Many employers make the mistake of looking at corrective action as
a black-and-white choice. They either do nothing at all, or they prepare
very formal disciplinary documents that may leave an employee
feeling alienated and threatened. However, there is a middle
ground.

A letter of clarification is an alternative response that allows the
supervisor to formally acknowledge her concerns in writing without
inflicting the shame associated with formal warnings (e.g., ‘‘failure
to provide immediate and sustained improvement may result in further
disciplinary action up to and including termination’’).

On one hand, letters of clarification are presented to the employee
in written format and require the employee’s signature. Logically,
when things are written down, they are perceived more
seriously. In addition, when employees sign their names to documents
related to their performance or conduct, they develop a
healthy sense of paranoia that those documents may be used later
down the line to establish some pattern in their actions.

Taken From : The Hiring and Firing Quention and Answer Book