As the end of the year quickly approaches, you may be gearing up for a necessary annual tradition – year-end performance reviews. According to SHRM, the average employer spends about 210 hours preparing and conducting these reviews. But what is the return on their investment? Employers who provide constructive, strengths-based feedback enjoy 8.9% profitability and 12.5% more productivity than companies focusing on employee shortcomings and weaknesses.
While these evaluations offer a valuable opportunity to provide constructive feedback, they also come with a set of legal considerations that should not be overlooked. Ensuring that your performance review process aligns with legal standards is not just about compliance; it’s about fostering a positive workplace culture and mitigating potential legal risks.
Need help crafting an employee-review process that benefits your company? Contact the Gertsburg Licata Labor & Employment Team today!
Legal Considerations of Performance Reviews
Performance reviews are more than just an annual formality. They play a pivotal role in shaping the employer-employee relationship and shifting the culture of your company to align more with your goals and vision for the future. As you prepare to provide feedback to your team, consider the following legal considerations:
- Document Everything
If performance-related issues escalate, thorough documentation becomes your greatest ally. From setting clear expectations at the beginning of the year to documenting specific instances of commendable or concerning behavior, maintaining a comprehensive record can substantiate your assessments and decisions. As you document your employees’ performance throughout the year, be sure to avoid making vague suggestions for employee improvement, avoid subjectivity in documenting employee performance and proactively provide objective evidence to support any claims made to support subpar performance. SHRM suggests that every document you prepare, do so with the thought that a third party will review it one day. Be thorough and be fair.
- Consistency is Key
Consistency is a hallmark of effective leadership and a legal imperative. Ensure that your performance review process is consistently applied across all employees. Discrepancies in how feedback is delivered or how decisions are made can open the door to claims of discrimination or favoritism. LinkedIn suggests that developing a regular feedback system applied company-wide can bolster consistent evaluation of employees.
- Fairness in Feedback
Constructive feedback should be fair, objective and tied to job-related criteria. LinkedIn reiterates that many problems involving employer feedback stem from the failure to keep supervisory feedback objective. Avoid personal biases and focus on measurable performance metrics. If an employee perceives feedback as discriminatory or unjust, it could lead to legal challenges.
Navigating Constructive Criticism
While legal considerations are paramount, the true essence of performance reviews lies in their ability to drive professional growth and development. Striking the right balance between legal compliance and constructive criticism is key. Below are some tips for providing constructive feedback.
- Provide Goal-Oriented Feedback
Align feedback with individual and organizational goals. By emphasizing areas for improvement in relation to overarching objectives, employees are more likely to perceive feedback as constructive rather than punitive. This not only helps with employee morale, but it can also help clarify the expectations of a job. With about 50% of employees reporting that they are unclear about their job requirements, goal-oriented feedback is critical.
- Provide Timely and Consistent Feedback
Incorporate continuous feedback throughout the year to avoid surprises during the year-end review. Timely and consistent input enables employees to make necessary adjustments, fostering an environment of ongoing improvement. According to SHRM, about 76% of Human Resource managers value ongoing feedback and reviews more than one-time, annual reviews that do little to improve a situation in real-time. Furthermore, a Gallup poll revealed that regular feedback increases employee engagement three-fold as compared to employees receiving less consistent feedback.
- Encourage Employee Input
Effective performance reviews are a two-way street. Encourage employees to share their self-assessments and career aspirations. This not only provides a more holistic view but also empowers employees to take an active role in their professional development. SHRM suggests asking employees the following questions, both for their own performance and their supervisors:
- What did you (or your supervisor) do in the past three months that worked well?
- What could you (or your supervisor) start doing and stop doing to make things better?
- What are your goals for the next quarter? What are your supervisor’s goals for the next quarter?
Mitigating Legal Risks Through Communication
Communication is the linchpin of a successful performance review process. Clearly articulate the purpose and expectations of the review, ensuring that employees understand the constructive nature of the feedback. The process should not be sugarcoated, but should also be done fairly, objectively, and in such a way that inspires employee growth and improvement. Transparent communication can help preemptively address concerns and reduce the likelihood of legal disputes.
The Role of Legal Advisory Services
Given the intricacies of employment law, many businesses find value in seeking legal advisory services to ensure that their performance review processes are legally sound. Legal professionals can provide insights into the latest employment regulations, offer guidance on documentation best practices, and assist in crafting legally defensible performance improvement plans when necessary. If you would like to examine your employee-review process, call the Labor and Employment team at Gertsburg Licata. We will make sure your goals are met, your employees are heard and your growth is prioritized.
Jonathan Stender, Esq., a partner in the Labor & Employment practice group, brings over 20 years of experience representing management and employers in workplace law. Formerly a partner at Dworken & Bernstein, Jon specialized in heavy litigation, administrative practice, and counseling clients through employment law matters and Class Actions. Beyond his legal practice, Jon is an avid Cleveland sports enthusiast and holds a soft spot for his alma mater, the Washington Huskies. For consultations or inquiries, Jon can be reached at [email protected] or (216) 573-6000 x7013.
Disclaimer: The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. It does not establish an attorney-client relationship, and any reliance on the information contained herein is done at your own risk. For specific legal guidance tailored to your business and jurisdiction, it is recommended to consult with a qualified attorney who can provide professional advice based on your unique circumstances.
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