Ask Rita in HR: Do we really have to do performance evaluations?

Dear Rita: I just started as the first HR Manager for an environmental nonprofit that has grown to 65 employees, although at least 35 of them are summer staff. I was somewhat shocked to discover that there are no performance evaluations in the files! When I asked the ED about this, she said two things: a) seasonal employees don't need to get evaluations, and b) that regular employees work mostly in teams and that they've worked together for a long time. When I recommended a formal performance evaluation process the ED said she would only do it if legally required. So my question: are performance reviews legally required? Signed, New Kid on the Block.

Dear New Kid: First, there is no law that mandates employers conduct annual performance reviews. But I assure you that the most common words uttered by employment attorneys are "document, document, document." (I don't know why we say it three times -- perhaps it goes back to the old days when documents were carbon copied in triplicate). When evaluating the potential for legal liability related to an adverse employment action, it is an employee's performance review -- or lack thereof -- that is the first document an employer looks to for direction.

A well-drafted and thorough performance review is the foundation of all legally defensible employment decisions; so while the law may not mandate reviews, every employment attorney worth their exorbitant hourly rate will advise you to do them. I have also occasionally run across a governmental grant that requires the employer to adopt a specific personnel system for workers on the grant, so you should also review any grant conditions to see if that may provide you the legal impetus you are seeking.

Many employment laws are subjective

As an HR professional, I am sure you appreciate that many employment laws are subjective. For example, suppose you have terminated an employee due to poor performance, and that employee is either covered by one of the protected classifications (race, age, religion, sex, disability, pregnancy, etc.) or had recently taken protected action (filed a client abuse complaint, took protected family leave, filed a workers compensation claim, etc.). As you can see from this list, every employee is in a protected classification because everyone has a race or gender, and many employees have exercised legally protected rights. If the employee brings a lawsuit that claims that the termination was due to discrimination or retaliation, how will you demonstrate that the decision was based on performance and not on something else?

Discrimination and retaliation are essentially unequal treatment of similarly situated workers where the unequal treatment was not based on a legitimate business reason or need. If you can show that all employees were evaluated based on standardized job-related criteria, and that this particular employee failed to meet that required standard, you will have gone a long way towards defending the decision. More importantly, employees who feel they are treated fairly are not likely to sue in the first place.

This applies equally to seasonal employees, as each year your agency makes a decision who to hire. If a former employee applies and is not offered re-employment for performance reasons that could be the basis of a discrimination complaint. Thus, you need to have some documentation of the performance deficiencies exhibited by this seasonal worker in the prior year to have a decent defense of the non-hire decision.

What do personnel files say about a person?

When I counsel our nonprofit members on the legal risks associated with a termination decision, one of the first questions I ask is, "What impression would I have of this employee if I just read her personnel file?" As a former trial attorney, I can assure you that juries want to see documentation that an employee was put on notice of performance deficiencies and provided specific examples of unacceptable work/conduct, and provided the necessary training and time to correct the behavior.

Since almost every juror is/was an employee, regardless of the legal standards at issue, they are more likely to give credence to an unlawful motivation put forward by an employee if the principles of fundamental fairness are not followed when the employee was terminated. The old adage, "A good termination should come as no surprise," is based on this principle.

But what if you have a long-term, satisfactory employee whose performance takes a serious turn for the worse? In this instance, do not wait for the annual review to bring this issue up, but address it in a Performance Improvement Plan (PIP) or other written mid-year evaluation. I have attached a sample PIP for those nonprofits who would like to see a sample.

Of course, performance reviews can be a two-edged sword if a manager pressed for time rates every employee satisfactory every year, and does nothing more than check the boxes. For that reason, supervisors and managers should be evaluated on their ability to timely and thoroughly complete reviews. Typically, it is up to the HR Department to ensure that all staff, but especially managers, are supported and trained on conducting reviews, setting goals, and ensuring that these reviews accurately reflect work performance and behavioral concerns.

So it seems to me you've got a sales job ahead of you - one that requires you to assist the executive team in recognizing the value of the performance review not only to mitigate the legal risks associated with employment decisions as I've described above, but also as an essential tool to motivate employees, further develop the nonprofit's mission, and establish goals for individuals and work teams. Once you've got the buy-in from the executive team, it is essential that the entire agency receive training on the purpose and process of this new tool, with the goal of the agency to embrace performance review as an essential communication tool that is beneficial for staff and management.

Here is a sample Performance Evaluation and Performance Improvement Plan that you can modify. And if you'd like to read a great overview of the mechanics and process of establishing a Performance Review system, I encourage you to read the chapter on Performance Reviews in The Nonprofit's Guide to Human Resources by Blue Avocado Editor, Jan Masaoka.

