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January 9, 2023 Industry Outlook | Law

Here’s how to better manage your employees’ performance in 2023

Kayla West and Abby Warren.

Following a global pandemic and resulting tight labor market, and with a potential recession on the horizon, employers should consider focusing on active performance management for a number of important reasons.

Implementing a consistent performance management system, both formal and informal, and integrating it into business operations is a valuable managerial tool.

It can increase efficiency, create consistency in employee reward and discipline, mitigate employer liability in case of accusations of wrongdoing, and provide an important framework in the event that tough workplace decisions must be made, such as layoffs.

What are successful performance management practices?

It is critical that employers are thoughtful about what is measured and documented, and how information related to the employee’s performance is communicated.

Employers may want to review the job descriptions for the employees being evaluated to determine what skills, knowledge and experience are important and/or essential for each position.

It is generally a good practice to document information in a clear, consistent and thorough manner. Employees should be able to understand whether they have made improvements or met or exceeded expectations and where they can improve.

Where areas of improvement are consistently noted, employers can create a workplace culture that is transparent and in which constructive feedback is regularly provided and readily received.

Additionally, performance management should provide a touch point for managers and employees to communicate about the employee’s performance, career and future with the company. Eliminating surprises and allowing employees the opportunity to ask questions and clarify their understanding of feedback and how to implement it can be helpful to both managers and employees.

Utilizing performance management tools

Managing and retaining employees

Effective performance management tools provide a rubric or guidepost for employees whether the actual review takes the form of an evaluation sheet, fillable online form or some other mechanism. This helps to set clear expectations and puts employees on notice of the metrics used to evaluate employees.

Establishing clear expectations allows employees to determine their strengths and areas for improvement. Employers can then work with employees on how to set and achieve performance-related goals that benefit the employee as well as the company as a whole.

Employees appreciate recognition of their successes. Employees also tend to appreciate knowing exactly what they need to be doing to meet or exceed expectations, as this generally informs whether they will get a bonus or be considered for promotions and other opportunities that arise within the company.

Further, having performance management tools can also help identify areas of improvement on a larger scale, such as within a group or department. In such cases, training and resources can be implemented or utilized to help improve company systems and practices for those individuals.

Guiding employment decisions

Whether employees are exceeding expectations or operating below expectations, performance management tools help to highlight for managers where each employee excels or struggles, how employees compare to their peers, and what action should be taken, if any.

Relatedly, it is important to develop consistent practices with regard to compensation that might be tied to performance reviews.

For example, it would be problematic for two employees to have similar performance reviews in the same department but to receive different bonuses.

Defending against employment claims

While not the intended purpose of performance management, documentation related to performance can play an important role in disputes or litigation arising out of claims of retaliation or wrongful terminations.

For example, when employers defend against employment discrimination and retaliation claims, they typically present evidence of the legitimate, nondiscriminatory reason for taking the adverse employment action (i.e., suspension or termination) against the employee.

Where an employer can show, for example, that the employee had consistently failed to meet expectations, and that the employer had taken similar actions against other employees in the past, this can support the employer’s defense that the employee was disciplined based on a legitimate, nondiscriminatory reason (poor performance), rather than an unlawful reason.

Abby Warren and Kayla West are employment lawyers at Hartford law firm Robinson+Cole.

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