How to Conduct Performance Appraisals

December 8, 2015

It is that time of year – you know what I mean: performance reviews. One of the joys of running a business is the employees because it is that human capital that really makes our businesses a success. However, just like any other aspect of our businesses, every once in a while we need to review how everyone is performing.

For many businesses, that annual performance review corresponds with year-end. If you have to give performance appraisals, then there is a chance you don’t like doing them. I mean, they take up your time and if an employee’s performance isn’t up to par, most of us don’t like having to tell the employee that. However, don’t rush to just get through them in order to get them off your plate.

The Importance of Getting Performance Reviews Right

How you handle performance reviews can have major legal ramifications. Imagine that you have an underperforming worker. You gloss through the performance review in order to get it over. A short time later, you fire them. They sue, saying you fired them for discrimination. You go to court, and you have nothing to show except some decent yearly appraisals.

You see the problem?

When it comes time to sit down with employees and examine how they are doing, there are a lot of things you need to be doing in order to make sure you are doing it right.

The Key Is Documentation

For starters, just like with so many other things in business, when it comes to your yearly reviews, you need to first track the results and then record what you tracked.

As you are probably aware, when things come down to he-said-she-said, they are a lot harder to prove. That is why tracking reviews with an actual form is so beneficial. Having written documentation about what both you (or HR, their manager, or whoever is actually giving the review) says and what the employee him or herself says, can help you out tremendously.

These forms should be signed and dated. The employee should also sign off on it. Their comments should be included on it as well.

Once everything has been recorded, that record should be kept for a number of years. Don’t just discard the record when a new one has been created. Something as simple as showing a drop in performance from one year to another could be helpful if it comes to a debate in court.

Use Concrete Terms

The more concrete your examples, the better the review will be. Be as specific as possible. Think of the differences between the following:

  • Statement A: Employee is unreliable.
  • Statement B: Employee came in over half an hour late on 10 different dates over the last year (xx/xx/xxxx, xx/xx/xxxx, etc.).
  • Statement A: Employee has a bad attitude.
  • Statement B: Employee yelled at co-worker on x date, causing co-worker to complain to supervisor.
  • Statement A: Employee does not have enough energy.
  • Statement B: Employee fell asleep at desk five times over last three months and three times during meetings.

While each pair of these are describing the same problem, when it comes down to any potential legal action, each of the B’s is better than the A’s. Hopefully you can see why. The first statements could be opinions. What defines unreliability, bad attitudes, or low energy? Those type of phrases don’t tell anybody what they need to know.

On the immediate front, they don’t help the employees. In order to improve any areas that need to be improved, an employee needs to know what objectives they are not meeting. Being told they are not satisfactory does not help them unless the specifics of how they are not satisfactory are also stated.

On the legal front, if the worst does happen and one of these reports ends up in court, it is a lot harder to argue facts and specifics than it is to argue generalizations. No matter how you look at it, though, concrete is better.

Track All Year Long

A performance appraisal should not be a trap or a surprise. It should just be a review. Performance should be tracked all year long. If a problem pops up, it should be addressed in the appropriate manner at the time it happens.

There are several reasons for this. For starters, an employee who knows what to expect – and then has those expectations met – is less likely to become angry about the results. However, a bigger reason for legal purposes is that it emphasizes the importance of the problem.

If you have a real problem with the behavior of a worker, then you aren’t likely to ignore it until the end of the year. That means if you do ignore it, and only bring it up at these meetings, it looks like less of a concern for you.

In addition, the point of a performance review is to show employees how they are doing so they can improve where they need to and so that they can keep up the good work on the areas that they are doing great in. To have the best results from these meetings, it is important to give periodic reviews throughout the year – though the annual one might be a lot more encompassing than the other, shorter reviews throughout the year.

The performance review should only be a summation of the last year – it should not be the only time you talk to an employee or help them see how they are doing.

Be Positive – Not Inflammatory

Performance reviews are intended to be helpful. They are designed to give employees overviews of their work so that they can improve on it. It is not a time to point fingers or call names. While everything said in one of these reports does not have to be a compliment – it should be useful. This goes back to the point about being concrete.

Telling an employee they are awful does not help them. Telling them specific areas they might need to work on – such as being more punctual or creating fewer grammar mistakes in assignments – and helping them come up with a plan to work on those areas is constructive.

Constructive criticism in a performance review is helpful. Telling an employee how horrible they are and then expecting them to figure out how to improve upon that horrible performance is not.

And just as mentioned above, if you do go to court, having positive reviews that show you are really trying to help your employees improve can only help you in the long run.

Review for the Whole Year

This is a different point than the one on tracking all year long. This point is referring specifically to the results of the year-end review. When you conduct the review, make sure you include information for the entire reviewing period.

If you do this review on a yearly basis, make sure that the review includes the whole year. This helps you create a more accurate picture of the employee’s performance.

If you only look at the last month, then you are missing performance for a large chuck of the time. There could be lots of reasons an employee is performing at a higher or lower level over the course of a short period of time.

Maybe a normally incredible employee is having car troubles, which has caused him or her to come in late a few times over the few weeks before the meeting. Maybe a below-average performer knows reviews are coming up and puts on an above-average rush to the finish line.

Taking in the whole period between reviews helps ensure a more accurate result.

Train HR and/or Managers on Conducting Reviews

In all likelihood, if you are a business owner and your business is medium to large, or perhaps even small depending on how you divide tasks, you are not likely going to perform these reviews yourself. Most likely, the employee’s direct supervisor will because they are the individual with the best ability to perform an accurate review, or perhaps in some circumstances, someone from HR will. With 360 performance appraisals, it might be the employee’s peers and reports that help with the review process.

Whoever is giving the review, make sure they know what they are doing. Training is key here.

Make Sure to Give Honest Reviews (Do Not Exaggerate)

When it comes down to actually putting a number or a label on a performance, it can sometimes be tough to be honest. Who wants to tell someone they see every workday that they are a below-average employee? However, it is critical to not exaggerate scores.

If you list a thousand areas an employee is not meeting expectations, but then you give them a number rating that equates to “meets expectations,” then you are only causing problems for yourself. For starters, you are sending mix messages. Do they need to improve or are they doing fine?

Then, going back once again to that court case, what will a judge or jury think when they hear you saying you fired someone because of their performance and then a few years’ worth of satisfactory performance reviews are submitted?

Even if it is hard, make sure that reviews give honest depictions of performances, and that the comments and the ratings match.

Have Employees Participate in the Review

A performance review should be an interaction; and for it to be an interaction, both parties should have their say. See what the employee thinks of their own performance as well as your opinions on it. Make sure you are on the same page. Once you have both had time to review the past year, work together to create areas where the employee can improve and grow.

The Takeaway

Performance reviews might not be fun, but they are very important. Make sure you do them right, and they are much less likely to hurt you in the future.


Ashley Shaw is an experienced Legal Writer with years of experience. After receiving her JD, she worked for years in a corporate environment writing on business and employment law topics

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