The Performance Appraisal Handbook

Legal & Practical Rules for Managers

The Performance Appraisal Handbook

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The Performance Appraisal Handbook

, Attorney

, 2nd Edition

Conduct employee evaluations with the information and tools in The Performance Appraisal Handbook.  Whether you're your writing your first or your hundredth performance review, you can find out how to:

  • help employees develop and grow
  • identify poor performers and help them get on track
  • avoid common legal traps and problems

Includes all the legal forms you need!



Available as part of the Nolo's Human Resources Bundle

Everything you need to conduct legally safe employee evaluations

The Performance Appraisal Handbook is a must-read for every manager, whether you’re writing a performance review for the first time or the hundredth. It's packed with the information and tools you need to make your company’s appraisal process work better for everyone.

Find out how to:

  • motivate your staff to perform better
  • help employees develop and grow
  • identify poor performers and help them get on track
  • avoid common legal traps and problems
  • increase employee morale
  • foster good communication
  • safely fire poor performers who fail to improve

Written by an employment-law attorney and reviewed by an expert advisory board, this guide provides a unique combination of practical and legal information, plus easy-to-follow steps. You'll also get helpful checklists, sample forms and policies, and audio dialogues.

The 2nd edition is completely updated to cover the latest legal developments.  

“This book should be on the shelf of every supervisor.”

-Aileen Macmillan, HR.com

“Shows managers how to use the appraisal process to get top performance from every employee —and avoid legal missteps. Highly practical. A rich and unique resource.”

-Attorney Fred S. Steingold, Author of The Employer's Legal Handbook

ISBN
9781413305678
Number of Pages
224
Included Forms

Checklists:

  • Avoiding Legal Trouble
  • Identifying Job Requirements
  • Preparing an Employee for Goal Setting
  • Identifying Goals
  • Writing Performance Objectives
  • Documenting Performance
  • Information to Gather for a Performance Appraisal
  • Assessing Performance
  • Common Performance Appraisal Errors
  • Agenda for the Year-end Appraisal Meeting

Forms:

  • Performance Log
  • Kudos to You
  • Tickler for You
  • Performance Evaluation

*Audio files are not available with the ebook

  • Amy DelPo

    Ms. DelPo is an author and consulting editor who specializes in employment and family law issues. She brings years of criminal and civil law experience to her work at Nolo, having litigated cases in all levels of state and federal courts, including the California Supreme Court and the United States Supreme Court. Since leaving the active practice of law, she has earned a master’s degree in library and information science, specializing in legal research and law librarianship. She has written numerous employment law titles, including The Performance Appraisal Handbook, Dealing with Problem Employees, and Create Your Own Employee Handbook. Ms. DelPo received her law degree with honors from the University of North Carolina at Chapel Hill.

Introduction

  • The Value of Performance Evaluations
  • The Value of Legal Knowledge
  • Who Wrote This Book
  • Who Should Read This Book
  • How to Use This Book
  • Icons Used in This Book

1. An Overview of Performance Appraisal

  • The Benefits of a Performance Evaluation System
  • The Elements of an Effective System
  • Your Role
  • Model Appraisal System

2. Legal Traps

  • Don't Destroy the At-Will Relationship
  • Don't Undermine Potential Terminations
  • Don't Harass or Discriminate
  • Don't Retaliate
  • Don't Forget to Document

3. Performance Objectives

  • Identifying Job Requirements
  • Identifying Goals
  • When to Set Performance Objectives
  • Writing Requirements and Goals

4. Observation and Documentation

  • Observing Your Employees
  • Maintaining a Performance Log
  • Documenting Ongoing Feedback

5. The Interim Meeting

  • Scheduling the Meeting
  • Preparing for the Meeting
  • Conducting the Meeting
  • After the Meeting

6. The Year-End Performance Appraisal

  • Writing the Evaluation
  • Presenting the Written Evaluation to the Employee
  • Planning the Appraisal Meeting
  • Conducting the Appraisal Meeting
  • Reassessing Job Requirements and Setting Goals

Appendixes

A. How to Use the Forms CD-ROM

  • Installing the Form Files Onto Your Computer
  • Using the Word Processing Files to Create Documents
  • Using PDF Files to Print out Forms
  • Listening to the Audio Files
  • List of Files Included on the Forms CD-ROM

