further disciplinary action, up to and including termination."

Don't soften it. Don't say "we may need to explore other options." Say what you mean — the employee deserves to know the stakes.

6. Signatures + dates

Employee signs acknowledging receipt (not necessarily agreement with every point). Manager signs. HR or owner signs. Dates on everything. If the employee refuses to sign, write "Employee declined to sign. Copy provided by [manager name] on [date] with witness [name] present."

The 60-day PIP template (what we use)

Here's the structure — fill in the specifics for any given employee:

PERFORMANCE IMPROVEMENT PLAN

Employee: [Name]
Position: [Title]
Manager: [Name]
Plan Start Date: [Date]
Plan End Date: [Date + 60 days]
Review Dates: [Day 15], [Day 30], [Day 45], [Day 60]

SECTION 1 — Performance Concerns
The following performance concerns have been identified:

  1. [Specific concern with dates/examples]
  2. [Specific concern with dates/examples]
  3. [Specific concern with dates/examples]

These concerns have been previously discussed on the following dates:
  • [Date, topic]
  • [Date, topic]

SECTION 2 — Expected Standards
By [Plan End Date], the following must be demonstrated consistently:

  1. [Measurable expectation]
  2. [Measurable expectation]
  3. [Measurable expectation]

SECTION 3 — Support and Resources
To support your success, [Company] will provide:

  • Weekly 30-minute check-ins with [Manager] on [Day, Time]
  • [Specific resource: training, tool, mentor, documentation]
  • [Removal of specific blocker]
  • [Clarified priorities document]

SECTION 4 — Timeline and Checkpoints
  • Day 15: Initial progress review
  • Day 30: Midpoint evaluation
  • Day 45: Course-correction check
  • Day 60: Final evaluation

SECTION 5 — Consequences
Failure to meet the expectations outlined above during this plan period may
result in further disciplinary action, up to and including termination of
employment. This document does not alter the at-will nature of employment.

ACKNOWLEDGMENTS
Employee signature: _________________________  Date: _________
Manager signature:  _________________________  Date: _________
HR/Owner signature: _________________________  Date: _________

That's it. One page, maybe two. Anything longer is bureaucratic cover; anything shorter leaves gaps.

The introduction meeting

Delivering the PIP matters almost as much as writing it. Script:

1. Set the context: "We've talked about [issue] a few times now. I want to formalize our path forward so we're both clear."
2. Present the document: Hand them a physical copy (or share it live on-screen if remote). Don't email it ahead.
3. Walk through it section by section. Don't skip to the end. Let them read Section 1 and react before you move on.
4. Invite questions and pushback. "What parts of this are unclear? Is there anything I've characterized wrong?" If they push back on a factual point and they're right, fix the document before signing. That takes strength but protects the plan.
5. Commit to the support. "Here's what I'm going to do to help make this work. Here are the check-in dates on our calendars already."
6. Set the tone. "I want this to succeed. I would not be giving you this plan if I didn't think it was achievable." If you can't say that honestly, don't say it.
7. Give them 24 hours to sign. Don't pressure-sign in the meeting. It looks coercive and weakens the document if it ever gets litigated.

Running the PIP well

• Every check-in is documented. Even a 15-minute status meeting gets a 3-sentence email summary afterward: what we discussed, what's on track, what isn't.
• Follow through on your support commitments. If you promised weekly 1-on-1s and miss two, the employee (and their lawyer) will argue the company didn't hold up its end. PIP voided.
• Give credit for improvement. If things are actually getting better at Day 30, say so in the check-in email. "You've hit every deadline since we started. Keep it up."
• Don't add new expectations mid-plan. If new issues arise, address them in future plans — not by amending the current one. Moving goalposts is another plaintiff's-lawyer favorite.

What happens at Day 60

Three outcomes. Handle each cleanly:

Outcome A: Improvement, expectations met

Document it. Send an email: "You've met the expectations of your PIP. The plan is now concluded. Continued performance at this level is expected going forward." Then back to normal 1-on-1s. Check in more frequently than usual for the next 60-90 days to prevent backslide.

Outcome B: Partial improvement

Case-by-case. Options:

• Extend the plan by 30 days if the trajectory is clearly upward
• Move to termination if improvement is inconsistent or superficial
• Never silently let the PIP lapse. That sets a precedent future employees will weaponize.

Outcome C: No improvement

Proceed to termination using the termination playbook. The PIP is now Exhibit A in your defense if the firing is ever challenged: you documented the gap, you gave a real chance, you provided support, you set a timeline, the employee didn't meet it. Clean case.

The 5 mistakes that turn PIPs into lawsuits

1. Vague expectations. "Improve communication" is not measurable. If you can't tell whether the employee hit the goal, neither can a judge.
2. No support documented. A PIP with no commitments from the employer reads as a setup. Juries hate that.
3. Putting an employee on a PIP right after protected activity. FMLA leave, discrimination complaint, workers' comp claim, pregnancy announcement. Timing creates retaliation inference.
4. Inconsistency across employees. If your star performer has a bad quarter and you don't PIP them, but you PIP someone else for similar misses, that's discrimination evidence.
5. Skipping the PIP entirely. Firing someone for performance with no prior documentation, no warnings, no PIP? Indefensible in most cases. The PIP is what separates "documented performance issue" from "they just didn't like me."

The bottom line

A PIP isn't punishment. It's a reset button for both parties. The employee gets clarity and a fair shot. The manager gets a documented process. Whichever way it ends — improvement or termination — you're in a better position than the vague "we've had some conversations" approach most small businesses rely on.

If you've got an underperformer right now and you've been dreading the conversation, the worst thing you can do is nothing. Use the template above, set up the first check-in, and get the 60 days started this week.

Need help drafting a PIP? IHG by ARG drafts, reviews, and runs PIPs for small-business clients across the U.S. — including the tough cases (employees near retirement, on leave, after protected activity, in multi-state situations). Everything is done remotely and typically delivered in 2-5 business days. Get in touch or log into the client portal.