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A Performance Improvement Plan (PIP) is a formal document that notifies an employee of recurring performance issues, indicating they are not meeting expectations. The speaker, a former software engineer and manager at Meta, explains that PIPs are common at large tech companies. Most employees on a PIP eventually leave the company, which the speaker views positively. PIP recipients meet with HR and their manager to discuss areas needing improvement and set goals to exit the PIP without facing termination.