B. Tear-Out Checklists and Forms

  • Checklists:
    • Avoiding Legal Trouble
    • Identifying Job Requirements
    • Preparing an Employee for Goal Setting
    • Identifying Goals
    • Writing Performance Objectives
    • Documenting Performance
    • Information to Gather for a Performance Appraisal
    • Assessing Performance
    • Common Performance Appraisal Errors
    • Agenda for the Year-End Appraisal Meeting
    • Forms:
      • Performance Log
      • Kudos to You
      • Tickler for You
      • Performance Evaluation

C. State and Federal Laws Prohibiting Discrimination

  • Federal Fair Employment Laws
  • State Laws Prohibiting Discrimination in Employment

Index

Chapter 1
An Overview of Performance Appraisal

The Benefits of a Performance Evaluation System............................................ 11

The Elements of an Effective System............................................................... 13

A Fair and Communicative Environment............................................................ 13

Respect for the Employee................................................................................ 13

Focus on the Future......................................................................................... 15

Employee Participation.................................................................................... 15

Ongoing Feedback.......................................................................................... 16

Document, Document, Document..................................................................... 16

Your Role........................................................................................................ 17

Model Appraisal System.................................................................................. 18

 

Chapter Highlights

•           Performance appraisal is a process, not a form. It structures your relation­ship with employees while providing legal protection for your company.

•           A good appraisal system includes observation, documentation, and communication.

•           A performance evaluation system can provide many benefits: It can improve employee performance and morale, identify poor performers and ways they can improve, and lay the groundwork for legally defensible discipline and termination.

•           A manager’s attitude helps determine whether a performance appraisal system will succeed. If the manager is enthusiastic about the chance to work with employees to improve their performance and their work experiences, the employees will share that enthusiasm.

•           A good evaluation system includes support, motivation, communication, collaboration, fair treatment, documentation, formality, and accountability and is consistent with the company’s core values and purpose.

•           Managers should use evaluation systems to improve future performance, not punish employees for poor past performance.

•           Employees must participate in every aspect of the evaluation process. Managers can increase employees’ job satisfaction and engender their trust in the process by bringing them into the loop and giving them power and responsibility for directing and assessing their own performance.

•           Managers must give feedback on an ongoing basis, not just at the year-end meeting. Managers must document employee performance as it occurs throughout the year.

•           Although communicating negative information is difficult, not communicating it can be much worse.

 

I

t’s a common misconception that performance appraisal entails simply filling out an evaluation form—answering prefabricated questions and checking boxes. If this were the case, you wouldn’t need an entire book to help you do it right, and your ­evaluation wouldn’t be worth the paper you wrote it on.

When done correctly, performance appraisal is a process, not a document—it is a way of structuring your relationship with your employees. A good appraisal system includes observation, documentation, and communication. It envisions a workplace in which supervisors know what is happening in their departments (who is doing what and how well) and document employee performance as it occurs. Supervisors and their employees should have open lines of communication. Employees should know how they are doing so they can make adjustments when they veer off track. ­Supervisors should know what obstacles get in the way of their employees’ performance so they can remove those obstacles as they arise.

Performance evaluations provide valuable continuity in a world where employees can change departments and managers during the course of a year. Often, a manager doesn’t have the benefit of having observed an employee for the entire appraisal
period. If every manager documents employee performance on an ongoing basis, the new manager can more easily pick up where the old manager left off.

Proper performance evaluations also provide important legal protection for your company and you. Sooner or later, despite your best efforts, you are bound to have difficulties with an employee. When this happens, an effective, legally sound performance evaluation system can serve as your first line of defense. Not only will it help you identify and deal with most employee problems before they rage out of control, it will also lay the groundwork for discipline and, if necessary, legally defensible termination when problems cannot be resolved.

Most lawsuits arise from the emotional state of the employee. ­Employees who feel treated unfairly or who are surprised by an unfavorable management ­decision are more likely to complain and to sue. Performance evaluations make the workplace more fair and predictable, thereby reducing the chances of disgruntled—and, therefore, litigious—employees.

