Performance Improvement Plans are not about performance

by Dale Davidson March 18, 2026

The WSJ had a great article about how companies use "Performance Improvement Plans" or PIPs as a pretext for firing people.

The Most Hated Way of Firing Someone Is More Popular Than Ever. It’s the Age of the PIP.

In the messy business of getting rid of employees, the PIP is having a moment.

A performance improvement plan is usually a list of tough-to-achieve goals to be completed within 30 to 90 days. Can’t shape up? You’re out.

The percentage of workers who are subject to performance actions, including PIPs, is on the rise. In 2020, 33.4 people for every 1,000 workers had documented performance issues, according to software firm HR Acuity, which conducts an annual survey. In 2023, 43.6 workers out of every 1,000 were involved in formal performance procedures. That includes PIPs and performance counseling, among other measures.

PIPs are intended to bring consistency and fairness to the way employees are judged and managed. Their stated goal is to lay out a path to improved performance—and sometimes it works. That said, many workers and even managers say they’re used primarily to provide legal cover from employment lawsuits or to cut costs without announcing layoffs.

This is the kind of nonsense that drove me crazy as a W2 employee. Big companies use a tool that is nominally about one thing, but then use it for another.

In this case, PIPs have nothing to do with improving performance, but rather, not getting sued by the employees they want to fire or lay off.

I'm not opposed to terminating employees, whether it's due to performance or simply a change in strategy.

But what makes employees feel crazy is when companies are not upfront about it.

It's like when organizations change health care plans and they market it to employees as "improvements."

Do they think their employees are idiots?

They're trying to save a few bucks for the company because health care is expensive.

If they just said that, the employees might not be happy, but at least you're not adding insult to injury.

Look, you're not going to change this corporate nonsense as a W2. But, you can go work for yourself as a 1099. At least that way you don't have to be subject to the insulting BS companies throw your way.

Want the full playbook? Check out Going 1099.