“Why do employers bother giving employees Performance Improvement Plans (“PIP’s”), if they always fire them after?”

Question: Dear Alan: After all I’ve read about Performance Improvement Plans, or “PIP’s,” and being placed on one, and ultimately fired, I continue to be perplexed by one issue: since almost all employees are “At Will” employees, and so can be terminated at any time, for any reason, why do all of these companies bother with PIP’s?

It’s not like they are conducted in good faith, have a genuine interest in helping the employee perform, and has been shown to be a glorified out-papering process.

So, since no employer is required to pay severance when someone loses their job why even bother with the PIP’s?


New York, New York 

Answer:  Dear Linda: I heartily agree with so much of what you write. However, two things you write are in error, and it is in those two errors that the answer to your question lies.

(a) First, it is not correct that “at will” employees can be terminated for “any” reason. While most people, lawyers and judges seem to believe that, it is a very incorrect statement. What is true is that “at will” employees can be terminated for “any proper” reason. So, employers cannot terminate employees for improper reasons, such as discrimination, retaliation, harassment, because they will not engage in improper or illegal behavior, and/or many other “improper” reasons.

(b) Second, you write that employers are not required to pay severance when someone is terminated. That is true, but when severance is paid, it is not due to any “requirement.” Rather, severance is paid to reduce risks, including risks that employees will claim they were fired for “improper” reasons.

So, if you put these two corrections together, we get the answer to why you are perplexed: Performance Improvement Plans are almost always instituted (a) to create a seemingly “proper” reason (and paper trail) to fire someone (b) in order to deny them severance, and possibly even  unemployment benefits.

By instituting Performance Improvement Plans (or “PIP’s”), employers (i) humiliate, (ii) infuriate, and (iii) intimidate employees. Then, as a direct result: 

 Often after a PIP, an employee will quit in disgust; presto: no severance and even no unemployment benefits, and the employer does not have to explain to anyone why they wanted the employee to leave.
 Often after a PIP, an employee will feel intimidated, and simply accept his or her termination; presto: no employee request or expectation of severance, and the employee will be too intimidated to ask for a reason for his or her being singled out.
 Often, after a PIP, an employee will feel infuriated, and either shout or engage in some other bad conduct; presto: they are then fired for “cause” and given no severance and not entitled to  unemployment benefits.
 Often after a PIP, HR will say to an employee, “You know, your resume would look so much better if you resigned, than were fired; we will ‘let you’ resign, as a favor.” Presto: no severance, no unemployment benefits, and the employer does not have to give a reason for pushing the employee out.
 Often, after a PIP, HR will say to an employee: “If you resign, in the future you may come back and work for this company. But if you are fired for performance reasons, you can never come back.” Presto: the employee quits, without request or expectation of severance, and is even denied unemployment benefits. 
 Often, after a PIP, HR will say to an employee, “If you resign we can give you a neutral reference, and maybe we will even not contest your application for unemployment.” Presto: no severance, and no need to provide a reason for wanting an employee to leave.

So, (a) many times PIP’s are used to hide improper reasons for wanting an employee to leave, when the real reason is improper. Also, (b) using PIP’s helps employers reduce severance costs, and even lowers their unemployment insurance premiums, which are based on how many of their employees collect unemployment benefits.

I am certain that some Performance Improvement Plans are honest and in good faith, but my experience is that such good faith use of PIP’s is quite rare. Most are false and fraudulent, and so very much upsetting. I believe it is the humiliating, the infuriating and the intimidating effects of the vast majority of Performance Improvement Plans that are the source of their power for employers, and the essence of their evil.

False and fraudulent PIP’s are a scourge everywhere, and do pose a great problem for employees.  We strongly urge our blog readers to stand up to them, resist them, and “push back” at them, using the insights we offer on our newsletters and Q & A’s, [click here]. Likewise, our video on responding to a PIP can be viewed, [click here].

Finally, our best-selling Model Letter to use to Push Back at a PIP is available, [click here].

Linda, I hope you are no longer perplexed. Thank you for writing in, and giving me the opportunity to explain these important aspects of PIP’s.

If this has been helpful, I would ask that you do me a small favor: tell one or two of your friends on Facebook, LinkedIn or other social media of our blog. It would simply help us “spread the word.” It is our hope that if less employees are perplexed, more employees will be empowered, and empowered employees are productive employees.

          Best, Al Sklover 

© 2010 Alan L. Sklover, All Rights Reserved.