This chapter provides an overview of performance evaluation systems by exploring their benefits, considering the qualities shared by effective systems, and introducing you to the steps in the model system this book presents.

The Benefits of a Performance Evaluation System

Most successful supervisors share common goals and challenges, including how to tap into the potential of each employee. You understand that your company benefits when employees feel like part of a team—loyal to their coworkers, their company, and you (their manager). As you know, it’s sound policy to reward good employees, encourage productive employees to strive for more, and help wayward employees get back on track. And, on occasion, you will need to let go of problem employees who, despite all efforts, cannot or will not do their jobs satisfactorily.

An effective performance appraisal system will help you achieve all of these ends—and more—by providing a solid foundation for all aspects of the employer/employee relationship. Such a system can help you:

•                             determine how the job of each employee can further the overall goals of the organization

•                             examine each employee as an individual to evaluate the employee’s strengths and weaknesses

•                             identify and reward good employees, in order to foster loyalty and motivate employees to continue to achieve

•                             keep employee morale high through continuous feedback

•                             stay on top of the needs of your workforce to ensure employee retention and increase productivity and innovation

•                             reduce the risk of complaints and litigation by ensuring that employees feel treated fairly and are not surprised by management decisions, and

•                             identify and deal with problem employees to either turn those employees into valuable, productive workers or lay the groundwork for discipline and, if necessary, termination.

All of this translates into better employee performance, which leads to better departmental performance, which leads to a more successful company. Indeed, an entire body of current research connects performance evaluation systems like the one described in this book to improved employee—and company—performance.

This book often revisits the benefits you can gain from an effective performance evaluation system. The rules this book presents are designed to ensure that you reap all of these benefits from your own system.

What’s Not to Like?

Having to complete performance evaluations is the thing many managers like the least about their jobs. Given the known benefits of effective performance appraisal, what makes it so unpopular?

A big reason is that it takes time, especially if it is done well. Managers view performance evaluations as time wasted pushing paper instead of doing “real” work. But if part or all of your job is to manage employees, performance ­appraisal is not only real work—it is an essential part of your job.

Often, the performance evaluation process is the only time set aside for formal communication with your employees about their work. If you follow the guidance in this book, the time you spend on the performance appraisal process will pay for itself many times over with improvements to the efficiency, productivity, performance, and morale of your employees.

Another reason managers dislike performance appraisal is the discomfort they feel when confronting employees about poor performance. While communicating negative information is difficult, not communicating it can be much worse. An uncomfortable, but clear, conversation with a poor performer can prevent you from making big mistakes, such as:

•            allowing employees to work under the mistaken belief that they are doing well, thereby never giving them the information they need to improve

•            tolerating poor performers and the burdens they place on your other employees and your company

•            surprising poor performers with negative decisions, and

•            facing difficulty in terminating bad employees because you have not laid the proper groundwork.

Lack of training or having to work within a flawed system are other reasons managers dislike performance evaluations. Some managers have spent years conducting performance evaluations that seem ineffective, illogical, or meaningless. They haven’t seen the benefits that a complete, effective, and consistent appraisal system can bring to their company. Fortunately, applying the rules presented in this book can help.

Finally, fear of the unspecified legal consequences of performance evaluations makes managers uncomfortable. Many managers have been warned that they can get their company and themselves into legal trouble if they don’t do things correctly, but nobody explains what that means. This book clearly explains the legal consequences of performance evaluations.

 

The Elements of an Effective System

This book is designed to complement the performance appraisal system already in place at your company. These systems have an infinite number of variations, so the discussion here won’t always match what you find in your company’s system. For example, the terms used here may not match the terms your company uses, or your company may require coordination with your human resources department, something this book does not discuss. Your company may have a single place for storing performance records, whereas the system described here assumes that managers keep their own files.

Although you should pay attention to these differences—and follow your company’s rules—know that most of these variations are cosmetic. All effective performance appraisal systems share the same basic qualities, and those are the themes that you should take away from this book and apply to the system in place at your company.

This section discusses some specific qualities that all effective performance evaluation systems share, paying particular attention to those that you as a manager can control.

