Are Performance Improvement Plans Actually Effective?

Jeff Riseley never forgave his first employer for placing him on a performance improvement plan.

He had been with the company for less than a year, and his first few months couldn’t have gone better. He crushed his quotas and outpaced all expectations for a new hire, earning him a reputation as a star in the making. But then the anxiety and stress of the job started to take their toll, and his performance suffered. 

If his manager had asked him what was wrong, they might have learned that he was struggling with panic attacks and insomnia that hampered his performance. Instead, they slapped him with a performance improvement plan with a target quota five or six times higher than what the average sales rep sold, Riseley said.

“They were essentially saying, ‘We know you’re not going to hit it because we want to fire you with cause,’” Riseley said. “I used that as pure anger and rage, like, ‘This is not how this is going to happen. I’m not going to be let go because of what this company is trying to do.’” 

Riseley went on to crush his target quota and eventually earned a trip to London for his performance. But he never forgot the performance improvement plan, and once he earned enough money, he quit.

Riseley’s experience isn’t unusual for a sales rep. It’s emblematic of what sales consultant Amy Volas believes is wrong with performance improvement plans. While they are intended to be a last resort to help struggling reps get back on track, they’re more often used as a crutch for poor management or to jettison an unwanted employee.

“I’m not a fan, and I have rarely seen that they work well,” Volas said. “It screams lack of communication and a lack of leadership if that’s what you pull out when the going gets tough, and it’s a surprise. And in a lot of scenarios, it is a surprise.”     

As the sales leader and founder of Avenue Talent Partners, Volas doesn’t believe in using performance improvement plan when a rep struggles. Instead, managers should develop a transparent relationship from the hiring stage on.

What Is a Performance Improvement Plan (PIP)? 

A performance improvement plan is a formal document managers give to an employee who has consistently failed to meet their quota or performance metrics. It’s typically used as a final warning before the rep is fired and includes a set of tasks and benchmarks that the employee must meet to return to good standing within the company, Volas said.

“Through the course of my career, which is a long one in sales, how I’ve typically seen the performance improvement plan used is there is somebody that’s struggling on the team, and it’s a way of having a defining-moment conversation to see if things can improve,” Volas said. “And if they can, great. If they can’t, we part ways.”  

The objectives within a PIP are meant to be prescriptive, taking into account where an employee is struggling and helping them bridge that gap. So if an employee struggles with outreach, a PIP might include attending additional cold calling training, making a certain amount of cold calls a week and booking a certain amount of meetings for the month. 

But not all PIPs are equal. Some, like in Riseley’s case, can include unattainable goals that are designed to push the employee out. Even when a PIP is well-meaning, Volas believes it still isn’t the most effective strategy to help a struggling employee. The onus to improve is often placed on the sales rep, however, reps rarely succeed or fail on their own.  

Who’s Responsible for Poor Performance? 

When a manager places a sales rep on a PIP, it’s usually because the employee has underperformed for too long. The plan represents a career crossroads — either improve your performance or find a new job.

But the situation that landed the rep on the PIP is rarely that straightforward, Volas said. 

She recalled a colleague at a previous job who was placed on a PIP after the manager changed their book of business. They had an easy collection of accounts that didn’t require a lot of work to reach quota. When that changed, the rep’s performance faltered.

The employee was frustrated because the manager changed their accounts without telling them. But the manager was also frustrated because it was clear to them the employee wasn’t putting in enough work to succeed, Volas said.   

The truth was, both were to blame.

“[The rep] was blindsided, and the leader was over [the rep],” Volas said. “I remember the leader saying to the person, ‘Do you want to just resign already because you’re never going to be able to get through this?’ Everybody had a part in the story. Everybody had responsibility for it, and nobody did the right thing.”

The experience underscores the seedy underbelly of some PIPs, Volas said. On the surface, a PIP is meant to outline the steps an employee needs to take to become a high-performing team member again. It might have a goal like quota or conversion rate attached, as well as steps to achieve that goal. 

“The most common association is, ‘I’m failing, and you’ve decided that I don’t have a job here anymore. Or you’re trying to push me out.’”

But in some cases, managers use PIPs to drive out unwanted sales reps. In others, they use the PIP as a crutch to avoid doing the work to help the rep thrive, Volas said.

Of course, not all PIPs are like that. In a well-oiled sales org, managers set clear expectations around employee performance. A rep is only placed on a PIP if they miss their number and they aren’t meeting their other KPIs to maintain a healthy pipeline, Volas said. The plan then focuses on actionable steps they need to take to bolster their accounts and close more deals. In those situations, success stories of reps working their way off PIPs are common.

Still, it’s hard to erase the stigma of a PIP. 

If the PIP isn’t communicated properly or the manager isn’t committed to supporting the rep, employees quickly tune out. They’ll feel shock, anger and fear at being placed on an improvement plan. While they might take steps to improve, they’ll have one foot out the door. 

“The most common association is, ‘I’m failing, and you’ve decided that I don’t have a job here anymore. Or you’re trying to push me out,’” Volas said. “Because a lot of the time, it’s too late to do the things you have to do in a PIP in the timeframe they want you to do them in.”

While managers need recourse to hold sales reps accountable, Volas believes there’s another way to do it — without the pressure of a PIP.

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Set Expectations Early and Often  

Everything starts with the hiring process. 

