Performance Evaluations: Maximizing Growth, Minimizing Legal Issues

Shalom Orlian
minute read

Meet Sam. He is a dedicated business development representative who joined a new company a year ago. Since then, he has thoroughly focused on his business development activities and successfully closed multiple long-term contracts. Sam's teammates and coworkers value his energy and the contributions he has made in his role. However, despite feeling confident in his performance, he finds himself unsure about what his manager thinks. Unclear about his performance and future growth with the company, he begins having conversations with other employers.

Meanwhile, Sam's manager hears about these conversations and is concerned. Sam's performance has been exceptional. He expected Sam to close just 1 deal in the first year but exceeded expectations by closing 4! In an attempt to address these concerns, the manager engages in a quick conversation with Sam about his performance. But it’s too late, Sam already has another job offer on the table.

This scenario is an all-too-common occurrence across industries—one that could often be averted through strategic performance evaluations.

The power of performance evaluations is far more than just administrative, annual activities. They serve as critical components of an effective management strategy that can drive employee growth, engagement, and ultimately, business success.

Just as any tool's effectiveness depends on its correct usage, performance evaluations have a strong impact when implemented correctly. Its benefits impact employees of all levels, fostering engagement, clarifying performance expectations, and increasing retention and performance.

Key Benefits

  1. Offering Personalized Feedback: Employees actively seek feedback. Performance evaluations provide a structured platform for managers to offer specific insights into an employee's strengths, areas for improvement, and achievements. While feedback can be offered at any time, performance evaluations set clear expectations about when employees can anticipate such feedback.
  2. Aligning Goals and Expectations: Clearly defined goals are crucial for individual and organizational success. Performance evaluations facilitate a collaborative process, enabling employees and managers to jointly establish goals that contribute to both the team's and the individual's growth.
  3. Identifying Development Opportunities: Performance evaluations highlight skill gaps and development areas. Enabling targeted skill development not only benefits employees but also improves the company’s overall expertise.
  4. Providing Recognition and Motivation: Positive reinforcement significantly boosts morale and motivation. Acknowledging accomplishments during performance evaluations serves as a testament to an employee's dedication and hard work. Even acknowledging an area that needs improvement can increase their motivation to develop.
  5. Ensuring Legal Protections (when conducted appropriately!): Fair and appropriate performance evaluations offer legal safeguards against potential claims of discrimination or wrongful termination. Assuming these conversations are documented, and objective performance metrics are used, they provide legal support for employment decisions such as terminations or adjustments in responsibilities based on performance.

Practical Steps for Conducting the Evaluation

Recognizing the benefits of performance evaluations is just the first step. You still must have the evaluation conversation! Here are some key steps to maximizing the conversation:

  1. Establish a Standardized Process: Develop a policy outlining the performance evaluation process, encompassing the evaluated criteria (performance, behavior, etc.), evaluation timing, and evaluation metrics.
  2. Regular Check-ins: Feedback should extend beyond formal evaluations. Regular one-on-one discussions between managers and employees create an ongoing dialogue that nurtures growth and minimizes surprises during formal assessments.
  3. Preparation for the Evaluation: Review key areas of performance where the employee has demonstrated growth and success, as well as those requiring improvement.
  4. Develop a Growth Plan: Collaboratively discuss strategies for enhancing key areas and outline the steps necessary to achieve improvement.
  5. Set SMART Goals: Collaborate with employees to formulate Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) goals aligned with their roles and the company's objectives.
  6. Document the Conversation: Maintain comprehensive records of the conversation, along with objective instances of the employee's performance. This documentation aids in tracking employee progress, making promotion or employment decisions, and addressing potential legal matters.

Remember, performance evaluations are more than just HR compliance; they play a pivotal role in fostering employee engagement and development. Striking a balance between growth and legal adherence not only protects your organization but also drives employee and company growth.

>HR insights from Shalom Orlian from Strategy HR.

Shalom holds a Master's in Industrial/Organizational Psychology and has extensive experience working in HR at global companies leading talent, leadership, and culture initiatives.  He is the co-founder and principal consultant for Strategy HR Solutions, a consulting firm specializing in talent development, company culture, and strategic HR management. His expertise and passion for creating positive change makes him a trusted advisor to business leaders in optimizing employee engagement and organizational performance.