A Fair and Communicative Environment

The most effective performance appraisal systems place concern for the employee at their core. The reality is that you cannot control your employees’ behavior—only they control how they perform their jobs. Research has shown, however, that the majority of employees want to perform well; the key is to ­provide them with the right environment in which to do so. Such an environment includes support, communication, collaboration, and fair treatment—the very qualities created by effective performance appraisal systems. In addition, a fair and communicative environment builds employee morale.

Respect for the Employee

You can follow every step in this book, but if you don’t demonstrate a fundamental respect for your employees, you will fail. This respect is the foundation for any effective performance evaluation system. Employees who feel ­respected are more likely to buy into the appraisal system—to participate fully and sincerely in setting goals and to strive hard to perform to the standards you set. On the other hand, employees who don’t feel respected will show that same lack of respect for you and your efforts to improve their performance.

 

Money, Money, Money

Some companies connect performance appraisal to salary review; others don’t. Tying the two together is a subject of some controversy. Obviously, you must follow your company’s procedures. But if you have some say in the matter, you might consider the following reasons some companies choose to keep performance appraisal and salary review separate.

Studies show that appraisals linked to administrative goals (such as salary increases) are less accurate than those linked to developmental goals (such as improving employee and team performance). This makes sense: The performance evaluation process is supposed to be about employee development. If the end result of the evaluation is a change in salary, employees may become less focused on development and more focused on end results. Employees may listen only to the money part of an evaluation and ignore the development part.

Another great benefit of performance appraisal is the feedback managers get from employees. If employees know that their raises hang in the balance, they may not be as forthcoming.

Also, instead of pushing themselves to strive for goals that are just out of reach, employees may rein in their goals so that they can be sure of meeting them—and of snagging a raise when they are reviewed.

Finally, some managers may have a gut feeling about who should get a raise—a feeling often based on soft factors such as whom they like and whom they relate to best. Linking a raise to a performance review can be risky because a manager may—consciously or not—write the appraisal to support the raise decision, rather than base the decision on the appraisal. In such cases, neither the salary decisions nor the reviews make much sense. And if a lawsuit arises, the appraisal may not adequately explain why a certain employee got a raise but ­another did not.

Focus on the Future

If, at its heart, a performance appraisal process is designed to improve employee performance, then a manager should emphasize what the employee can do going forward, not how the employee did in the past. The past can inform your ideas about the future, but it shouldn’t be the sole focus of the appraisal process.

This means that you should spend the bulk of the appraisal meeting on identifying goals for the next year and talking about how the employee can achieve them. It also means that your feedback throughout the year should not punish or shame employees for bad performance, but help employees see when their ­performance is slipping and strategize with them on how to improve. This doesn’t mean that looking at past performance has no place in the process; indeed, at each evaluation you should discuss whether and how the employee met the goals set at the previous evaluation. But you should look to the past with the goal of learning from it, so that the look backward is developmental and helpful to the employee, rather than punitive.

Employee Participation

Another element common to successful performance evaluation systems is ­employee participation. Employees must play a key role, participating in everything from writing job descriptions, to identifying their own goals and standards, to assessing how well they have performed.

You can increase employees’ job satisfaction and engender their trust in the appraisal system by bringing them into the loop and giving them power and responsibility for directing and assessing their own performance. This satisfaction and trust leads employees to accept the company’s appraisal process and make a commitment to their own development.

In addition, you need the information that your employees can bring to the table. Your employees are often in the best position to answer the questions posed during the appraisal process; at the very least, they can provide some crucial insights. These questions include:

•                             How can they help the company achieve its goals?

•                             How much can be expected from someone in a given job?

•                             Are there any organizational impediments to their performance?

•                             Is there anything you can provide to help them perform better?

•                             How well have they achieved their own goals?

Research has shown that when employees are involved in goal setting, the goals they set are higher and more demanding than goals that managers set alone. Employees will push the envelope, often demanding more of themselves than you might demand of them.

Employee participation promotes teamwork. It gives the two of you the sense of working together rather than being on opposite sides of the fence. It also reduces the chances that you will miss out on important information or insights you could share with each other.

