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Your business’s human capital in employee performance is extremely important. Your employees are the ones who make things run, innovate, stream-line processes, and interact with customers.  Evaluating the performance of employees is an important piece in the practice of human capital management (HCM), such as ensuring accountability for expected performance levels, ensuring that communication is open and effective, and in providing a system where management of performance, including associated training, is effective. 

The review of employee performance is not something small business owners jump out of bed in the morning to do.  If you do a happy dance when employee performance evaluations come around, you are likely in the minority.  It can be complicated, and it can be an uncomfortable experience to tell someone when and where they do not measure up.   With that said, it is a responsibility that should be done, and it is a practice that must be done well.   

From a legal perspective, when an employee sues an employer, one of the first things that will be produced as evidence is that employee’s personnel file, including any performance evaluations included in it.   These documents will be closely scrutinized, and can either serve as clear evidence of the employer’s fair treatment and objectivity in dealing with the employee, or can be evidence for a plaintiff’s attorney to use in exposing unfair practices, inconsistent treatment, or some other action that might result in employer liability

Five Best Practices

Employee Evaluations

Documenting a false, overly-positive picture of an employee’s performance can really come back to bite you in a lawsuit.  Using the performance evaluation process to target a single employee can as well.  Doing no performance evaluations for your employees would actually be better than being disingenuous or malicious.  This is likely true both from a legal standpoint, as well as in the practice of managing human capital.   Here are five best practices to guide your employee performance review efforts:


Quality Over Quantity

Be honest and forthright.  Performance reviews should reflect what is actually happening. In an evaluation you should go over both positive comments and concerns. For example, an employer showed “uncontroverted evidence of continued problems” with an employee, even though the employee met expectations in some aspects of his work on his one and only performance evaluation.  The narrative comments made by the supervisor that gave specific details about some work relationship and time management issues were the most important to the court.

Employee performance can go up and down.  If that is what is happening, performance reviews should reflect this accurately.  Be precise and detailed, describing specific conduct that either meets, or fails to meet, expectations.  As discussed below, you have to be careful with this, because it can look bad if out of nowhere a performance review is suddenly negative.  This is especially true if it happens soon after the employee engages in protected activity, such as filing for worker’s compensation, or making a complaint of harassment.  However, that does not mean an employer cannot express to the employee where they perform well, or where they might be improving, and then be hamstrung in their ability to also criticize their work on other occasions.  

Avoid Embellishment

Some supervisors fall into the trap of not wanting to hurt anyone’s feelings, and to avoid confrontations.  So, what they do is give everyone satisfactory performance evaluations, at times embellishing an employee’s performance to make it sound better than it is.  They do the employee a favor in the short term, avoid a tough conversation, and avoid being seen as the bad guy.  However, this can be a major issue when the supervisor one day needs to terminate an employee.  The backlog of “satisfactory” ratings and positive comments will raise legal eyebrows when suddenly the employee does not meet expectations.  This goes back to quality and precision.   Performance reviews should accurately and honestly reflect employee performance.

Be Consistent

This is about applying the same level of precision discussed above to all similarly situated employees.  For example, if you mark someone down for gossiping in the workplace, and do not mark down the rest of the group that they gossip with, that is going to look bad in court.  You will have to give a pretty good explanation.  Maybe they always instigated it, or perhaps tended to take it too far.

A court explained that the employee can show pretext, or that the performance evaluation is just an excuse for a discriminatory action, by showing that he was “treated differently from other similarly-situated employees who violated work rules of comparable seriousness.” In other words, treating someone inconsistently exposes a supervisor’s potential biases or prejudices towards that person.  And when inconsistent treatment results in an adverse employment action, such as termination, a demotion, or unwelcome transfer, it is a recipe for a lawsuit.  

Evaluate and Train Your Supervisors

Employers often delegate employee performance evaluations to direct supervisors.  What you want to have is supervisors who perform employee evaluations like the supervisor in the example above where the court found “uncontroverted evidence of continued problems” with the plaintiff employee.  The court found that the employer “followed its standard formal evaluation process with [the employee],” and that there was “no evidence that [the employer] deviated from its usual evaluation process in any way.” There was a standard procedure, a performance review form, and company policies regarding the performance reviews, how often they were to take place, remedial measures, etc., and the supervisor who conducted the reviews clearly knew the employer’s expectations and followed them closely.  

Beyond protocol and process, this is also an opportunity to ensure that supervisors understand substantive measures of employee performance. Train supervisors in the objective performance measures that the company values.  Supervisors should receive guidance and training on how to make subjective judgments consistently and fairly.

Treat Them Like a Human Being

Employees are human beings. The effective delivery of a performance evaluation goes a long way in establishing trust and building a culture of innovation.  If communicated respectfully, an employer can often mitigate potential issues that might lead to hurt feelings and a lawsuit.  This means taking the time to have a meaningful conversation.  Make an employee feel heard and feel important, that you value what they are doing for you.  Allow them to provide feedback and ideas on their own performance.  They might just surprise you.  

When providing feedback, be honest.  Acknowledge the good things they do and the things they could improve on. If you invest in employees, show them respect, and then are clear about expectations and where they have specifically fallen short, they will generally respond graciously.  

Wrapping it Up

On a final note, it is crucial that supervisors understand the significance of the evaluation process.  This is true both in a legal sense, and in the performance and human capital of your business.  Train supervisors appropriately and regularly.  You want to ensure that the integrity of your company’s employee performance evaluation process is protected. Failing to do so can come back to bite you.  It can be embarrassing and expensive. 

We’re here to help you ensure that your employee performance evaluation process would be defensible in court. Protect your business and get peace of mind by contacting us. Dana Ball Legal Services can help you with your small business legal needs. You can contact us at Dana Ball Legal Services to make sure your business complies with all regulations in Utah.

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