We Killed Performance Improvement Plans (PIPs)—Honest Severance Was Kinder

The Performance Improvement Plan (PIP) is a corporate euphemism. Ostensibly, it's a structured path to help a struggling employee get back on track. In reality, in 90% of cases, it's a delayed firing with a paper trail to minimize legal liability.

We stopped doing them. We realized the PIP process was cruel, expensive, and dishonest. Instead, we moved to a "Performance or Pay" model. The results were better for the company and, surprisingly, much better for the departing employees.

The Cruelty of False Hope

A typical PIP lasts 30 to 90 days. During this time, the employee is under a microscope. Every email is scrutinized. Every commit is reviewed. The manager is documenting failures, not coaching for success.

The employee usually knows the score. They feel the shift in tone. But the "Improvement" in the name gives false hope. They work 60-hour weeks, trying to survive. The stress is immense. It's a slow-motion car crash that lasts three months.

When the inevitable termination comes at the end, the employee is burnt out, demoralized, and often bitter. They've spent their energy fighting a losing battle instead of finding a new job where they might thrive.

The Manager's Burden

For managers, PIPs are a nightmare. They require hours of documentation every week. "Did John meet objective 3.a of the plan?" They have to be adversarial with someone they likely hired and care about.

Because the legal department requires the PIP to be bulletproof to prevent lawsuits, managers stop being leaders and start being prosecutors. They build a case file. This destroys trust with the rest of the team, who see the bureaucratic machinery grinding their colleague down.

The operational cost is massive. A manager spending 10 hours a week documenting a PIP is 10 hours a week not helping high performers. We were investing our scarcest management resources in our least productive outcomes.

The Alternative: The Fork in the Road

We replaced PIPs with a transparent choice. When performance is consistently below expectations and coaching hasn't worked, we have a "Fork in the Road" conversation.

We tell the employee clearly: "You are not thriving here. The current trajectory leads to termination. We see two options:"

Option A: The Improvement Sprint. "If you genuinely believe you can turn this around, we will set incredibly clear 4-week goals. This is not a paperwork exercise. If you miss them, you leave with standard severance (2 weeks). But honestly, we have doubts this will work."

Option B: The Graceful Exit. "We accept this isn't the right fit. You leave now, with dignity. We pay you 3 months of severance. We will provide a neutral or positive reference focused on your strengths. You can focus immediately on finding a role that fits you better."

Why People Choose Option B

95% of people choose Option B. And they are relieved.

The offer of 3 months' pay is generous. It buys them time to find a new job without panic. They leave without the trauma of a 90-day failure documentation process. They leave feeling treated like an adult, not a delinquent.

They often find jobs quickly. Why? Because they aren't interviewing while exhausted and beaten down by a PIP. They are interviewing with a financial cushion and their confidence intact.

The Legal Fear vs. Reality

HR and Legal departments love PIPs because they believe documentation prevents wrongful termination suits. "We proved they were bad at their job!"

Our experience? People rarely sue when you treat them fairly and pay them generously. People sue when they feel humiliated and trapped. The PIP creates the animosity that leads to lawsuits. The "Graceful Exit" diffuses it.

The cost of the extra severance is lower than the cost of the manager's time, the legal review time, and the potential legal fees of a bitter dispute. It's a "peace dividend."

The Culture Impact

The rest of the team notices. They see that when things don't work out, their colleagues aren't "disappeared" or tortured. Transitions are handled with respect.

It creates a culture of high standards but high psychological safety. You can fail here without being destroyed. It makes people more willing to take risks, and more willing to admit when a role isn't working for them.

Conclusion

Hiring mistakes happen. Role mismatches happen. They are not crimes. Punishing someone for a mismatch with a PIP is a relic of command-and-control management.

We realized that being "kind" didn't mean pretending everything was fine until it wasn't. It meant being honest quickly, and being generous during the transition. Honest severance isn't just nice; it's better business.

If you are putting someone on a PIP, ask yourself: Do you actually expect them to succeed? If the answer is no, stop the charade. Buy out their contract, shake their hand, and let them get on with their life.