Ongoing Feedback

Giving employees feedback—both positive and negative—as circumstances warrant is another important feature of an effective performance evaluation system. If you tell employees what you think of their performance only once a year, you’ve wasted a lot of opportunities throughout the year to encourage good performance and to help employees who are struggling get back on track.

Feedback also helps employees adjust as circumstances change throughout the year. The importance of certain goals may shift; obstacles may appear; ­employees may lose motivation or focus. Your feedback will tell employees what is still ­important, what is no longer important, and what they can do to achieve their goals in the face of these changes.

Studies have shown that without feedback, a performance appraisal system alone will not improve employee performance. Positive feedback, often ­particularly neglected, is important: Providing positive feedback whenever appropriate gives employees a sense of accomplishment and appreciation, while highlighting ­standards for how they should continue to perform.

Document, Document, Document

Ongoing and accurate documentation is the crux of a good performance appraisal system. Documentation spanning the entire appraisal period ensures that your review will be fair and accurate and gives you rock-solid support in case of a ­lawsuit. Without good documentation of an employee’s performance throughout the year, all you’ll have are memories and gut feelings, neither of which are reliable or legally safe.

In addition, good documentation provides continuity should the employee change departments or managers. If the old manager properly documented the employee’s performance, the new manager can take over more easily than if no record existed.

This book provides you with a method for documenting employee ­performance throughout the year that does not require too much time or effort. In fact, ­following the suggested methods in this book will actually save you time and make the appraisal process easier in the long run. With proper documentation, you can avoid once and for all the horrible feeling of having to write a year-end appraisal for an employee whose performance you can barely recall.

Your Role

Performance appraisal is not a human resources issue; it’s a management issue. For that reason, you—as the manager—are the key to its success. You must buy into the process and commit to it. Your role in the process includes, of course, following any steps required by your company’s system. Regardless of the system your company uses, to do this well you must set standards and goals, observe and document performance, give feedback, and conduct appraisal meetings.

Your role goes beyond these duties, however. As a manager responsible for implementing the performance evaluation system, you are like a bridge between the company and the employee. You must be friend to both, always mindful of the company’s overall needs and strategic plan while at the same time acting as something of an advocate for your employees. Although this is tricky and somewhat controversial, it’s important, because both your company and your team need you. You should work to create an environment in which your employees—and the company as a whole—can perform at their best.

As such, your attitude is key to the success of the process. If you think that performance appraisal is an annoying waste of time, your employees will, too. If, on the other hand, you are enthusiastic and optimistic about the chance to work with your employees to improve their performance and their experiences at work, many of your employees will share in your enthusiasm. If you think the appraisal system is worthwhile, so will they. If you commit yourself to it, you increase the likelihood that they will, too. Your style and vision in laying the proper ­foundation for performance management will determine in large part whether the system ­succeeds or fails.

To motivate your employees to perform well, you must do more than just ­provide an encouraging word here or there (though encouraging words certainly help). For employees to commit to their jobs and have the desire to perform well, some or all of the following must occur:

•              They must feel that their jobs give them the opportunity to accomplish something that is important or worthwhile.

•              They must have the resources they need to do their jobs and meet their standards and goals.

•              They must receive feedback so that they always know what is expected of them and whether they are meeting those expectations.

•              They must receive recognition for what they do. Although this ­recognition should include raises and bonuses, it’s just as important to recognize ­employees in nonmonetary ways—for example, through a positive write-up in the company newsletter, a memo commending the employee on a job well done that you copy to company higher-ups, or an announcement of praise at a company meeting.

•              They must be given the opportunity to grow and develop. They should not be asked to do things they simply cannot do (because, for example, they don’t have the skills or the resources), but they should be challenged by their jobs and asked to do more and different things. They must feel a
comfortable stretch when accomplishing some of their tasks.

•           They must gain autonomy and responsibility as they demonstrate their ­abilities.

•           They must feel free to express their opinions and ideas about their jobs, any obstacles to performance, and how the company can run better.

•           Management must listen to them.

•           They must feel like an important part of the company’s success.