See also in Blue Avocado:

Ellen Aldridge, J.D. is a Labor and Employment Risk Manager for the Nonprofits Insurance Alliance Group. Ellen has practiced labor and employment law for 21 years in both the public and private sectors - representing and advising management in wrongful termination, wage and hour, discrimination and sexual harassment cases. With Nonprofits Insurance Alliance Group, Ellen advises nonprofits with D&O insurance about employment issues - before they are sued - to help keep them out of court. Ellen claims to be very conscientious about doing performance reviews for her dog.

Comments (12)

  • Anonymous

    I do not see a performance evaluation attached here.

    Jun 11, 2013
  • Anonymous

    The form is a hyperlink in the 1st sentence of the last paragraph.

    Jun 11, 2013
  • Like the first post, I can't get the sample evaluation form. The link is broken The link in the last paragraph is the performance improvement sample form.

    Jul 28, 2016
  • Anonymous

    I agree with the statement, "document, document, document," as well as the adage, "A good termination should come as no surprise." But I think it's important to separate the things we *think* performance evaluations accomplish from the things that they *actually* accomplish, and re-think how we seek to provide employee feedback, as well as how we think about and document factors related to employment decisions. I recommend the following blog post for a more detailed exploration of this: http://gembawalkabout.tumblr.com/post/44448446872/the-case-against-perfo...

    Jun 11, 2013
  • Anonymous

    Another critical point is the value of the performance appraisal for the manager, employee, and agency as an important evaluation and planning tool. Many years back, as a new CEO of a non-profit, I conducted "real" (vs. pro forma) performance reviews of staff -- all with substantial years of service. One staff person in particular was a bit upset when I rated her performance as "satisfactory" vs. "outstanding." Her work was OK -- she completed assignments on time, was organized, but she had one year's of experience 20 times vs. 20 years of service showing growth and mastery. Part of the problem was that previous managers had gone through the motions of doing the performance review rather than using it as a tool to plan and manage staff resources. these managers rated everyone as "outstanding," perhaps thinking that this was the most effective way to motivate employees. I used the performance review to challenge this competent employee to stretch herself and to take on new programs and services. As a result she was willing to work along side me to develop (and put her stamp on and take the lead on) new service programs that moved the organization into a much needed direction. Her accomplishments were recognized by her peers, she presented workshops at industry conferences on the new program area, etc., etc. -- in fact, she became an outstanding employee in every way. And she thanked me repeatedly for providing her with an honest assessment of her work all those years ago. The performance reviews established a baseline of expectations of behavior and service delivery for each employee and for the agency -- and I was able to turn this sluggish agency into a highly regarded organization recognized for its work. (I also made sure that staff were also recognized for their critical contributions.) When this employee retired, I was able to document her many accomplishments in part through her performance appraisals.

    Jun 12, 2013
  • Anonymous

    How long is it recommended for HR managers to keep these performance evaluations in the employee files?

    Jul 22, 2013
  • According to a past Blue Avocado Article on Model Record Rention policies, you should keep personnel for documents for 7 years after the person leaves the organization.

    Jul 24, 2013
  • Anonymous

    Do employees have the right to view their performance evaluations if they ask? Are employers suppose to share these performance evaluations with their employees? How is an employee suppose to know what they need improvement on or rebut statements made in their performance evaluations if they have no access to them? I have a friend who was denied access to view her performance evaluation. Is this legal?

    Jul 24, 2014
  • Anonymous

    how to you approach an employer that does not do annual evaluations from the employee perspective? Specifically in terms of the annual review being the basis for an annual raise?

    May 18, 2016
  • My husband and I each worked for non profits in development. In less than a year each of us was let go because our jobs were eliminated. We are both old enough to collect Social Security, but focus, energy, or attitude were not issues. In my case my boss was a self-admitted control freak who constantly re-did my work. When I asked her, in a pleasant tone of voice, why she ignored best practices to do things her way, she gave me a "Because I can" answer and eliminated my job the following Monday. In my husband's case the Executive Director wanted to hire a personal friend (with no development experience) and she did. Neither of us was ever given a written evaluation. Do either of us have a discrimination claim?

    Jul 28, 2016
  • The above article highlights the punitive aspect of most performance evaluations--and why the majority of managers and employees dread the entire process and the huge waste of time and resources. Why is it that only when there is an issue that it becomes important to provide a paper trail of documentation? The nonprofit sector has an opportunity to highlight the many skills and talents of our co-workers--that simply cannot be broken into meets, somewhat exceeds or exceeds expectations. Every non-profit employee who has ever received a 'meets expectations' rating--is irritated that they are being graded a C on some arbitrary scale--and all of the passion, creative energy and willingness to continue this difficult works begins to trickle away.

    Jul 28, 2016

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