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Estimated reading time: 10 minutes
Though the new year is officially underway, the tech labor market is looking no less volatile.
Within the first two weeks of January, both Meta and Microsoft joined the ranks of more than a dozen tech companies to announce imminent layoffs, with Microsoft focusing on performance-based layoffs without severance, according to documents viewed by Business Insider. Amid the sector’s ongoing turbulence, use of the dreaded PIP, or performance improvement plan, is on the rise.
According to a study by the software firm HR Acuity, 43.6 out of every 1,000 US workers had been subject to “formal performance procedures” in 2023, a nearly 30% increase from 2020 figures. The Wall Street Journal further reported that managers cite increased pressure from executives to apply PIPs within their teams, effectively sending the message that workers must be high-performers if they want to remain employed.
In engineering circles, a shift away from a culture of experimentation to one of rigid benchmarks has been especially jarring. “Within Silicon Valley and tech, from 2020 to 2022, it was a four-hour workday for top dollar and there wasn’t really a lot of accountability for results. So it was a bit of a shock to the system when all of a sudden executives said ‘OK, that was excessive,’” Janine Yancey, the founder of HR compliance firm Emtrain, told the Wall Street Journal. The rise of the PIP shows that skills alone are no longer enough to be considered valuable to an organization; employees must deliver.
Shocking or not, studies have shown that PIPs are both unpopular and an unreliably effective tool for improving the performance of floundering staff members. They threaten workers’ trust and morale in an industry that’s suddenly suffering from a distinct lack of confidence.
The managers tasked with issuing these plans must walk a careful line between meeting organizational needs and serving the professional growth of their direct reports.
The purpose of PIPs
PIPs ostensibly serve as a last-ditch effort to help severely underperforming workers get back on track. They are an organization’s final step before laying off someone who isn’t meeting the standards expected of their role. An employee on the receiving end of a PIP is on thin ice, and likely understands that their job is in jeopardy.
In some instances, a PIP may be deployed as part of a genuine strategy to develop an employee’s workplace skills in order to keep them on staff. However, PIPs are widely known as a means to gather the necessary documentation to dismiss an employee, while also reducing the risk of legal repercussions from claims of wrongful termination.
Whatever the case-by-case rationale, experts agree that the recent increase in PIPs likely says more about evolving organizational demands within a turbulent business environment, than it does about individual workers’ performance.
Binod Singh, the founder and CEO of the identity and access management firm Cross Identity, believes that the heightened focus on efficiency and output throughout the tech industry is likely to blame. “As a software engineer and founder, I’ve noticed that the pressure to issue PIPs often comes when deadlines are tight, and every task needs to be delivered on time to meet client expectations,” Singh said. “Companies are under constant pressure to deliver faster, and competition is fierce.” Singh adds that he has especially noticed the increased use of PIPs in startups, where teams are small, and individual contributions carry more weight.
Kyle Elliott, a Silicon Valley-based tech career coach who regularly works with engineering managers at both startups and major companies such as Amazon, Apple, Google, and Meta, also views the increase in layoffs and PIPs as closely linked. In fact, the connection is often made explicit to managers. Elliott reports that many of his engineering clients face growing pressure to put their employees on PIPs in anticipation of future downsizing.
Some are even expected to meet PIP quotas, whereby a certain percentage of their staff must be on a PIP at any given time. “This percentage will vary from company to company, but is often a high enough number that leaders have employees they are ready to terminate should they need to conduct a reduction in force,” Elliott said. “What this means is that even if their entire team is high-performing, a percentage of employees have to be placed on a PIP.”
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A better way to improve performance?
Regardless of a company’s intent, many employees view a PIP as a sign to start looking for a new job. “I’ve never heard of anyone who survived being put on a PIP,” one Reddit user recently warned, noting the rise of PIPs within industries seeking to “trim the fat” of their workforces.
Despite their negative reputation, experts argue that PIPs are not inherently harmful when they provide a structured path for the employee’s growth. Problems arise when PIPs are issued without the aim of improving performance. “PIPs work if they are actually directed towards improving an employee through actionable feedback and support. But when applied as a mere prelude to termination, they rarely improve performance and destroy trust,” said Daniel Williams CTO at UKWritings.
As Singh sees it, PIPs can be useful for improving performance, but only if handled carefully. “From my experience, they’re most effective when they focus on real solutions, not just ticking boxes,” he said. “For instance, if an engineer is struggling with a specific technology, a PIP that includes hands-on training or pairing them with a mentor can help. On the flip side, if a PIP feels like a punishment, it’s likely to backfire. People need to believe they have a genuine chance to improve, and that requires making the process supportive and practical. In engineering, building confidence is just as important as addressing skill gaps.”
Singh ultimately believes that PIPs are rarely the ideal course of action for improving output on engineering teams. “Performance issues are often rooted in unclear expectations or a mismatch in skills,” Singh said.
To better address those gaps, Singh advises that managers schedule regular one-on-one meetings to deliver feedback to direct reports on an ongoing basis. Creating peer mentorship opportunities, and even redesigning workloads to align better with an individual’s strengths, can also bolster performance and improve team cohesion. While PIPs are sometimes effective, they are best approached as a last resort.