Obviously, you aren’t in control of all of these factors, but you are in control of a number of them. For example, you can give recognition and you can, and should, listen. You can also work hard to get the resources your employees need. Although you can’t change job descriptions fundamentally, you can increase a person’s responsibility as that person demonstrates an ability and desire to take on new responsibilities. For example, are there things on your own to-do list that you could assign to an employee you supervise instead of doing yourself?

Model Appraisal System

This book guides you through a model performance appraisal system, devoting a chapter to each step you should take along the way. The system at your workplace may not exactly match the one presented in this book. Virtually all appraisal ­systems, however, will contain some or all of the steps that this book discusses:

•                             Work with employees to set job-related goals and standards for their performance. Chapter 3 shows you how.

•                             Regularly observe and document employee performance in relation to these goals and standards. Chapter 4 gives you the tools you need.

•                             Meet with employees periodically to discuss their performance and to r­edefine their goals, if necessary. Chapters 4 and 5 explain how.

•                             Conduct a formal performance appraisal at the end of each year. Chapter 6 covers this step.

Before moving into a discussion of each step you should take, Chapter 2 pauses to explain the legal consequences of performance evaluations and common legal traps that you—and your company—can avoid.

 

Responsibilities in a Performance Appraisal System

The company

•  Creates the strategic plan

•  Provides support and resources

The manager

•  Identifies job requirements

•  Observes and documents employee performance

•  Provides ongoing feedback to the employee

•  Provides support and resources

The manager and the ­employee together

•  Identify job goals

•  Create action plans for how to meet requirements and goals

•  Engage in ongoing dialogue about employee performance

The employee

•  Listens to and acts on feedback from the manager

•  Performs by meeting requirements and goals

•  Provides feedback to the manager about the work environment

 

Test Your Knowledge

Questions

1.

The written, year-end evaluation is the most important aspect of a performance appraisal system.

  True   False

2.

You are in control of your employees’ performance.

  True   False

3.

Your primary focus in doing a performance evaluation is to ­review each task an employee did in the past year to assess how well he or she performed.

  True   False

4.

Employee involvement in a performance evaluation is ­limited to listening to what you have to say and following your ­instructions.

  True   False

5.

Employees often know more than you do about their jobs and how well they have performed them.

  True   False

6.

If you allow employees to participate in setting their own performance goals, they will set easier goals for themselves than you would set for them.

  True   False

7.

You should give employees feedback throughout the year, not just at formal, year-end reviews.

  True   False

8.

If you have a good memory, documentation is a waste of time.

  True   False

9.

Documentation can help you in case of a lawsuit.

  True   False

10.

If your company’s system isn’t the same as the one described in this book, the book will be useless to you.

  True   False

 

Answers

          1.  False. Performance appraisal is a process, not a piece of paper. No part of the process is the most important; all aspects of the system work together.

          2.  False. You can guide employees and control many of the circumstances they encounter, but ultimately, only employees control how they perform.

          3.  False. You should look toward the future, not dwell on the past. You and the employee can learn from what happened over the past year, but focusing on it too much destroys the evaluation’s use as a developmental tool.

          4.  False. Employees should, of course, listen and follow instructions, but their role in performance appraisal is much broader. Each employee should play an integral role in his or her own performance evaluation process, from setting goals to assessing his or her own performance.

          5.  True. Employees are often on the front line of your business. You can learn a lot from them about what happens in your workplace, what obstacles they face, and how they are performing.

        6.  False. In a workplace that uses an effective performance evaluation system, employees tend to set higher goals for themselves than their managers would set for them.

          7.  True. Ongoing feedback, both positive and negative, is an important aspect of a successful performance evaluation system.

          8.  False. No matter how good your memory, documenting employee ­performance as it occurs will give you a much more detailed, accurate, and reliable picture of an employee’s performance over the course of an entire year. Also, documentation is necessary to create a record that supports your actions in case of a lawsuit.

          9.  True. If someone sues your company, what you say won’t be worth much if you don’t have evidence to back it up; documentation can provide that ­evidence. A clear, written record that supports your statements and explains your actions can go a long way toward protecting your company—and you—if an ­employee sues.

        10.  False. All effective appraisal systems share some or all of the steps, and most of the principles, discussed in this book. Understanding the model performance appraisal system presented here will make you a better manager and a better participant in your company’s performance evaluation process.

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