Employee Performance Appraisal Process: Honesty is the Best Policy

Let's face it. Nobody likes to be the bearer of bad news. Sometimes, it can be especially difficult to inform an employee that his work is not up to par, or that she has an attitude or attendance problem that is seriously affecting her future with the company. Often, managers feel it is better to give a good or neutral performance review-- or not give a review at all-- than to sit down with the employee and be candid about the areas of deficiency and the steps necessary to achieve acceptable performance.

Not only is the failure to give honest performance feedback unfair to the employee-- there is no chance to obtain the information necessary to improve performance-- but it could also result in significant legal liability for the employer if it decides to terminate the poorly performing employee. It is not enough to rely upon provisions in a company's employee handbook stating that its employees are "employees at will," or can "be terminated at any time for no reason or for any reason." Regardless of these safeguards, terminated or disciplined employees have obtained sizeable jury awards and out-of-court settlements based upon claims that they "didn't know" their performance fell short of expectations.

While large companies almost always have a formalized review process, many smaller to mid-sized companies have a less structured system, sometimes leaving it up to individual managers as to whether, and how, to conduct an employee performance appraisal. As a result, managers who are uncomfortable with conflict often fail to accurately address an employee's shortcomings, or procrastinate in giving the review until the problems get out of hand. All employers, no matter what their size, should establish and consistently administer systems that provide feedback to employees regarding skill level, work quality and productivity.

A sound performance appraisal process will help to the employer to avoid legal liability and reap the benefits of improved communication. Some states are "employment at will" jurisdictions, where the prevailing law reflects the concept that an employer may terminate an employee at any time or for any reason, provided that the reason is not discriminatory. Other states have stricter standards governing termination. In practice, however, whether or not a particular state is nominally an "at will" jurisdiction may be of little relevance in the eventual outcome of an employee lawsuit. Employers terminating employees without communicating and documenting the areas of performance deficiency are always taking a huge risk, as rightly or not, a jury will tend to consider the employer's lack of communication as unfair and improper. And, unfortunately, this presumption that the employer acted unfairly may well lead into an eventual verdict and large monetary judgment against the employer, even in situations where the organization did not technically violate any laws.

In addition to the deterrence of employee litigation, a thorough, well conceived evaluation system provides many benefits to employer and employee alike, including:

• Encouraging constructive communications between employees and managers regarding job performance
• Providing a standard, company-wide format for measuring employee performance against job standards
• Identifying areas needing improvement
• Enhancing employee morale by fostering employee participation in goal setting and future development
• Assisting the company in identifying individuals with promotion potential and establishing opportunities for future career development

Elements of an effective system
Although there is no single "right" way to structure an evaluation system-- and in fact, the appraisal system should be adapted to fit the unique culture of the organization-- effective programs do share some common elements.

• Scheduled, periodic reviews
  The employer should establish a scheduled review period (i.e., first review after 90 days; thereafter, every 12 months). It is important that this period should not be deemed the only time to give employees feedback, but should serve as the guideline for the maximum time that will elapse between performance appraisals. The review should be in writing and conveyed during a face-to-face meeting between the manager and subordinate.
  
  
• Consistency among "like" employees
  Employees in the same job category should be measured similarly. Depending on the structure of the organization, separate review formats might be developed for managerial and support staff, technical and non-technical employees, etc.
  
  
• Clear identification of standards by which performance will be measured
  If the employer prepares job descriptions for each position, the responsibilities listed in these documents can serve as good starting points for the review. If job descriptions are not available, the evaluation form can provide space for the manager to list the most critical elements of successful performance of the individual job. In addition, there are many standards that are applicable to all positions, such as timeliness and accuracy of work, ability to prioritize, positive attitude, etc.
  
  
• Objective measurement regarding whether the employee is meeting performance standards
  Whether performance is measured according to a numerical system, or the employer chooses descriptions such as "excellent," "good," "fair," and "unacceptable," the evaluation form should clearly specify which ratings constitute acceptable performance, and which indicate performance below company standards.
  
  
• Specific examples
  Provide space on the form to illustrate the objective ratings described above with specific examples. The reviewer should carefully select examples that concentrate on performance, not personality or trivialities, with an eye toward helping the employee understand the assessment.
  
  
• Future action plan
  The evaluation should provide and opportunity for the supervisor and employee to jointly develop a plan for future growth and development. This may include further education for the employee to improve his/her skills or acquire new ones, or opportunities for the employee to take on new responsibilities during the coming months.
  
  
• Opportunity for the employee to respond to the evaluation
  The evaluation should be an interactive process, giving the employee the chance to participate, ask questions, respond to feedback, and offer suggestions for further career development. The employee may not always agree with all comments in the review, but should be given the opportunity to express concerns and request clarification-- although the meeting should not be allowed to disintegrate into a complaint session, The employer should offer the employee the opportunity to comment on the review in writing, and should make those comments part of the employee's file. The employee should retain a copy of the review at the end of the session.
  

Unscheduled, "on the job" feedback
Of course, the formal review is not meant to take the place of valuable, informal communications between evaluation periods conveying constructive criticism or praise for a job well done. Ideally, there should be constant communication regarding employee performance. And there are certain instances in which it is strongly advisable to give the employee immediate feedback rather than waiting for the annual review date. If the employee is falling severely short of the standards for satisfactory performance of his job responsibilities, committing serious breaches of company policies, such as excessive unexcused absences or tardiness, or engaging in behavior that is disruptive to other employees, it is prudent to address these issues immediately and take the appropriate disciplinary or rehabilitative action if the situation is not corrected.

Consistency is crucial
Even the most well designed performance appraisal system is worthless unless the company is committed to ensuring that it is used properly and consistently. The company and, specifically, its human resources department must take an active role in the process, encouraging managers to conduct timely and accurate appraisals, reviewing individual performance evaluations in advance and working with the manager to revise the appraisal as necessary. If a manager is reluctant to bring up negatives with the employee, the human resources department can conduct workshops or provide individual coaching on techniques for providing constructive criticism. The manager should come to understand that providing accurate and constructive employee feedback is an organizational priority, and an important criterion of acceptable performance as a manager.

Shawn Smith is a consultant, speaker, attorney and the founder of Next Level Consulting, LLC, an organizational development and management consulting firm. She has worked with a broad range of public, private and non-profit organizations to develop practical programs and strategies to navigate change, increase individual and organizational effectiveness and exceed business objectives. Shawn is the co-author of The HR Answer Book: An Indispensable Guide for Managers and Human Resources Professionals.