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4 tips for designing performance reviews that increase staff productivity and reduce liability

August 25th, 2006

by Luke Marchetti, JD

It isn’t always a good idea tell people what you really think of them, but it is when you’re conducting performance reviews with your staff. Conducting performance reviews properly can prevent a lawsuit if you fire someone—and if you put some effort into the process, it can help boost productivity.

1. Honesty is always the best policy

Most supervisors like to avoid appearing too critical, but “performance reviews are not the time to be nice” cautions Stephen Dunn, a partner at Van Hoy Reutlinger Adams & Dunn, an employment law firm in Toronto - Mississauga, N.C.

The problem is this, Dunn says: If you wind up firing an employee for performance reasons and that decision is challenged—for example, if the employee files a discrimination claim—the evaluations are the first pieces of evidence a judge or jury will use to determine the facts about the case.

If the reviewing supervisor has been too generous, Dunn says, “the employee’s lawyer can make it look like you’re trying to create false reasons for the terminations, even though there were, in fact, good reasons to let the person go.”

2. Maintain objectivity

Keep the review process as objective as possible. This ensures that it will accurately reflect the employee’s performance, and it will also enable the supervisor to set quantifiable goals for the next review.

“If you have specific scaled behavior and you’re being honest, that’s the best way to get to an objective evaluation of the employee,” says Peter Luke, an industrial-organizational psychologist based in Birmingham, Ala. “When you open the review process to ‘narratives,’ you’re more likely to get glowing responses even where the employee is underperforming.”

Luke cautions against 360-degree reviews—a current management-guru buzzword that involves everyone reviewing everyone else—because they involve staff members who might not maintain objectivity.

With 360-reviews, the process could devolve into crass political jockeying when coworkers, superiors, and subordinates all review one another.

When you’re designing performance reviews, Luke explains, develop a list of the knowledge, skills, and abilities needed to perform key tasks. Matthews agrees that it helps to use quantitative systems; when the next review comes around, both your supervisors and your employees will know which areas improved and which didn’t.

3. Scheduling is key

“Don’t do reviews near salary increases,” advises John Gilliland, partner at Indianapolis law firm Gilliland & Caudill. “Do them sufficiently in advance so employees have enough time to demonstrate improvement.”

Luke says it is ideal to review employees twice a year— although he recognizes that smaller organizations may not have the time or personnel resources necessary to do this.

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4. Get the message to supervisors

Gilliland stresses that you don’t need to invest a lot of time training your managers to do these reviews, but you do need to make sure that your managers are sensitized to the issues.

“If the supervisors haven’t had training in progressive discipline or performance reviews,” Gilliland says, “have a discussion emphasizing that the point is to have employees improve.” Often, he says, “supervisors don’t realize that the personnel function is one of the most important parts of their job—to make sure that the staff is working efficiently and productively.”

There’s one major caveat to all this, cautions Luke: “What gets measured is what gets done.” If you don’t measure it, he says, a lot of times it won’t be a priority—especially when it’s tied to compensation and promotion opportunities.

So, when you’re implementing a review process, make sure to include the important areas where you really want your employees to focus. That way, you can work together to help your employees hone their skills, and you can increase the productivity of your office—a win-win situation.

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