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PIP like you mean it

February 5th, 2013  |  Lisa Milam

Performance improvement plan: (a) valuable tool for correcting performance problems, or (b) obligatory pre-discharge formality? If you answered (a), you know that a PIP can help a faltering employee meet job expectations—an important goal given the costs of employee training and turnover. If you answered (b), try again. In the at-will employment setting, a PIP is not a legal prerequisite to termination (of course not) and it won’t insulate your organization from liability if a discharged employee files suit.

For many private-sector employers, the PIP serves a genuine “due process” function of sorts, a fair warning and last chance for an employee to avoid discharge. But when a PIP is used for the sake of appearances or implemented in half-hearted fashion, courts and juries tend to see right through the subterfuge.

Cases in point

In Brock-Chapman v National Care Network, LLC, a sales executive filed FMLA claims after she was placed on a PIP and then discharged within a month of returning from leave to care for her cancer-stricken (now deceased) husband. Under the PIP, which was implemented because of her purported “lack of urgency” for her work, the employee was required to make “significant improvement” within 30 days. Unsure how to meet this vague mandate, she asked for more specific performance goals, but her request was denied. In fact, when forwarding one such request to the employee’s supervisor, the HR director referred to the employee as “exhausting,” evidencing animus, the court noted.

By objective measures, the employee was performing quite well—she was 43 percent ahead of her sales target for the year. But the PIP required her to “improve sales.” The employee was supposed to have regular calls with her supervisor to monitor her progress toward meeting the PIP goals, but her boss skipped five of the eight calls and did not reschedule them. Moreover, while employees were usually given 90 days to meet PIP objectives (as clearly noted on the employer’s standard PIP form), the employee was granted only 30 days. Under these facts, a federal court in Texas let stand a jury verdict in the employee’s favor, noting that the questionable intent and execution of the PIP demonstrated pretext.

In Trickey v Kaman Indus Tech Corp, a federal district court in Missouri found sufficient evidence that an employer actively thwarted a branch manager’s attempts to comply with a PIP. While on the PIP, his superior undermined his efforts to reestablish his authority as branch manager by publicly congratulating another employee—who was being groomed for the branch manager position—for the branch’s excellent performance. An HR manager testified that the PIP process had been manipulated by a supervisor who had asked her to create a PIP for the branch manager when it was inappropriate to do so. A coworker testified that considerable attention was paid to finding the branch manager’s mistakes.

When the branch manager asked for additional customer accounts in an effort to meet the sales goals set forth in his PIP, his boss refused the request. Only 58 days into the 90-day PIP, the branch manager was demoted and given a gross sales target of $1.2 million. However, he was assigned customer accounts that had netted for only $200,000 in combined sales during the previous year. A jury found the branch manager had deliberately been set up to fail by a sales requirement that was practically impossible. The district court agreed, upholding a jury verdict in his favor on his age bias and retaliation claims.

Finally, in Burnsed v Pasco Regional Medical Center, a hospital placed a respiratory therapist on a PIP. Then the employer removed her from the schedule. Despite the employee’s frequent calls to her supervisor and the director of nursing, she was not given any shifts. Ultimately, the employee was terminated, allegedly because she failed to fulfill the conditions of her PIP. The evidence indicated that the employer interfered with the employee’s attempts to work enough shifts to satisfy the requirements set forth in the PIP. Thus, a reasonable jury could find that the hospital issued the PIP, removed her from the schedule, and ultimately terminated her because it did not want to deal with her intermittent FMLA absences for asthma and colitis, the federal district court in Florida held.

The right way to PIP

A bona fide PIP is a good-faith effort to help an employee correct performance deficiencies and succeed. To that end, the organization seeks to remove impediments, rather than put obstacles in the employee’s way:

• A PIP is implemented in conjunction with HR to control for any unfair bias on the supervisor’s part in assessing whether the employee has met stated goals.
• Stated goals are SMART—specific, measurable, attainable, relevant, and timely. Meaningful criteria are provided in order for an employee to gauge progress. Instead of “improve poor attitude,” for example, an employee is expected to “reduce customer complaints to zero.”
• The employee is given regular feedback. Weekly or semi-weekly meetings with the supervisor are built into the PIP schedule so that more formal feedback can be provided.
• Additional training, mentoring, “scaffolding” are given as needed or requested.
• A fair amount of time is allowed in which to meet the stated criteria. If a standard PIP is 90 days, then an employee is given the full 90 days in which to meet PIP goals. If business needs require a reduced time frame (the employee is in a key policy position, for example), the PIP states at the outset the specific time to be allotted, and why.
• Employees are given a sufficient number of shifts or meaningful work assignments during the PIP period in which to demonstrate improvement and satisfy the PIP criteria.
• The consequences of failure to meet PIP goals—usually termination, perhaps demotion—are clearly articulated at the outset.

When to PIP

A PIP should be imposed for objective, clearly documented reasons. The decision to place an employee on a PIP must be consistent with his or her recent performance evaluations and merit pay decisions. A PIP is not to be imposed in retaliation for filing a complaint, or out of a discriminatory belief that an older employee “can’t hack it” anymore. An employee should not be placed on a PIP if similarly situated younger workers (or male workers, or white workers, for example) would not have been placed on a PIP based on the performance at issue.

Know when not to PIP. A PIP works best to correct performance deficiencies, rather than significant misconduct or behavioral issues. In one instance, an assistant principal was placed on a PIP after she strip-searched an 8-year old male student without calling his parents. However, a PIP is hardly appropriate for situations like these, which call for more severe disciplinary measures.