An effective hiring process is essential to a midmarket company's success. Because you have fewer workers than enterprise organizations, you have to entrust employees with more duties and allow for less room for error. Hiring someone who is unable to perform creates extra work and stress for your team, compromising the company's performance overall. Organizational performance will also lag between termination and your next hire. Thus, the best solution is to help current employees improve in their roles.

If an employee is underachieving, their manager should meet with them to discuss an improvement plan.

One method is through a performance improvement plan (PIP), which specifies terms, behaviors and measurements the employee must meet over a certain time. Possible reasons include underperformance or struggles with interpersonal relations with colleagues or managers. Because employees likely have the underlying ability to perform their jobs, a PIP could help remedy specific flaws.

However, the performance improvement process can be tricky. Once an employee is notified about a PIP, that person may think management is simply creating a paper trail that allows for termination. If management truly thinks the employee can still be an asset, they must present the PIP wisely so it both has the right effect on the employee and covers the firm from a legal standpoint.

Best Practices for the PIP Process

When developing a PIP, a manager must:

  • Keep notes. It's necessary to establish a pattern of failures or shortcomings to preclude the employee's ability to dispute a supervisor's decision or file a legal claim that requires a midsized firm to incur costs in its own defense.
  • Listen to the employee's perspective. There may be simple remedies to an employee's underperformance, such as additional training, a slightly altered work schedule or a better workstation. Further, some employees will point to factors they feel are outside their control. Managers should investigate the latter claim more deeply, because it could be a symptom of a larger departmental problem. If the cause is a personality mismatch between employee and manager, explain to the employee that in a midsized company, it's unlikely that another department or manager could make use of them.

When executing a PIP, a manager must:

  • Present a SMART action plan. Institute objectives that are specific, measurable, achievable, relevant and time bound, based on an employee's documented inadequacies.
  • Introduce judgment-free mentors or other resources. Having a mentor or other impartial resource could make the employee more amenable to the PIP process and feel that there is an honest chance at success. Word spreads fast at midmarket firms, so this will show other employees that there is a credible support system in place if they ever have difficulties.
  • Set out interim checkpoints. These should be weekly or biweekly, during which the employee meets with the supervisor to evaluate progress and discuss any new challenges. Midsized companies have little time to waste when performance is lagging, so don't draw out these time frames.
  • Obtain the employee's written acknowledgment and agreement. Because some employees might feel that signing the PIP is simply a formality in their eventual termination, the supervisor must take a delicate approach. Have them practice their approach ahead of time with a human resources person, outside consultant or fellow manager.

If the employee shows improvement after the initial presentation, the manager should then express optimism and a hint of praise. Positive reinforcement is critical to those who are close to failing. If a manager doesn't support a struggling employee with an admirable work ethic, this is management's failure. And if the employee washes out and must be replaced, this will add financial and workload stress to a midsized firm.

Post-PIP Termination

On the flip side, employees who have made little or no progress can be terminated based on documentation of their continued inability. Managers should do this without emotion and apology; rather, they should provide facts and next steps. While the performance improvement plan gave that employee an opportunity to get back on track, their colleagues are likely to meet this termination with relief. They'll no longer need to sacrifice time and effort to make up for an underachiever.

Have you had to develop PIPs for failing employees? How do you approach it? Have your plans ever saved an employee from termination? Tell us your experience by commenting below.

Rob Carey is an NCMM contributor and a features writer who has focused on the business-to-business niche since 1992. He spent his first 15 years at Nielsen Business Media, rising from editorial intern to editorial director. Since then, he has been the principal of New York-based Meetings & Hospitality Insight, working with large hospitality brands in addition to various media outlets.