How Companies Are Using PIP To Humiliate and Get Rid of Workers

by EconMatters, EconMatters.com

In my last two posts, I talked about why hiring now takes longer and how some companies use interview to score free consult from job applicants, today I’d like to discuss the increasing popularity of PIP. This is not your forex trading pip, PIP in the corporate lingo means Performance Improvement Plan.

What’s in PIP?

Any Human Resource (HR) person would preach that PIP is a performance management tool designed to facilitate “constructive discussion” between a staff member and his or her supervisor and to “clarify the work performance to be improved”. PIP typically consists of a summary of an employee’s ‘guilt’ and a list of tasks and milestones to rectify the ‘guilty behavior’ requiring at least weekly check-in’s with HR and manager to report progress. Although a non-public process between employee, manager and HR, PIP is quite humiliating and a definite morale killer.

PIP or Quit?

PIP is very ineffective in actually ‘improving performance’. Employees (particularly the ones that are highly skilled and experienced) on PIP most likely would quit before the completion of PIP thus defeating the entire purpose (I personally would think twice retaining somebody who’s willing to go through PIP and stay).

Since PIP is an official and formal HR process (i.e. included in employee record), it is typically a last resort and rarely used. In fact, most managers understand or should have the IQ to know that if you put an employee on PIP, be prepared for that employee to quit (leaving all the work to the manager or other team members, not to mention disrupting the team product delivery project plan).

New Love of PIP

Up until about five years ago, managers usually had favored the more informal approach such as a good long sit-down talk, followed up by more short discussions for feedback. Nevertheless, my observation is that in recent years, PIP seems to have become a popular tool to the new generation middle managers for the purpose of a “homogeneous team”. That is, PIP has become an acceptable and common practice to get rid of the “black horse” employee that is typically high-skilled and highly productive, thus at odds with a team of mostly mediocre members (including the manager) and hard to terminate based on pure work performance.

Highly Subjective

The loophole is that there’s not a clear definition of behavior or performance that warrants a PIP. Let me just cite one example.

Throughout the years, I have maintained a small network of friends (around 8 people in various fields including IT, Marketing, and Finance) with 10-30 years of professional experience. We work for different companies and usually feel safe discussing things such as work projects and politics with each other. Within this small 8-person network, all of a sudden, four got put on PIP within the past 3 years (what are the odds?) for some highly subjective and vague “violation” like “unprofessional conduct”. These four all have something in common:

1. A newly-promoted Gen X or Y direct manager that’s less experienced
2. All four have the most company seniority within their respective teams outranking even their managers
3. All four are highly skilled and have a proven track record of high performance and high productivity

I don’t think this is a coincidence or some random occurrence. For a professional with 20 years of experience, going through PIP is like a slap on the face. Needless to say, all of them quickly got the message and landed a new job shortly after the PIP started. Of course, their managers are not all too shy about calling and asking for work-related things long after they quit.

Why New Gen Managers Love PIP

I’m not sure how corporations are training managers these days, but I find it very peculiar that any manager with half a brain could think PIP is actually an effective managerial tool and be used so often. So here is what I think happening (otherwise, it means companies are now all run by real morons).

As we noted before, the post-boomer new generation middle managers tend to rely on tools favoring standardization in the decision-making or project delivering process. They tend to be ruthless (‘relationship’ means very little), and like to band together and act like a “Fraternity Group”. PIP, in essence a group-decision-make tool without clear boundaries and definitions, is perfect for them to use getting rid of an otherwise hard-to-terminate high-performance employee with low risk of a lawsuit (The PIP employee is usually required to sign the PIP to show “understanding” and “commitment to the plan” thus agreeing to the ‘guilt’ summarized on PIP). .

Start of Decay?

I think the worst part in it all is that this is taking place with blessings from the corporate higher-up. These people are brain-washed by the almost two-decade-long propaganda to give special consideration to Gen X and Y — ‘The Hope of Corporate America after Boomers’. In most corporations, the higher-up is still mostly the boomer generation with Gen X or Y kids, so letting the new generation managers do whatever including losing valuable employees is like giving their kids a break (on a psychological level).

The U.S. has long worried about China taking over America in talent, economy, military, etc. From what I’ve observed in Corporate America, this may not be an idle threat.

Graphic Source: http://www.polyp.org.uk/