It depends on the organizational systems. The Performance Improvement Plan is specifically improving the performance of the targeted employee/s. Most of the cases people are taking it in a negative way ie., plan related to bringing in improvement of low / poor performers but it's a wide range initiative.
A potential employee is being identified as a successor for a critical employee or a right fit for a critical position / task with some skill gaps then a detailed plan is structured in bridging the gap between the expected vs existing is a futuristic plan of improving the performance or a plan in carving / preparing a potential employee for taking higher responsibilities over a period of time by improving his performance.
In the case of first one ie., a Plan structured in improving the performance of a poor / low performer should not be more than one year with a structured evaluation process of every 3 months, the evaluation, feed back should be in writing duly signed by the employees, immediate superior, HOD & HR representative. In case the employee is improving and meeting the expectations of the management then it's ok or else after 3 such evaluations the employee should be given a clear communication to search for a job as he is going to be discontinued by the end of the year.
Some times such poor / low performer may opt for a change in his role & to that extent the management should give him an opportunity but this should be at the beginning not after completion of the entire year.
From India, Hyderabad