Insight for business owners and risk managers
Employment practices liability claims are a significant exposure that affects companies of all sizes. Wrongful termination, discrimination and harassment are just a few of the claims employees file against their employers. The litigation toll can be high, resulting in costly payouts, tension and negative public relations. Establishing an objective employee evaluation program—and consistently applying it across the company—is vital for preventing employment-related lawsuits.
However, managing employment liability is more than just creating an evaluation form and requiring your managers to use the form to rate their employees. What’s crucial is the overall framework of the evaluation program:
- start with a foundation of training for managers
- create job descriptions and job-specific evaluation forms
- regularly monitoring the process.
An objective evaluation program has several benefits, including:
- Ensures employee success, which increases the overall success of your business
- Mitigates the risk of employment claims, as evaluations are a communication tool that ensures employees know what is expected of them
- Provides evidence of non-discriminatory practices for promotion or pay in the event of a lawsuit
Basics of an Employee Evaluation Program
An employee evaluation program should be carefully designed so it is fair and free of discrimination for all employees, especially protected classes. Employee evaluations should be conducted regularly to increase the efficiency and productivity of your employees. Some employers choose to review employee performance annually. In some industries, more frequent quarterly or monthly evaluations make better sense as they can improve performance and correct job-related issues more quickly.
Provide Employees with Job Descriptions
The first important step in loss control is to provide job descriptions to all newly-hired and current employees. Well-written job descriptions inform employees of their job duties and responsibilities and provide criteria for evaluating their performance. Subsequently, when managers are working on an employee’s evaluation, they should have the job description handy to ensure they are evaluating the proper duties and not duties outside the scope of the position.
Use Job-Specific Evaluation Forms
Managers and supervisors should complete all employee evaluations in writing so they can be referenced in the future. The following are a few tips for completing employee evaluation forms:
- Use job-specific evaluation forms. Evaluate employees based on their job descriptions and avoid evaluating employees in general terms.
- Keep in mind the primary and secondary audiences for evaluations; the primary audience is the employee, and the secondary could be lawyers and juries (in the case of a lawsuit). Ensure all audiences could easily understand the content and format of the evaluation.
- Avoid short, overly general reviews and complex, overly detailed reviews. Use straightforward, non-technical language that concisely describes the employee’s performance and goals.
- Use specific examples for subjective areas of evaluation.
Train Managers on How to Evaluate Employees
Using objectivity in evaluating employees may not be intuitive for all managers. Training managers on the basics of your employee evaluation program and guiding them throughout the process will help mitigate the risk of discrimination claims.
After managers have completed their employees’ evaluations, have the human resource department and upper management review them before they are presented to the employee.
Share Evaluations in a Face-to-Face Meeting
When the evaluation form is ready to present to the employee, managers should set up a face-to-face meeting with the individual to discuss the evaluation. In some cases, employers may choose to conduct 360-degree evaluations. This process requires the employee to complete a self-assessment before the meeting, evaluating their own job performance. The self-evaluation is then compared with the manager’s evaluation later on.
Managers should begin the meeting by praising the employee’s strengths and specifically commenting on their valuable contributions to the company. Next, they should discuss each item of the evaluation form with the employee, describing the job-specific behaviour and rationale for the rating while allowing the employee to ask questions or give input.
If there are areas of poor performance, managers should confront the job-specific problem, not the person. While describing job-related issues, they should provide specific examples so the employee understands the rating. They should set clear goals for underperforming employees and brainstorm with the employees ways they can achieve those goals. In all cases, managers should avoid making the employees feel like they are being personally attacked. It may be a good idea for managers to have materials, such as a copy of the employee handbook, company policies or past documentation of disciplinary actions, on hand to reference if necessary.
The in-person meeting should be a two-way conversation between the rating manager and the employee. The employee should have the opportunity to ask questions and comment on the evaluation. If employees disagree with anything on the form, they should be able to state on the form what they disagree with. If they refuse to sign the evaluation, make a note of this. After the review, the employee should receive a copy of the evaluation form.
Monitor the Overall Evaluation Process
Monitoring the evaluation process and consistently applying it across the organization are critical. This requires checking in with all managers and supervisors, scrutinizing their evaluation forms and providing additional training if needed.
Do your employees feel like they are being evaluated fairly? Sometimes, you may also want to ask employees for feedback on the evaluation program to determine what works and what doesn’t.
Common Mistakes With Employee Evaluations
Understanding common mistakes in employee evaluations may help you identify problems in your current evaluation process or highlight what to avoid when you create your program. Evaluating employee performance—especially poor performance—can be difficult and unpleasant for many managers. Common problems include:
- Employees are not evaluated regularly.
- Managers rate employees more “middle-of-the-road” while avoiding the “poor” and “superior” ends of the rating scale.
- Managers make the mistake of rating employees on their overall job performance instead of evaluating how they performed in each area of their job.
- Managers rate an employee’s personality instead of job-related behaviours.
It is important to note that if employees feel they are being personally attacked, they are more likely to claim discrimination or harassment.
Are Employee Evaluations Required by Law?
All organizations must understand federal and provincial employment laws, which may require employers to keep employee personnel files. In many cases, employee evaluations become a part of a personnel file. Employers should be aware that employees can use their evaluations as evidence of discriminatory practices. On the other hand, well-written, accurate documentation of employee performance—especially disciplinary actions—can bolster the employer’s case in the event of a lawsuit.
To avoid invasion of privacy, emotional distress or defamation claims, it’s also essential to keep employee evaluations confidential. Evaluations and all employee files should be stored appropriately, locked and have controlled access.
At Finuity Wealth, we are deeply committed to promoting employee well-being and endorsing exemplary practices. We aim to enhance the overall wellness landscape, ensuring your team members recognize their importance to your mission. With our expertise in financial well-being, we can amplify your efforts in cultivating a driven, involved, and dedicated workforce. We’re available to work together to shape a prosperous future for every stakeholder in your business.
