Did you ever think an HR Professional would tell you not to do performance appraisals?  While these are considered an essential part of human resources “best practices”, your YPP HR Professionals would actually prefer you not do them at all if you are not going to do them right.  We routinely see performance appraisals that were poorly done, creating far more potential issues than if they had not been done at all.

One common problem is that clients complete appraisals with “meets standards” in areas where they have had performance issues with employees.  How does an employee “meet standards” who repeatedly fails to show up for work on time, is rude to clients, violates company policies, or does not have the level of skill needed for the position?   This is the common pitfall of an owner, manager or supervisor who is afraid to be honest with employees, and as a result they create more liability with the appraisal.

If you want to do these right, here’s some Essential Guidelines, and we always recommend that you have your YPP HR Manager review your appraisals before you give it to employees so we can help you achieve your goals.

Essential Guidelines for Appraisals

1. Carefully document how all employees are performing

You might be tempted to document only your problem employees. A better practice is to keep performance records on all of your workers. This means carefully recording your observations, praise, counseling, and warnings—in writing—in clear, objective language.  Establish an electronic document for each employee and add notes as needed, including the date and identification of the person who added those notes.   If you congratulate an employee for doing a good job, make sure that is documented as well as the issues addressed.

2. Be candid and explicit

Although many managers are uncomfortable with this, it’s important to be frank. Don’t use euphemisms, such as, “There’s room for improvement,” or duck out of giving an employee strong, but necessary, constructive criticism. Be specific about what’s gone wrong and offer concrete steps for improvement. It is unfair and unrealistic to expect an employee to improve unless he or she knows exactly what is amiss.  Just as important, juries do not like it when an employee has not been told what the expectations are and where they need to improve.

An example:  “John does not have the level of skills using computer hardware, software, and the other equipment required to do his job. As a result, he frequently needs help and distracts others from their work.  For example, he was recently asked to create labels using an Excel list, and was not able to complete it without assistance from other staff because of a lack of skills in this essential software”.

3. Don’t give raises to marginal employees

Some employers give poor performers a raise in the hope it will motivate them to improve. Without counseling an employee about his or her inadequate performance, however, this strategy is doomed to fail. What’s more, if the employee is terminated and sues, he or she can point to the history of pay raises to show that he or she was doing a good job.

4.  Separate raises from performance appraisals

You should establish an annual or semi-annual review of compensation for all employees.  This helps manage your compensation costs, and eliminates the expectation of most employees that they are entitled to a raise when they receive a performance appraisal.

5. Don’t mention age, gender, race, etc.

In addition to these comments being illegal and inappropriate, don’t set yourself up for a discrimination complaint.  This means, for example, not telling a 45-year-old, “The younger salespeople seem to grasp our new products better than you do,” or “We need younger people with more energy around here.” Appropriate feedback for employees would be “you have demonstrated some difficulty understanding new products quickly, which is important for your position so you can discuss the products with customers”. Performance appraisals also should not discuss leave of absences taken by the employee, particularly when those were for medical reasons.

6. Don’t let marginal performers slide

When an employee’s poor performance goes uncriticized for several weeks or months, negative comments in a performance evaluation lose credibility and are likely to trigger complaints of unfairness or bias.   If the performance issues was serious, it’s appropriate to mention it but also to state how the employee has improved and what improvement is still needed.  The performance appraisal should not be the first time an employee learns they are not performing to expectations.  It should also not ignore performance issues;  if you let those slide in a performance appraisal, those previous issues can be negated.

7. Use relevant, objective standards

Look at the job and how it is being performed, rather than the person. Some examples of objective criteria are:

  • Maintaining or increasing sales volume
  • Handling customer complaints
  • Working with coworkers
  • Operating within a budget
  • Meeting deadlines
  • Written communications and reports
  • Complying with certain company policies (such as those regarding absences)
  • Reducing costs
  • Overall productivity

8. Back up judgments with facts

Use production records, disciplinary reports, attendance records, examples of work quality, etc., to back up your assertions, and be clear about how you arrived at your conclusions.

9. Make sure employees understand all performance standards

If they don’t fully understand their obligations and how their work is being judged, the performance appraisal system will be of little use, either as a performance management tool or a defense in a lawsuit.

10. Keep all performance evaluation materials in a confidential file

While employees should have access to their performance appraisals, others’ access to such information should be strictly on a need-to-know basis.

11. Seek feedback from the employee

A performance appraisal is most effective when you seek the employees’ input and give them an opportunity to tell you where they don’t think they are being as effective as possible, what you or the company could do to help them improve, and what processes or services they may have ideas about improving.  An appraisal meeting should be a collaborative environment instead of the traditional “let me tell you how I ranked your performance” meeting.

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