Performance improvement plan

A Performance Improvement Plan or PIP is a set of explicit goals given to an employee to meet. These goals are usually given as a result of some failure, either dramatic or systemic, on the part of the employee. Properly done, a PIP gives an explicit list of those areas where the employee must improve, and what metrics they must meet. A PIP should be filed with the department of Human Resources because it is often the beginning of a paper trail that may end in an employee's termination.
When is it used
In the best of circumstances the PIP exists to help an under-performing employee do their best. By laying out clear guidelines, employees get a clear sense of what is expected of them and gives them the room and direction necessary to improve in that direction.
A PIP may also be a precursor to termination, as it is often the first step required in establishing a paper trail in advance of a firing. In the worst situations — for instance, an employee who blatantly refuses to follow established procedures, or someone who is clearly incompetent and/or unqualified for their assigned position — a PIP can be used to establish unreasonable or unattainable goals so that the subsequent termination of an employee can be justified as following internal process.
How to respond to a PIP
Employees receiving PIPs and uncertain of their status are best served speaking openly with a manager they can trust. The manager is unlikely to directly contradict the official position of the company, but they may be willing to drop hints.
Due to their intimidating presence, PIPs are often scrutinized by employees. The PIP method was parodied in the feature film Office Space. The comedy illustrates the measures that PIP firms implement, citing their incompetence in a hilarious fashion.
If you already have a better job lined up, then consider leaving. The PIP is a paper trail to get you fired. If you are fired, you may not be able to collect unemployment benefits due to the PIP. If you are like most folks who need to pay the bills to feed your family then you need to protect yourself.
PIP In History
Mr. Hart's Screwy PIP Story
After many years of being an adequate earner, Mr. "Hart" was asked to quit his job due, yet he worked out a plan with his current employer to find work with a competing organization for more money. In the end, his former employer let him go, Mr. "Hart" had one of the biggest salary in the history of his industry and the competing organization got to hire Mr. Hart. There were some bitterness and conflict between Mr. "Hart" and his former employer and co-workers, yet 10 years later, it's water under the bridge. It's a 'win win' situation.
Terry's Ultimate PIP Story:
After many years as top earner and superstar of the company, "Terry" was asked by the owners to quit his position and give it to a younger star "Jim". After a year, "Terry" tested employment in other areas, while "Jim" did not match his numbers. THe owner eventually decided to offer "Terry" his old job back with a promotion and a raise. "Jim" eventually asked for too much money and was let go.

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