Performance Management: Are You Exposing Your Firm to Risk and Liability?

Tips for protecting your company when dealing with poor performing employees

Performance management is a tricky but necessary task, and one that can expose your firm to limitless potential liability if dealt with incorrectly. It is imperative that your company avoid the pitfalls that could haunt you if communication is mishandled and your feedback inconsistently shared with a poor performing employee. Below are some best practices to limit your firm’s liability when handling poor performers.

Deal with the Issues Verbally and in Writing

It is often human nature to avoid conflict, but when it comes to performance management, the less honest and direct you are, the more you will potentially pay for it later. You owe it to the employee to be candid, a strategy that will serve you well down the road.

Be sure that as issues arise, you start off with a conversation, pointing out your concerns and mapping out a specific path toward addressing them. When a problem recurs, have another conversation, possibly documenting the issue in writing. Eventually, an employee’s repeated failure to rectify a problem may leave you with no choice but to terminate him or her. While there are no set number of steps that need to occur before you reach that point, the key is to be able to defend the decision to terminate by showing evidence that the employee was told about the problem and what to do differently, yet failed to comply in a reasonable period of time.

The Performance Review

Another means of tracking performance is a written performance appraisal, which all employees should receive at least once a year. You can conduct performance reviews for all employees at the same time of year or on the anniversary of each person’s hire.

A performance review should document an employee’s performance on all relevant criteria and measures. And–this next point may seem obvious–it’s critical that your appraisals align with the actual performance of your employees. In other words, a top performer should receive a solid review, where a poor performer should receive a poor review. Time and again, we see companies who have a poor performing employee who has received a neutral or even positive review, with no mention of performance issues in the person’s file.

Be prepared to support your assertions with specific examples of the issues you have documented. Poorly performing employees and a neutral or positive review often add up to an employee that could be extremely difficult to terminate.

A word of caution: Never wait for appraisal time to first address your concerns. Address problems throughout the year as they come up, and document them in a formal appraisal.

Have a Witness Present

Having a witness present during communications on performance can help ensure that the conversations are accurately recorded in case the need to recount them arises. All too many lawsuits and government audits emanate from the one-on-one meeting, where an employee says one thing about the content of the discussion while the manager tells a different story. It’s always difficult to be certain about who is telling the truth, but having a witness can make it easier. Witnesses should be HR or managerial personnel, and they need not actively participate in a meeting but simply observe and note what is said.

The Question of the Month is sponsored by Norwalk HR outsourcing and consulting firm OperationsInc. Don’t miss Performance Management Basics, a CBIA HR Council program presented by David Lewis, CEO of OperationsInc., on Oct. 8. Register here.