A PIP should be used when there is a commitment to help the employee improve, not as a way for a frustrated manager to start the termination process. Used as the latter, it's nothing more than a document trail that should already exist, and it signifies to all employees that no such help is available.
What are the guidelines for performance improvement?
Answer: The use of a performance improvement plan can help reduce the risk inherent in any termination. It supports employees whose performance has slipped, become inconsistent or otherwise needs improvement.
Why should you use a performance improvement plan?
A PIP is sort of like probation for a job: you did something wrong, and your boss is ready to fire you, but they're willing to give you one more shot. If you can fix the issues, you can stay, and maybe you'll win back your boss's respect, too. In some rare cases, a PIP could actually be a good sign.