Fears grow over companies using ‘sham’ performance plans to axe staff

And there are fears the practise could escalate, as sustained economic pressure and the influx of AI see more organisations attempt to get rid of staff they no longer desire.

One Adelaide worker, who did not wish to be named, has been on both the delivery and receiving end of PIPs and said their unjust use was “very common”.

“Performance plans are absolute bullshit,” said the worker, who has decades of experience as a HR professional.

“If an employer doesn’t like the colour of your hair or your glasses, they will (use a PIP to) get rid of you.”

‘I SACKED A GOOD WORKER’

When used legitimately, PIPs are designed to address shortcomings in a worker’s performance and outline the steps required to improve.

However, many believe they can be unfairly implemented to justify sacking workers by creating goals that are unachievable within documented timeframes.

The Adelaide worker said he was placed on a PIP in 2021 by a manager that continually tried to bully him out of the company.

He said a change of leadership saw the plan torn up after his new manager recognised the PIP was nonsense.

Earlier this year, while employed at another company as a HR specialist, the worker said he was instructed by his boss to issue a PIP to “a good worker who did his job”.

“I was forced to sack this guy for performance reasons but I knew his performance record was good,” said the worker, who is now employed outside the HR field.

He expected the use of fake PIPs would increase as companies sought to cut staff to rein in rising costs.

“Performance plans put a worker at a disadvantage because they can’t be challenged and you can’t show they’re unfair or unsustainable or whatever the case may be,” he said.

BE ALERT, NOT ALARMED

Workplace expert Ilona Charles, co-founder of HR consultancy Shilo, said there was “no doubt” some companies used sham PIPs to justify a worker’s sacking.

She said recent examples of Xero and Microsoft offering underperforming workers a severance package in lieu of a PIP raised doubts over how genuine organisations were about developing their employees.

“A performance plan is supposed to be around improving someone’s performance but there’s always going to be a proportion of managers and leaders who will use this process to exit people that they perhaps don’t want anymore,” Ms Charles said.

“Hopefully, the majority of employers still go into a performance improvement plan with the right intention but… it can just be a way of getting rid of (workers).”

As AI continued to take over work tasks, leaving some employees surplus to company requirements, Ms Charles agreed the use of phony PIPs could increase.

However, she encouraged those placed on a PIP to treat it as though it was genuine and ask for clear examples of what good and poor performance looked like.

“Be concerned but take it at face value that (the PIP) is legitimate,” Ms Charles said.

A WIN FOR EMPLOYERS

Another HR specialist, who requested anonymity, said she had issued PIPs to six staff in her three years as chief people officer with a Melbourne-based tech company.

Of those, just one worker quit because they did not wish to participate in the PIP, while another left for other reasons, she said.

Four more workers achieved the goals outlined in their PIP and remained at the company.

“Negative feedback, even when its constructive, is sometimes hard to take. Humans don’t want to hear they have done something wrong,” she said.

“Maybe some companies do (PIPs) to either self-select (get a worker to quit) or as a way to be able to terminate someone’s employment but I would hope most companies come from a place of genuine intent.

“If someone can improve, it’s a win-win (for the employer and the worker).

“Having a lot of churn and a lot of short tenure (of employees) is expensive from a cost perspective but it’s also not great from a culture perspective, from a client continuity perspective and it affects the camaraderie amongst colleagues as well.”

HR expert George Liberopoulos, co-founder and director of Impactora, believed PIPs often represented a failure of companies to make expected behaviour and performance standards clear to employees.

“When you look at the organisations that get it right, it doesn’t mean they have better PIPs – they’ve just got fewer reasons to use them,” Mr Liberopoulos said.

“Generally, I see companies are using (PIPs) well but, when they’re not used well, it’s really bad.

“Organisations do exist that use them as a weapon, not as a tool (to improve performance).”

WHEN TO ASK QUESTIONS

Workplace relations law specialist Roxanne Hart, director of Hart and Co Lawyers, said there were instances where employers had used PIPs unlawfully to avoid redundancy payments.

She encouraged workers issued with a PIP to review their employment contract and job description to ensure they were meeting the specified requirements of their role

“Sham PIPs certainly exist,” Ms Hart said.

“If you are meeting the (job) requirements and you feel that this (PIP) has come from nowhere, then you should definitely question it.”

The red flags that may indicate a sham performance improvement plan:

1. The PIP is issued after a worker recently returned from a significant period of personal leave, lodged a complaint about pay or workplace conditions or made a worker’s compensation claim.

2. The worker is a long-term employee who has never previously received negative feedback about their performance.

3. Behaviour or performance targeted in the PIP is accepted by the employer for other workers.

4. The documented timeline for the employee to show major improvement is less than four weeks.

5. There are no support mechanisms outlined in the PIP to help the worker improve.