Performance improvement plan. Basically a chance to get your act together before they fire you.
If it's the latter, I'd like to challenge the assertion that a PIP is necessarily the company trying to get rid of someone. In my experience as a manager, I've always made sure that PIPs are as honestly designed to get people back on track as could be. In, say, the last five years as a manager, and in my organisation of a couple hundred engineers, there were exactly two cases (and the key point is that I recall both specifically) where a PIP was primarily motivated to document the already extremely obvious (to anyone far and wide) underperformance and attitude problem. And even then, the managers in question had the professionalism to design the PIP to be eminently achievable.
Generally speaking, I find the likelihood of a PIP to be adversarial and/or a tool to be able to fire somebody to be much more strongly connected to whether there has been an adversarial relationship between the employee and their manager. For that reason, I found that it paid off hugely to make sure people move to different teams & managers and get a reset there before taking any drastic action. In the same way as people are said to leave due to their managers, not jobs, it's key to take that personal component out of a bad situation.
In my workplaces I would consider 2 PIPs over 5 years among 200 (highly filtered) engineers to be a normal rate, yet you are implying this is a small fraction of the total PIPs.
I'm not a manager so it is definitely possible that I'm unaware of many instances, but to have a pip for more than low single digit percentages of your workforce seems like a big red flag. Whether the motivation is cya or honest encouragement, a pip still means their current performance is unacceptable, so you seem to be describing a harsh environment (or a large collection of unmotivated employees, but the former seems more likely in this industry).
Can you clarify?
The industry this was in was moderately high pressure, but by no means a grind like you might see in games, etc. We painstakingly avoided bs deadlines, for example.
To a first order approximation, five years by 200 engineers is a thousand engineer years. So naively, that'd be two PIPs per thousand engineers per year. Of course, you can argue that this isn't true since the performance of an individual from one year to the next is correlated. But this was a very rapidly changing organisation where people move between departments regularly and there's a lot of growth. The latter means that you get a lot of new people that might turn out to be a poor fit. So I actually think the original approximation of quite conservative: 2 out of 1000 engineers being disagreeable about their performance assessment sounds like a total luxury for managers!
But you're right to point out that that's only the bad cases. Our company had a(n HR imposed) rule that anyone receiving sub par ratings (needs improvement) for two consecutive quarters had to go on a PIP.
In a growing organisation, complexity keeps increasing: more coordination overhead. More things all going on at the same time, more scaling challenges, etc. So naturally, performance that was just about alright last year just about DOESN'T cut it this year. This means that in my experience, it would be a sign of rating inflation or managers that avoid difficult conversations if the fraction of "needs improvement" in any given quarter was less than ~5 percent. That's a number I just pulled out of thin air, but in the right ballpark in my experience. And there you go: you get several times as many PIPs as the "bad" ones discussed above.
However, the reason why I wrote the lengthy post you're replying to is that this is by no means universal. This means that if every employee starts with the assumption that it's just a firing tool, the chance to succeed drops dramatically. That's because instead of heeding the warning and pulling oneself together, one might disengage, become cynical, and give up.
So please, before anyone checks out in that situation, pay close attention to what's been happening in the department, and be careful about simply throwing away the career one might have had in that company just because of someone else's claims.
Or put differently: that situation is one best served WITHOUT cynicism, but indeed rational caution.
The issue is that much of this is an opaque process (for both good and bad reasons). People are forced to make an assumption one way or the other, because they have no access to the data. At that point, the prisoner's dilemma dominates.
I don't doubt companies like yours exist, but are they the norm? I've not met one person in real life who has been on a PIP and it was not a case of the manager trying to find an excuse to get rid of him. Netflix's HR got rid of them because they were being used by managers to get rid of employees.
That being said, likening this to a prisoner's dilemma is a tiny bit misleading: the costs and benefits between the options are less symmetric then in the idealized proposition. There is really no benefit to going cynical about the process besides some cheap satisfaction in a bar after work and avoiding introspection. That doesn't mean it's not pragmatic to make a plan B, however!
First, the two are not exclusive. One can introspect and go straight for plan B without bothering with the PIP. Why go along with the PIP even if you accept you are at fault, if you do not know if the company will keep you? You can always improve at a new job.
To me, it does seem like a prisoner's dilemma.
You have to weigh the probabilities of each outcome and decide. In the few cases I've seen, the real issue was a disagreement between the manager and the employee on whether their was underperformance at all. As a clear example I've seen in my company: The employee is more productive than a coworker, yet he was put on a PIP and the other wasn't. He also did not work long hours, choosing instead to be efficient. He was in the habit of disagreeing with his manager and the customer on many issues. However, the PIP did not mention any of the last part - it just said he was slow to meet his goals and was often not at his cube. Yet when he went to the manager, HR, etc and asked what "slow" means and how it is being measured (because he likely was ahead of some of his coworkers on those metrics), etc, he really did not get anything concrete - just phrases like "well if your peers and manager think you are being slow, that is enough".
This kind of example is not unusual where I'm at. And this is an example of no transparency. The employee literally was excused of something but had no way to defend himself: No evidence presented by the management that he could question. Just that his manager and customer were not happy with his speed, and some of his coworkers saying he would leave work before the others.
When you see that happen at your company, you lose faith in HR. If I get a PIP that I disagree with, I'm not going to bother. Plan B will become Plan A. Heck, even if I agree with the PIP, I don't see a point in following it through, because given the company's policy, I have no way of knowing if they are sincerely trying to help me or trying to get rid of me. I can always introspect and go for plan B.
1. You're not really trying because you're used to the work being relatively easy. It means you need to actually try, and barring evidence to the contrary, you have no reason to believe you'll be fired if you shape up.
2. You're trying your hardest and the work just isn't good enough. This is a bad sign, and you'll likely fail to meet the requirements of the PIP so you should start looking.
3. Your company is using a PIP to cover their ass for legal reasons. In the US, this makes no sense at all, especially for folks in the $170k+ total comp bracket, because you can be fired for any or no reason (barring certain protected classes). It's unlikely the company is going to spend $100k to cover their ass if you don't fall into a protected class.
I have seen multiple folks at multiple companies put on PIPs both formal and informal, and I have never seen it used as a cover for someone to get let go.
Check your state. In my state, it is. Being fired for performance reasons disqualifies you from benefits. My company is "nice" enough that they openly state they will not challenge unemployment benefit claims if they fire you for that reason.
If you get unemployment benefits denied, especially in a very pro-employee state like California or New York, you certainly did something to justify it.
My point is that you should NEVER count on getting it, and especially not with getting in quickly. I got laid off in Michigan and was eventually accepted, but by that point I had burned through all my savings (I was pretty young, so there wasn't much to burn through) and already accepted a job here in Texas. It was a nice bonus, but didn't really help me with my unemployment situation in any way.