Before Volas posts a sales job, she maps out exactly what work needs to be done and what the buyers need from the rep. She’ll also think about what it looks like when a person struggles in the role. Answering those questions helps her create a job description with clear expectations, so the candidate knows what it will take to succeed. It also helps her identify what skills a sales rep needs to thrive.

All of that information then gets translated into her hiring scorecard, which allows her to evaluate each rep’s strengths and weaknesses during the interview stage. Since no new hire is perfect, she looks for candidates who possess at least 75 percent of those skills. 

The remaining 25 percent forms the foundation for hiring conversations and onboarding. Volas lets new reps know where they struggle, what work she’ll do to help them improve in those areas during onboarding and what they need to do to succeed. 

“I’m not here to sell you on the job, I’m here to confirm or deny whether it makes sense for us to work together,” Volas said. “Does it help you get better in your career? Can you help me grow the business? When the answer is yes, good things happen.” 

Establishing this foundation from the get-go creates a dynamic where there are no surprises about the role. The candidate knows exactly what to do to be successful and what will happen if they don’t take those actions. 

“If you’re not talking about this stuff now, you deal with it later. And it costs you a heck of a lot more.”  

It also sets the foundation to have tough conversations about performance in the future.   

“If you’re not talking about this stuff now, you deal with it later,” Volas said. “And it costs you a heck of a lot more.”  

Host Transparent One-on-Ones

When Volas first stepped into a sales manager role, she assumed that whenever someone had a problem, her way of doing things was the best way to solve it. She quickly learned that’s the worst approach a sales leader can take.

Every rep wants to be understood on their own terms, and they may have their own solutions that work best for them, Volas said. Refusing to hear them out was a quick way to lose trust.

Since then, she’s learned to approach one-on-ones with an agreed-upon agenda. The agenda contains all of her notes from previous meetings with the rep and updates on any issues the sales rep brought up. For example, if a rep noticed customers were frustrated with the product’s lack of a particular API configuration, Volas would take note and come prepared with an update from the product team.

“You can’t just go in and say, ‘Tell me about your pipeline.’ That tends to shut people down.” 

The document also contains agenda items for the sales tasks the rep has agreed to work on. This helps create a structure for the meeting and ensures that both she and the rep are held accountable for their given tasks. 

But before she digs into the agenda, she makes sure to ask the rep how they’re doing. This gives them the space to bring up any personal issues they may be going through. 

“We’re in this together, we’re human. Sales is hard, and the pandemic made it a lot harder,” Volas said. “You can’t just go in and say, ‘Tell me about your pipeline.’ That tends to shut people down.” 

She’ll also make sure she’s vulnerable with her reps when she’s having a bad day or when she’s made a mistake. Conversations like that help her establish trust — she can learn whether the rep is really struggling or just needs some time off.

After all this, they’ll dig into the agenda. If there are recurring struggles, she’ll ask the rep what’s going on, why it’s happening and how they’re thinking about addressing it. She’ll also offer her suggestions and steps she can take to help.

In that way, performance improvement becomes a continuous discussion with the rep, rather than an ultimatum. It allows her and the rep to get on the same page and commit to an ongoing plan for improvement.

“If I can open people up, that’s where the work is being done, and I don’t have to rely on a PIP,” Volas said. “It’s not a surprise. I can say, ‘You’ve been falling short. I’m not sure if you realize this, but this has been a common theme in our last four calls. What’s going on?’ And I listen.”  

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Know When to Part Ways 

Volas has a policy when it comes to a struggling employee: If she cares more about the rep’s success than the employee does, it’s time to part ways. 

When it comes to having a difficult conversation with a chronically underperforming rep, it’s never an “or else” situation, Volas said. She’ll reiterate what the expectations were for the job, then ask what’s going on and whether they can fix the issue. 

Everything depends on their answer. If they say they can fix it and they’re committed to doing what’s necessary to improve, she continues to work with them.

But that’s not always the case.

In one situation, Volas had a rep who was not having enough conversations to fill up their pipeline. She tried several tactics, like helping them identify key people to talk to, coming up with a list of reasons a customer wouldn’t want to engage and pairing the rep with a mentor. 

But over several months, they showed no signs of improvement. In fact, they used the time with the mentor to complain, Volas said. When she asked the rep what was going on, they told her they were doing the best they could. 

“You have to really listen to what people are telling you,” Volas said. “If they’re saying, ‘I’m doing the best that I can,’ I can’t do anything with that because they’re not willing to make a change.”

It’s then, after many conversations on the subject and several attempts to improve, that she lets the rep go, paying them their full month’s salary and any commission they earned.

It doesn’t always have to end that way, though.

“The approach I subscribe to is that there are no hidden surprises.”

Volas recalls one employee in a customer-facing role who was struggling. Volas, who managed the rep’s manager, went to visit her and ask what was going on. Volas learned that the employee was struggling with rheumatoid arthritis. The barometric shifts in the air at her location triggered the symptoms and made it difficult for her to perform. 

Volas helped the employee relocate to a new city, and her performance improved 180 degrees, Volas said. 

Ultimately, there are always going to be employees who just don’t fit the job and others who are simply going through a rough patch. If you resort to a PIP every time, you may end up driving the wrong employees out, Volas said.

“The approach I subscribe to is that there are no hidden surprises,” Volas said. “I’m a big believer of communicating early and often and setting expectations. If there is something going on, nip it in the moment.”

“I find people hide behind PIPs because they are not having these kinds of conversations,” she continued. “When [managers] say they want to be in leadership, this is the work we’re talking about.”