Performance appraisal policies commonly contain two mistakes. They make a promise that may turn out to be hard to keep. And they attach wage reviews to the performance evaluation.
Mistake #1: Does your employee handbook say something like this: “Employees will receive a performance appraisal each year on their anniversary?” A well-intended statement, but one which has a way of falling through the cracks. Supervisors dislike doing performance reviews. The reviews are time-consuming. And supervisors often are uncomfortable discussing unsatisfactory performance with employees.
So the time-frame for doing the performance reviews stretches out, and eventually, the evaluations just don’t get done.
The supervisor plans to tell an employee at her next review that she needs to show improvement in certain areas. The review doesn’t take place, performance doesn’t improve and the employee is fired. An attorney or a court may then view the broken promise of a review as a broken employment contract.
Mistake #2: Employees come to expect a pay increase with the annual performance review. And supervisors come to take the easy approach, and give out pay increases even to employees whose performance does not justify the reward.
What to do? Employees need fair and objective standards for judging their work performance. An appraisal or evaluation policy is a means to measure — and improve — work performance. Also, performance appraisals are a part of any program to prevent and protect against wrongful discharge lawsuits. Appraisals help prevent lawsuits by avoiding those situations where the discharged employee, unaware of his or her poor work record until the time of firing, goes to a lawyer and starts an action.
So here’s what to do to avoid the two mistakes:
First, don’t explicitly promise performance reviews within a specific time-frame.
Second, separate pay raises from performance reviews. Let the company’s profits and an employee’s achievement of predetermined gain determine increased earnings. Otherwise employees come to expect automatic pay increases for just being present for their jobs.
Following is suggested language for a performance evaluation policy:
Sample Policy 1
Performance evaluations provide an excellent opportunity for you and your supervisor to discuss your employment.
It is important for you to understand your performance is evaluated by your supervisor on an ongoing basis. However, you will receive periodic written evaluations of your performance. Written performance reviews are based on your overall performance in relation to your job responsibilities and will also take into account your conduct, demeanor, and your record of attendance and tardiness. Performance evaluations do not include wage reviews, and do not suggest pay increases automatically occur.
If you feel the need to discuss your work with your supervisor, you may request a review at any time.
Sample Policy 2
Your employer uses performance evaluations to keep you informed of your performance achievement and to offer you guidance for defining and reaching your performance goals.
Your supervisor may give you performance evaluations in three ways: Verbally, informally in writing, and formally in writing.
Verbal evaluations: Your supervisor will inform you of what you are doing correctly, what you are doing which could be improved, tell you and show you ways for improvement, and invite you to offer your suggestions for how your performance can be improved.
Informal written evaluations: From time to time your supervisor may communicate an evaluation of your job performance to you in an informal written memo.
Formal written evaluations: The formal evaluation begins with a private meeting between you and your supervisor. In this meeting the two of you will discuss your achievements, goals for improvements in your job performance, and ways you and your employer can cooperate to assure you are reaching goals. Your supervisor will complete a summary of this discussion, which you will be able to add comments to. Then you and your supervisor each will sign the written evaluation, and finally the evaluation will be added to your personnel file.