Is My Quarterly Performance Review Plan Fair? Seeking Advice on PIP Methods and Effectiveness

I have decided to start a Quarterly Performance Review in which we will shortlist at least two lowest-performing employees from each team and issue a one-month PIP to them. The one who is not successful in that one-month observation according to their PIP will be directly terminated.

Objective of the Performance Review

My idea to develop this is to reduce inefficiency in teams. Thus, kindly suggest if this method is appropriate or not. Also, guide me on what method I can use for PIP.

Regards

You appear to have a basic confusion about the concept of Performance Management System (PMS). There seems to be a zeal for the removal of people on account of underperformance, rather than measuring the business performance as a whole. The essence of PMS lies in measuring what deserves to be measured. For this, you need to identify the direct and indirect costs associated with each department.

While managing costs, you need to make sure that while reducing one cost, another cost does not increase. In your current situation, you may want to reduce the cost of underperformance; however, have you considered the potential increase in recruitment costs? The hire-and-fire policy may seem appropriate, but it can turn employees into mere zombies. Constant fear of job loss could haunt them and potentially degrade their morale. Can you measure the cost of low morale?

I recommend taking a holistic view before swiftly removing employees. By the way, I previously provided a detailed response on how to establish a PMS in a company. The link is provided below:

https://www.citehr.com/511936-pms-company.html

Although the above link pertains to an IT company, the response is applicable to all industries. There are several hyperlinks in the provided link. Please go through them patiently to enhance your understanding of PMS. If you have any doubts, feel free to contact me on my mobile.

Thanks,

Dinesh Divekar