Today’s topic is Effective Performance Appraisals. Effective evaluations can reduce companies’ legal risks and keep employers out of court.
Today, we’ll learn:
How to prepare for appraisals
How to hold an appraisal that benefits the employee and the organization
How follow-ups help reinforce points made during evaluations
How to make sure performance reviews are effective and legal, and
How to avoid problems that typically follow poorly done performance appraisals.
Granted, it’s tempting to put off performance evaluations — especially when you have to talk about problems. No one likes to be the bearer of bad news. But appraisals are important because:
Awareness is half the battle. Many times, employees make mistakes without realizing it. Performance reviews help employees learn from their mistakes.
When employees file lawsuits, the court always looks for documentation supporting the company’s business reason behind its action.
Effective performance reviews can help employees who have gotten off track, making them valuable and productive staff members again.
By doing effective employee evaluations, supervisors can save the company money in potential legal battles.
Plus, productive employees contribute more, making their salaries a better investment for the company.
Last, but certainly not least: What supervisor doesn’t want the most productive team possible?
Performance evaluations are a measuring device for both employees and supervisors. People need to know where they stand — how they’re doing.
Decisions about promotions, bonuses, pay raises, demotions and terminations usually hinge on performance appraisals.
When employees need help getting back on track, performance appraisals open the doors of communication and clarify expectations. When employees have made great strides, performance appraisals are a great time for pats on the back.
Effective appraisals set up future goals. Everyone deserves a target to shoot at.
Good reviews provide a road map, giving direction, taking you full-circle to the next appraisal when the employee wants to know, “How am I doing?” again. How close employees were to hitting the goals will answer the question.
We’ll talk about this more later, but performance appraisals should end up being a key part of the paper trail. Sooner or later, you’re going to have to justify your decisions — positive or negative — about an employee. Documentation gives you something to refer to later.
Best time for an appraisal? It’s usually mid-morning, after your start-of-day routine, but before folks get preoccupied with the day. Friday is the worst day to do an appraisal, especially on a marginal performer.
Neutral conference rooms are better than your office or workplace. An appraisal that has you sitting behind your desk while the employee sits on the other side sets up a judge-defendant atmosphere.
Beforehand, briefly outline what you’ll be covering without being specific. Ask employees to be ready to discuss the topics. Take time to explain the process to newcomers who may be undergoing their first appraisal.
Remember to put together documentation that:
Shows what the employee has and hasn’t accomplished during the appraisal period.
Defines performance levels, and the level where the employee should be.
Effective communication is an exchange of information, not a one-way street. Here are a few strategies to engage employees:
Start the meeting off on a positive note. If employees are anxious, you’ll put them at ease by starting with some good news. Talk about what’s on employees’ minds, too. Job satisfaction affects attitude, productivity and retention. Open-ended questions can’t be answered by a simple yes or no, so they get employees talking.
Let’s talk about the different responses to the questions below:
“Do you think you’re doing a good job?” Not helpful because the employee is likely to say “yes” and nothing more.
“How do you think you’re doing?” Probably won’t result in an answer that’s much better than the first.
“Which parts of the job do you feel you’re doing well?” And as a follow-up: “Which parts of the job do you feel you need to improve? Why?”
“You” is a great word when you're delivering a compliment: “You closed that deal for us when no one else could.” But “you” can cripple a conversation when it’s harsh criticism, such as, “You blew the deadline.”
Instead of using “you” when delivering criticism, try to talk in terms of performance. Then, the problem becomes about the action instead of the person.
Consider this example which includes generalizations and absolutes: “You’re always late with your reports.”
Two elements of the statement put employees on defense: (1) It uses “you” to personalize the problem, which makes it about a person instead of performance. (2) It uses “always,” which gives employees a chance to prove you’re wrong, and not credible.
You and the employee should have a clear picture of the employee’s rating. You can use:
A number scale, such as 1 to 10
Words, such as “poor” to “excellent,” or
A narrative, such as “met or exceeded all goals established last year.”
Be specific. What did the employee do to deserve the rating? Accomplishments and improvement needs are the foundation for the ratings.
Clearly describe the employee’s targets: What are the future expectations? This is “the contract” you and the employee agree on. Set realistic goals. Consider using intermediate goals, or contracts, for marginal performers. Several small successes can add up to a big one.
Goals aren’t enough. Plan “how” the employee will reach the goals. What behavior will the employee follow to do it: More training? More time? Changing work habits? What will you do to help: Make more training available? Provide more hands-on guidance? Give the employee more independence about making decisions?
Document every part of the review. People’s memories of an incident rarely agree.
Best practice: Both parties sign the document and retain a copy for future reference.
When managers use the SMART formula to set goals, they’re also setting employees up to succeed.
“S” is for specific. Goals are more likely to be met if employers are specific about what they expect employees to do. Employees who understand exactly what supervisors want know where to focus their efforts.
“M” is for measurable. Goals have to be measurable in order to be met. Employees need a scale to figure out where they’re at and where they’re going.
“A” is for achievable. Goals need to be achievable or employees will get discouraged. When setting goals, managers have to consider employees’ skills. Remember: “Victory is not won in miles but in inches. Win a little now, hold your ground and win a little more later,” (Louis L’Amour).
“R” is for relevant. Employee goals should be relevant to the company’s big picture goals. When the two sets of goals are related, both employees and the company win.
“T” is for timely. Sure, there’s a time and a place for everything. And when managers are helping employees set goals, it’s important to keep them on track. They may have a lofty goal that would be a boon to the company. But is that goal really what the employee needs to be working on? Make sure employees aren’t jumping in over their heads. Break the loftier goals into manageable pieces.
Money tends to take over the conversation, since in many instances that’s why employees believe we do appraisals in the first place.
