Managing underperformance is one of the more challenging responsibilities for any leader. It’s also a conversation that’s easy to put off. However, when performance concerns go unaddressed, small issues can grow into bigger problems, potentially affecting team morale, productivity, and organisational performance.
A Performance Improvement Plan (PIP) provides a structured approach to addressing underperformance. For a PIP to be effective, managers need to understand the underlying reasons for poor performance, set clear expectations and provide employees with the support and guidance they need to improve.
What Is a Performance Improvement Plan?
Under New Zealand employment law, the duty of good faith means an employee should be told about performance concerns and given the chance to respond and improve before any formal process begins. A PIP is a practical way to meet that obligation.
It’s a formal written plan with a deadline, setting out where performance falls short, what needs to change and how the employer will help. An effective PIP includes:
- Performance concerns described clearly, with examples
- Specific, measurable expectations
- A realistic timeframe
- Training, coaching or other support
- Regular review meetings
- The possible outcomes if expectations aren’t met
The law also treats poor performance and misconduct separately. As Employment New Zealand makes clear, misconduct is a disciplinary matter, whereas performance concerns call for performance management – The aim should be improvement, not paperwork to back a decision that’s already been made. Employees usually notice the difference.
Find the Cause Before Writing the Plan
When someone isn’t meeting expectations, the reason matters. Expectations may never have been made clear, or the feedback may have been too vague to act on. The role might have changed without any training, or there may be a skills gap, a clash of working styles or a problem outside work. Managers should also consider whether their own communication, expectations or management approach may be contributing to the issue.
Few managers are trained to interpret people’s actions and behaviour, so an objective assessment can give them a starting point. 360 degree feedback compares how an employee perceives their own performance with how managers, colleagues and direct reports perceive it, which shows whether the gap is real or one of perception. An Extended DISC® assessment describes a person’s communication style, motivators and responses to pressure, which helps identify a mismatch in expectations. Cognitive ability assessments provide insights into an individual’s reasoning, problem-solving and learning abilities, helping managers understand how they process information and approach complex tasks.
Sales Competence assessments help identify sales-related skill gaps, assess suitability for sales roles and highlight areas for further development.
Treat any results as a prompt for discussion with the employee. They help set fairer expectations, but they’re not a verdict and not a reason to lower the standard.
Start With an Informal Conversation
Talk to the employee privately before anything goes on paper. Explain the concern, why it matters and what good performance looks like, then follow up with a short written summary and invite corrections. Employment New Zealand recommends this informal performance management before proceeding with more formal steps.
A PIP isn’t a legal requirement before dismissal, and your employment agreement or workplace policy may set its own process, so check both first. Keep written records of what was discussed, expected, offered and agreed. If you’re unsure, Employment New Zealand’s Infoline (0800 20 90 20) can help.
Writing a PIP That Can Succeed
An effective PIP includes a clear description of the performance concerns, specific and measurable expectations, a realistic timeframe and the support that is available to them.
Targets or expectations will vary dependent on the role and it’s important to be specific. “Improve communication” gives the employee nothing to work with. “Reply to internal requests within one business day, or let the sender know when it will take longer” does. Keep targets tied to daily work and reasonable for the person’s working style.
Support might include coaching, training, adjusted priorities or more frequent check-ins. Where a manager finds it hard to adapt their approach, leadership development can help.
Timeframes depend on the role and the size of the gap. A behaviour issue can turn around quickly; a complex skill takes longer. Weekly meetings suit most plans early on, spacing out as progress is made. Start each with what’s gone well, cover what hasn’t, agree next steps and record them.
Avoid opening with a line about termination. It may become relevant later, but it sets the wrong tone. Stick to the concerns you’ve named too, because Employment New Zealand warns that raising new or older issues midway can make the process look unfair.
What Changed in 2026
The Employment Relations Amendment Act 2026 came into force on 21 February 2026. This outlines that employees earning $200,000 or more a year do not have the same dismissal protections and can no longer raise a personal grievance for unjustified dismissal. There is a 12-month transition window for existing employees. The $200,000 threshold uses a statutory definition of remuneration rather than base salary alone, which means allowances, overtime, bonuses, annual leave, gratuities and employee share benefits are all considered remuneration. The amendment to the act does not prevent higher earners from bringing other grievances, such as discrimination or harassment.
For other employees, remedies can now be reduced where their own conduct contributed, and a minor procedural error won’t make a dismissal unjustified if the person wasn’t treated unfairly overall. Good faith still applies. An employee who never had a real chance to respond or improve can still bring a successful claim.
What Happens When the PIP Ends
- Expectations met: Close the plan in writing and don’t raise unrelated concerns in the final meeting.
- Mixed results: Go by the written criteria. An extension, a change to the role or a formal process may all be options.
- Dismissal: This can be lawful after a PIP, provided there was a real performance problem, reasonable expectations, support that was actually given, enough time and a fair process throughout.
Afterwards, it’s worth reviewing onboarding, role design and how feedback works in your business, since earlier intervention often removes the need for a formal plan. If you’d like to see how assessments could fit your team, HR Profiling Solutions offers a 30-minute complimentary consultation.
Frequently Asked Questions
How long should a PIP last?
There’s no standard period. It depends on the complexity of the issue, the role and the support available. A one-week plan for a skills gap that built up over months isn’t reasonable, so explain whatever timeframe you choose.
Can an employer start a PIP without warning?
It may be allowed, but it’s rarely wise. Your agreement or policy may require earlier steps, and Employment New Zealand’s guidance is that formal measures follow informal ones.
How long does an employee have to raise a personal grievance?
Ninety days from when the issue arose or came to their attention, or 12 months for sexual harassment. Late grievances are possible if the employer agrees or the Employment Relations Authority allows it.
How can assessments help before a PIP starts?
They can show what’s behind a concern while it’s still small enough for a development conversation rather than a formal process. 360 degree feedback shows whether an employee’s view of their performance matches how others see it, and an Extended DISC® assessment shows how they communicate and respond to pressure. Used early, the results can shape a development plan and sometimes make a PIP unnecessary.
Which assessment suits which performance concern?
It depends on what you suspect is behind the gap.
- Perception gap or blind spots: 360 degree feedback
- Communication or working-style mismatch: Extended DISC®
- Cognitive or learning ability: cognitive assessments
- Sales results: sales competence assessment, which covers 18 skill areas plus mindset
None of them replaces a conversation with the employee. They give you a starting point for it.
