Silicon Valley is experiencing a “war for talent,” even as the nation struggles with unemployment. The Bay Area has not been unaffected by unemployment, but with the number of high technology startups based in cities such as Palo Alto, Mountain View, San Jose, and Santa Clara, companies are finding themselves competing for talent. The value of human capital is greater than ever, which is why it is essential for companies to perform assessments on their employees. Employees can be a company’s most valuable asset or its greatest liability.
Conducting employee performance reviews is one of the most important and often most dreaded tasks of management. Employee reviews take a lot of time and cause a lot of stress for managers even if the reviews are generally positive. Many employers try to avoid employee performance reviews. However, regardless of the size of your company, not conducting performance reviews can really hurt you both in productivity and in an increased risk of employment-related litigation.
I recently worked with a San Jose consulting business that was sued by a former employee of the corporation. The company had a salesperson in their Mountain View office that was drastically underperforming, but had never documented those failures in any way. The corporation eventually fired her and the salesperson then sued the company for wrongful termination. An employee file documented with poor performance reviews could have made that case go away much faster, and kept the settlement offers much lower. Below are some suggestions to make the most out of review time.
First of all, employee reviews should be conducted at least once a year, sometimes twice a year or more depending on the company and the employee. Good performance review practices help communicate issues before they get to the point of firing. In addition, if an employee is having performance issues, don’t wait until review time to bring them up. Deal with the issue immediately.
Second, when conducting employee performance evaluations, be honest. Many managers give their employees high marks, even if they’re not justified, just to avoid a confrontation. If an employee is performing poorly, discuss the poor performance in their review. Don’t give an employee all high marks, especially if you are not happy with their performance. This could cause a problem if you decide to fire an employee for poor performance later. The employee may claim he or she had no idea that there was a performance issue and that former employee may try to sue on the basis that the real reason for termination was something else like discrimination. Courts like to see documentation of poor performance issues and the employee review is a great place to document any problems.
Third, consider keeping notes throughout the year when your employees do something positive. You can then bring these up during the evaluation instead of just focusing on the most recent items. This helps you provide specific examples of strengths and weaknesses. Give employees goals so they have something to strive for throughout the year.
Fourth, consider having employees complete self evaluations. Self evaluations help managers know where employees may not be receiving appropriate feedback throughout the year, especially if there is a large discrepancy between a manager’s evaluation and an employee’s self-evaluation.
Fifth, try to use a form of evaluation that actually fits the employee’s job description, rather than a pre-printed form, or a form someone else is using. The right form will enable you to objectively measure an employee’s performance on specific essential taxes required for their job. When conducting several evaluations at once, be careful to avoid certain pitfalls including the tendency to evaluate all employees as outstanding, average or poor, especially if that is not a true reflection of their performance.
Finally, use the evaluation process as an opportunity to talk to your employees and allow them to provide feedback to your organization. This is an excellent opportunity to gather ideas for your business, improve your organization, reduce grievances and prevent lawsuits. It is also an excellent opportunity to train your management staff in the evaluation process.