Avoid discussions about money during the appraisal. When employees bring pay up, say, “I promise we'll get to salary after we discuss performance.”
You've probably been told a million times: Successful meetings have a clear agenda. The same goes for appraisals. Once your agenda gets mixed up, you lose sight of the goal – to discuss performance.
Don’t leave people hanging, either. If talking about money is part of your job and part of the appraisal process, make it a separate, scheduled meeting but don’t let too much time lag in between – not more than a day or two.
On the other hand, if you’re pressed for time and you want to wrap everything up as quickly as possible, it’s OK to schedule the “money meeting” just a few hours after the appraisal.
Hold frequent “How am I doing?” meetings with the employee to review goals and achievements. These talks can be informal, over coffee or lunch, to avoid the heavy atmosphere of a performance appraisal.
Stick to reaching goals and solving problems. For instance, you’ll open an old wound if you say, “Remember at your last appraisal we talked about how you’re not meeting deadlines?” Instead, try: “Let’s touch base on your progress for deadlines twice a month.”
Employees will look at the post-appraisal period as a fresh start, if you approach it as a new beginning, too.
Companies end up in lawsuits when performance appraisals aren’t done properly. Guess which type of lawsuit employees file most often? In other words, why do employees sue? Pay, harassment, retaliation, discrimination or terminations?
Answer: It’s usually some type of discrimination — race, gender or age.
But that's misleading, because it doesn't tell you the source of the lawsuit. A lot of times, it was connected with the appraisal - such as a demotion, layoff, termination or even being passed over for a promotion.
Here’s another question: Other than money, what’s the top reason people give for jumping ship?
Answer: Strained relationship with a supervisor. And more often than not, that begins with the performance appraisal. The supervisor thinks one thing; the employee thinks another. The gap isn’t bridged through communication.
Sometimes people get angry when appraisals don’t meet their expectations. That’s not good for morale or productivity. It puts people in the mood to sue.
Show of hands please: Who thinks they’re incompetent and can’t get the job done? It’s human nature for us to think, “I do a good job.” So it’s a shock to the system when someone says, “No, you don't.” And when that happens, you have a gap between the supervisor’s perception of performance and the employee’s.
Who feels like every boss you’ve worked for has treated you with total fairness? When people get a poor appraisal, they tend to focus on the negative.
In a couple of minutes, we’re going to talk about good documentation. Everyone here knows the importance of getting things down on paper. We’ll describe the right things to get on paper.
“Full moon” lawsuits do happen. That’s when someone sues, even though you and the company did everything right.
In this case, the company said it had several specific examples of poor performance over the years. But the company neither documented nor discussed the performance problems with the employee until after FMLA leave.
Suddenly, the employee was put on a performance improvement plan, and he failed to achieve the goals. So he was terminated. And he sued for FMLA retaliation.
The judge agreed with the employee because the company lacked documentation. The timing looked suspicious, especially since past problems were addressed after the FMLA leave. Bottom line: Poor performance must be addressed and documented. Letting problems slide asks for trouble down the road.
A lawyer once said she wasn’t upset that the managers in her company didn’t have enough documentation. She said, “I prefer that they have none, because most of the documentation they keep tends to be bad. None is better than bad.” Well the choices aren’t just “none” and “bad.” There is such a thing as good documentation, and it’s a crucial part of every review. Obviously, documentation should be accurate. But accuracy usually rests on what you’re trying to describe.
Case in point: An employee terminated after he was sent home twice when he showed up for work barely able to stand up, slurring his words and smelling of alcohol. Supervisor wrote: “You twice showed up for work drunk.” The employee sued for wrongful discharge and won, getting his job back along with $22,000 in back pay (Brown v. Colman).
Anyone want to guess at the court’s reasoning? The judge pointed out that the company didn’t test the employee for intoxication, and since the documentation didn’t describe the behavior, it was hard to conclusively determine if the employee was actually intoxicated.
How could the supervisor have documented this differently? “Several other employees and I noticed you nearly fell several times, slurred your words and smelled of alcohol.”
See the difference between the two statements? Good documentation describes behavior; bad documentation describes the person.
Inaccurate documentation is false or can’t be proven; conflicting documentation may be accurate, but it contradicts other documentation.
Let’s look at another court case. A thorough supervisor put together a merit spreadsheet for each employee. It rated various facets of the jobs and was attached to appraisal documentation.
During a layoff because of budget cuts, the decision to keep or drop people was based on their prior performance appraisals. The supervisor pulled the spreadsheets and used them to justify keeping or firing employees. Result: One laid-off employee whose spreadsheet ratings were low sued and got his job back, plus $250,000 (Juarez v. Government Solutions Group).
Anyone want to guess why? Separate documentation in his file described the employee as a “self-starter” who “exceeded requirements.”
So you want to be careful that documentation is consistent, especially for marginal performers. Some supervisors think they can pick and choose between conflicting statements to suit their own needs.
Why do you end up with conflicting documentation? Usually because the two pieces were documented at separate times. No one can be expected to remember everything they’ve ever written. That’s why it’s so important to review the whole file before adding more to it.
First and foremost, we want the appraisal to be fair, to the employee, to the supervisor and to the company. If we start out there, we’re on the right path.
It’s still true: Honesty is the best policy. Any attempt to “fudge” the review is a ticking bomb. Supervisors have to walk the line between sugarcoating problems and being overly critical. Lay it on the line. Describe positives and negatives.
Documentation has been stressed over and over, and with good reason. There's no such thing as a risk-free appraisal — anyone can object to or sue over anything. But good documentation gets to the truth and limits risk.
Think of the appraisal as the starting point for the year, instead of the conclusion. Remember, the point of an appraisal is to encourage or discourage future behavior.