PIP means Performance Improvement Plan. It is also called a Performance Action Plan. It is an HR tool used to fill in the performance insufficiency gaps of employees. It works as a strategy to align employee’s goals and performance together. It identifies whether the deficiency is due to a lack of skill, willingness or it is a training gap. Based on the analysis done during PIP, necessary action is taken whether a transfer, shift in the department, moving under another team leader or manager, or termination as the last option.

PIP is considered as a part of HR strategy when an employee is underperforming or not performing. HR determines whether PIP is suitable as per the situation and provides guidance to both manager and employee during the PIP process