Why Performance Improvement Plans Became a Quiet Layoff Tool

Formal performance procedures — the paper trail that precedes most for-cause firings — were logged against 43.6 out of every 1,000 U.S. workers in 2023, a nearly 30% increase from 2020, according to data from the HR software firm HR Acuity, reported by LeadDev. Behind that number is a specific piece of workplace paperwork employees have started treating as a warning label: the performance improvement plan, or PIP.

Microsoft's January 2025 job cuts made the connection explicit. The company built its round of reductions around performance-based terminations, and structured them without severance, according to internal documents reviewed by Business Insider — a detail that turns a management-tool question into a straightforward pay question for the people affected. Meta cut jobs the same month. Both joined more than a dozen other tech employers announcing layoffs within the first two weeks of January, part of what LeadDev described as a labor market still "looking no less volatile" heading into the year.

What a PIP is supposed to do

"When somebody is underperforming, you don't fire them on the spot," said Josh Bersin, the global industry analyst and CEO of Josh Bersin Co., in comments to WorkLife. "You give them feedback. You document why it is they're underperforming so that they know, so it's written down, and you give them some time to improve their performance." In that reading, a PIP is a documented off-ramp back to good standing — a reset button for the manager-employee relationship, in Bersin's words, that makes clear an employee is "in trouble" and needs to fix something specific.

That is also, not coincidentally, the version of a PIP that holds up best in an employment lawsuit.

The version workers describe

Josh Merrill, founder and CEO of the performance-review platform Confirm, put the harder read on the same paperwork: "I think in most companies, PIPs more often serve the purpose of creating documentation for the company to justify its decision and kind of reduce legal risks, than it is in creating any genuine opportunity for the employee to improve." Lisa Kostova, founder and CEO of the career-coaching firm CareerClimb.co, described it in blunter terms as one of the cheapest ways a company can trim its payroll: a way to "get rid of employees without the additional cost of layoffs, without the reputation damage that an additional round of official layoffs would have."

Kostova flags a specific warning sign: an employee with no history of performance issues suddenly landing in performance conversations right as the company's finances or market conditions shift. The goalposts move, she said, and the burden to hit a moving target — typically within three months — falls entirely on the employee.

Not every source agrees the pattern is deliberate policy. Binod Singh, founder and CEO of the identity-management firm Cross Identity, traces the rise to ordinary deadline pressure rather than a cost-cutting playbook: "The pressure to issue PIPs often comes when deadlines are tight, and every task needs to be delivered on time to meet client expectations. Companies are under constant pressure to deliver faster, and competition is fierce." He's seen the pattern most in startups, where small teams mean each person's output is harder to hide.

Quotas, not just conversations

Kyle Elliott, a Silicon Valley tech career coach who works with engineering managers at companies including Amazon, Apple, Google and Meta, said some of his clients are held to explicit PIP quotas — a required share of their team that must be on a plan at any given time, independent of how the team is actually performing. "What this means is that even if their entire team is high-performing, a percentage of employees have to be placed on a PIP," Elliott said.

That detail is what separates a genuine coaching tool from a numbers exercise: a quota measures headcount reduction, not skill gaps. Daniel Williams, CTO at UKWritings, drew the line the same way: "PIPs work if they are actually directed towards improving an employee through actionable feedback and support. But when applied as a mere prelude to termination, they rarely improve performance and destroy trust." One Reddit user, describing the pattern more bluntly in a thread flagged by LeadDev, put it as: "I've never heard of anyone who survived being put on a PIP."

What it costs, and who notices first

A separate January 2024 flashpoint sharpened the debate. A Cloudflare employee filmed her own layoff meeting and posted it to TikTok, capturing an HR representative citing missed 2023 performance expectations without naming a specific metric she'd failed to hit. She pushed back on camera, noting her manager had told her in every one-on-one that her work was going well. CEO Matthew Prince addressed the fallout directly on X:

Post by @eastdakota

Whether that standard is being met is precisely the argument. A 2024 survey of 1,900 U.S. workers by the online resume builder Myperfectresume found more than 80% feared losing their job that year — a number that sits uncomfortably close to the rate at which formal performance procedures are now being issued. The paperwork and the fear are rising together, and for the worker on the receiving end, the distinction between "documented path to improvement" and "quiet layoff" mostly comes down to whether the goalposts move once they start running.