The Pluses & Minuses of Using Performance Improvement Plans for Under-performing Sellers

Performance Improvement Plans (PIPs) are a common tool used by sales management to help underperforming sales representatives improve their skills and productivity. These plans are typically structured with specific, measurable goals designed to boost performance over a set period. While PIPs can be highly effective in some situations, they also come with potential drawbacks. If you are a regular reader of content on LinkedIn, there has been much written around PIPs lately; some articles are supportive of the concept/execution, and some articles are highly critical and negative around the concept.? Here, I’d like to explore both the advantages and disadvantages of using PIPs for sales reps.

(+) Pluses of Performance Improvement Plans?

1. Clear Objectives and Expectations

• PIPs provide a clear and structured way for managers to communicate expectations and specific performance goals to sales reps. This clarity helps eliminate ambiguity about what is expected from the employee.?

2. Opportunity for Development

• These plans can be a constructive way to address skill gaps and improve job performance. They often include training sessions, ongoing meetings, and regular feedback, which can be very beneficial for personal and professional growth.? This also serves to ensure that the manager and the seller are on the same page, so to speak, with little opportunity for misunderstandings or confusion around the goals and progress toward those goals.

3. Enhanced Engagement

• Implementing a PIP can motivate a sales rep to engage more deeply with their roles and responsibilities. The process of overcoming challenges and meeting their established goals can increase job satisfaction and commitment.? There are circumstances where sellers can turn things around in a PIP process.

4. Documentation and Accountability

• PIPs create a formal record of the steps taken to improve performance. This documentation can be helpful in justifying decisions made regarding employment, such as promotions or terminations, thus ensuring a level of fairness and transparency in managerial decisions.? Simply stated, it’s a corporate CYA.? If you don’t know what CYA means, Google it.?

5. Creates a Finite Process with a Clear Outcome

• By engaging in a PIP process, the manager and the seller jointly agree and understand that there will be a definite outcome in a set period (often 90 days, with provisions for an early end to the PIP in absence of clear progress).? And while nobody would call the PIP a “pleasant process”, the outcome is productive – if the seller achieves the requirements if the PIP, they can perform satisfactorily in the job and remain at the company.? If the seller misses the goals, then they will leave the company or move to a different area, which in the long run is better for the seller and for the organization.?

6. Sets the Tone for the Rest of Your Team by Showing That:

• The system for evaluating and disciplining team members is data-driven, egalitarian, and fair.?
• Team members are given an opportunity and time to turn their performance around.
• Far from being arbitrary, the process for performance improvement is well-thought out and applied across the board.
• Team members understand that management will act in the face of protracted, purposeful or poor performance.

(-) Minuses of Performance Improvement Plans

1. Stress and Pressure

• Being placed on a performance improvement plan can be stressful for sales reps, as it often implies job insecurity. This stress can sometimes hinder performance further, rather than encouraging improvement.

2. Potential Stigma

• There can be a stigma attached to being put on a PIP, which might isolate the employee from colleagues. This perceived negativity can affect the morale of the individual and sometimes even the team.

3. Managerial Bias

• If not properly structured, PIPs can be subject to managerial bias. The objectives set might not be entirely fair or achievable, which can lead to frustration and a sense of injustice on the part of the seller.? Sellers often place blame on the company, market and circumstances versus their own performance. Clearly there must be participation and buy-in from HR, to assure that an independent party has bought into the efficacy of the PIP.?

4. Resource Intensive

• Developing and implementing a PIP can be time-consuming and resource intensive. Managers need to invest time in monitoring progress and providing feedback, which could be directed towards other team building, helping coach more successful sales reps, managing “up”, or sales-driving activities. Having regular conversations can take time away from otherwise-productive bookings-generating activities.

5. Attitude vs. Aptitude

• It’s often difficult to tell whether a seller is struggling due to “attitude”, (burnout, doesn’t want to do the job, angry at the world, etc.) versus “aptitude”, (lacks training, intelligence or the basic skill set necessary to succeed at the role).? Unfortunately, this puts extra pressure on the manager to dig in and diagnose the situation.? If it is a case of “aptitude”, then the PIP has virtually no chance of being successfully completed in absence of additional training or some other transformational circumstance occurring to help the seller succeed.? You see this a lot with behavioral PIPs, where the seller is achieving or exceeding their sales goals, but has a disruptive behavior or an issue of integrity which hurts the rest of the team or causes other issues.? Situations where the seller has virtually no chance to succeed can create an incredible amount of unnecessary pressure on the seller, which is not helpful to the process and can create animosity or worse.?

The Wind Up

Performance Improvement Plans can be a double-edged sword in the management of sales teams. They offer a structured approach to address underperformance and develop skills, potentially leading to higher productivity and better job satisfaction. However, they must be implemented carefully and strategically to avoid added stress, potential stigma, and ineffectiveness. To maximize the benefits and minimize the downsides, it's crucial that PIPs are used as part of a broader, supportive management strategy that emphasizes continuous improvement and support rather than punishment.? The goal is to either validate the wisdom of the original hiring of the seller, or to assist them in moving on to a more suitable and executable role, and backfilling with someone who is able and willing to perform the mechanics of the sales role.

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