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Chapter A7:

Performance Improvement Plan Process

Next: State FMLA Laws

If your work performance is not meeting expectations, you may be put on a Performance Improvement Plan (PIP). We only initiate PIPs if your manager’s concern is correctable in the short term. We do not usually initiate PIPs for fundamental performance issues that relate to your core job skills.

Below are the steps your manager will take at 37signals when they identify a problem with your performance that must be addressed with a performance improvement plan (PIP).

Identify and Document

Your manager will identify a productivity or disciplinary problem as soon as possible after it occurs if it’s a specific incident, or as soon as they can when they sense a general problem with your ongoing performance. Your formal reviews may be helpful in identifying a problem, but managers shouldn’t wait for those reviews to raise a problem with you.

Your manager will have a conversation with you about:

  1. the specific problem
  2. the steps required for you to correct
  3. the timeline for correction

Revisit Throughout Timeline & On Deadline

Your timeline for taking steps to correct your performance is at the discretion of your manager. During that timeframe, you and your manager will check in periodically about whether or not they’re seeing the improvement they’ve asked to see.

When you come to the end of your PIP timeline, you and your manager will have a formal check-in. If your performance is back where it should be, that’s the end of this process.

If your performance is not where it should be, your manager will outline next steps. If they feel you’re putting forth good effort and could use more time to show improvement, they may extend the timeline of the PIP. If your manager feels your performance has not improved at all and you haven’t met the requirements outlined in your PIP, they may decide to terminate your employment with 37signals.

If you are terminated, you’ll be offered a severance package. If you’ve been with the company for less than 1 year, you’ll be offered 4 weeks severance pay. After a year, you’ll be offered an additional 2 weeks of severance pay for every 6 months of employment over 1 year, with a maximum of 6 months of severance pay. The package also includes health insurance for you and your dependents if you’ve been on our policies for the same time periods, compensation for unused vacation time, and compensation for unused sabbatical time if applicable (1 year look back). Compensation for all pay categories is calculated using your hourly rate. In return, you’ll be asked for a general release of liabilities and other standard employment termination terms. When you begin looking for work, your manager may provide references, if desired.

What’s the most important detail missing from the above process?


Your manager will offer extra support during the PIP process. We know lots of external factors can come into play at work. If you’re having personal or professional issues that are harming your performance, please tell your manager so they can work with you.

Lots of employees who still work at 37signals have been on PIPs. We’re not in the game of high turnover. We want to see you through the process and see you come out energized on the other side. We care about everyone who works here and if you’re having performance issues, our first reaction is to help you. We only ask that you work with us to devise a realistic improvement plan that elevates you and works for 37signals.


The process outlined above is for employees who are dealing with manageable performance or disciplinary issues. If an employee is negligent in their duties or commits fraud or insubordination to the point that a performance plan won’t serve 37signals or the employee, we retain the right to immediately terminate at-will as stated in our employment contracts. 37signals also retains the right to bypass steps outlined above, including offering a severance package, if the severity of performance problems warrants that. In either of these cases, the reasoning will be spelled out in detail to the employee prior to termination.