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Are Performance Improvement Plans the Best Practice?

Categories: Employment, Article

I often get asked – what is the best way to terminate an employee? Often, the discussion centers around whether the employer should issue a written warning and/or performance improvement plan ("PIP")?

Many attorneys feel that employers should give the employee at least one written warning and then put them on a PIP. That way, there is a good paper trail. It also gives the employee a chance to correct the issues that are of concern.

In most cases, I recommend against issuing any written warnings or putting the employee on a PIP. I have seen firsthand how employees react to a PIP. Many (if not most) employees become insecure, defensive, and paranoid. Their productivity often declines because they feel that they are being intensely scrutinized and set up for failure.

It can also cause the employee to "lawyer up." The employee's lawyer often suggest ideas for how the employee can file a complaint of unlawful discrimination or harassment. It is unlawful to terminate an employee because she/he has filed a complaint of unlawful harassment or discrimination. This puts the employer in a precarious position. If it moves forward with termination, it will likely be accused of unlawfully retaliating against the employee. It makes terminating the employee, no matter how warranted it may be, problematic.

Unfortunately, it is rare in my experience when an employee receives a PIP, rationally accepts and understands the criticism, and makes significant improvements in their performance. Many employees, especially employees with repeated performance issues, don't seem to have the emotional capacity to accept criticism. They often become angry, depressed, resentful, and paranoid. They look to blame others and stir the pot. They may spend their time gathering evidence to support whatever claim they feel they may have. The employee often "poisons the well" by conspiring with other employees and disparaging their manager and the organization. It can be a long and costly thirty days.

Terminating an employee is never pleasant, but experience has shown me that terminating an employee is a better strategy than issuing written warnings and/or a PIP. This does not mean you shouldn't give your employees multiple chances to improve – you should. Nor does this mean you should avoid being critical of their performance – you should speak early and often about performance issues. You should just think carefully about whether it is necessary or beneficial to issue a written warning or a PIP. Frequently PIPs result in more problems than they solve.

For all of these reasons, I recommend that Arizona employers (in most cases) terminate employees as soon as they decide the relationship is not salvageable.

If written warnings and PIPs are not issued, employers should keep internal documentation about their oral discussions with a problem employee. They can do this by having the manager who spoke with the employee send a contemporaneous email to another manager or HR documenting the performance issues discussed that day. That way, there is a paper trail about what was discussed and when. In my view, this kind of internal documentation is just as effective in court as a written warning or PIP.

There are, however, situations where having a paper trail can be important. For example, if the employee has already complained about unlawful discrimination or harassment or is in a protected class due to their age, disabilities, race, etc., it may be more important to have a clear paper trail. Even still, issuing a written warning or PIP is often not the best approach.

As with many HR issues, there are risks and benefits to taking different approaches. Arizona employers should weigh the pros and cons and talk with an experienced employment attorney to decide what approach is best for each situation.


About the Author: Jeffrey Silence is a partner at the Phoenix law firm of Jaburg Wilk.  He has helped advise many employers on best practices to terminate a problem employee. He has also drafted policies and handbooks for employers to help ensure their compliance with the law.