Employers who routinely evaluate employee performance and conduct regular employee evaluations reap tremendous benefits:

• Your employees will know what you expect of them. They will receive feedback, praise, and criticism of their work, and will have notice of any shortfalls in their performance or conduct.
• You can recognize and reward good employees and identify and coach workers who are having trouble.
• The communication required to make the evaluation process effective ensures that you will stay in tune with the needs and concerns of your workforce.

The evaluation process also nips a lot of employment problems in the bud. Performance evaluations can keep you out of legal trouble by helping you track and document your employees’ problems. If you ever need to fire or discipline a worker, you will have written proof that you gave the employee notice and a chance to correct the problem, which will go a long way towards convincing a jury or judge that you acted fairly.

This article provides an overview of the evaluation process; for step-by-step instructions and forms for conducting performance evaluations, including tips on creating performance objectives, observing and documenting employee performance, writing appraisals, holding evaluation meetings, and more.

Evaluate Employee Performance

Create Standards and Goals

Before you can accurately evaluate employee performance, you need to establish a system to measure that performance. For each employee, you need to come up with performance standards and goals.

Performance standards. Performance standards describe what you want workers in a particular job to accomplish and how you want the job done. These standards apply across the board, to every employee who holds the same position. For example, a standard for a salesperson might be to make $50,000 in sales per quarter. Make sure your standards are achievable and directly related to the employee’s job.

Goals. Unlike performance standards, goals should be tailored to each employee; they will depend on the individual worker’s strengths and weaknesses. For example, a goal for a graphic artist might be learning a new software program that will make his or her work more efficient; for an accounting professional, a goal might be to take the exam to become a certified public accountant. Your workers can help you figure out what reasonable goals should be.

Once you have defined the standards and goals for each position and worker, write them down and hand them out to your employees. This will let your employees know what you expect and what they will have to achieve during the year to receive a positive evaluation.

Keep Track of Employee Performance

Throughout the year, track the performance of each employee. Keep a log for each worker, either on your computer or on paper. Note memorable incidents or projects involving that worker, whether good or bad. For example, you might note that a worker was absent without calling in, worked overtime to complete an important project, or participated in a community outreach program on behalf of the company.

If an employee does an especially wonderful job on a project or really fouls something up, consider giving immediate feedback. Orally or in writing, let the employee know that you noticed and appreciate the extra effort — or that you are concerned about the employee’s performance. If you choose to give this kind of feedback orally, make a written note of the conversation for the employee’s personnel file. It is also a good idea to have a policy on progressive discipline.

Giving the Evaluation

At least once a year, formally evaluate each employee by writing a performance appraisal and holding a meeting with the employee. To prepare, gather and review all of the documents and records relating to the employee’s performance, productivity, and behavior. Review your log and the employee’s personnel file. You might also want to take a look at other company records relating to the worker, including sales records, call reports, productivity records, time cards, or budget reports.

Once you have reviewed these documents and gathered your thoughts about the employee’s work, write the appraisal (or, if you will solicit input from other managers, ask each of them to complete an evaluation, and then compile them). Although an appraisal can take many forms, it should include:

• each standard or goal you set for that worker and that job
• your conclusion as to whether the employee met the standard or goal, and
• the reasons that support your conclusion.

When you have finished writing the appraisal, set up a meeting to discuss it with the employee. Remember, this is likely to be one of the most important meetings you have with each employee all year, so schedule enough time to discuss each issue thoroughly. At the meeting, let your worker know what you think he or she did well and which areas could use some improvement. Using your evaluation as a guide, explain your conclusions about each standard and goal. Listen carefully to your worker’s comments — and ask the worker to write them down on the evaluation form. Take notes on the meeting and include those notes on the form.

Evaluation Tips

It can be difficult to evaluate employee performance. Some workers react to criticism defensively. And, sometimes, no one understands what merits a positive evaluation. If your workers feel that you take it easy on some of them while coming down hard on others, resentment is inevitable. Avoid these problems by following these rules:

a) What they can do

• Be specific. When you set goals and standards for your workers, spell out exactly what they will have to do to achieve them. For example, don’t say “work harder” or “improve quality.” Instead, say “increase sales by 20% over last year” or “make no more than three errors per day in data input.” Similarly, when you evaluate a worker, give specific examples of what the employee did to achieve — or fall short of — the goal.
• Give deadlines. If you want to see improvement, give the worker a timeline to turn things around. If you expect something to be done by a certain date, say so.

b) What you can do

• Be realistic. If you set unrealistic or impossible goals and standards, everyone will be disheartened — and will have little incentive to do their best if they know they will still fall short. Don’t make your standards too easy to achieve, but do take into account the realities of your workplace.
• Be honest. If you avoid telling a worker about performance problems, the worker won’t know that he or she needs to improve. Be sure to give the bad news, even if it is uncomfortable.
• Be complete. Write your evaluation so that an outsider reading it would be able to understand exactly what happened and why. Remember, that evaluation just might become evidence in a lawsuit. If it does, you will want the judge and jury to see why you rated the employee as you did.
• Evaluate performance, not personality. Focus on how well (or poorly) the worker does the job — not on the worker’s personal characteristics or traits. For instance, don’t say the employee is “angry and emotional.” Instead, focus on the workplace conduct that is the problem — for example, you can say the employee “has been insubordinate line managers twice in the past six months. This behavior is unacceptable and must stop.”
• Listen to your employees. The evaluation process will seem fairer to your workers if they have an opportunity to express their concerns, too. Ask employees what they enjoy about their jobs and about working at the company. Also ask about any concerns or problems they might have. You’ll gain valuable information, and your employees will feel like real participants in the process. In some cases, you might even learn something that could change your evaluation.
  

by: Amy DelPo, Attorney

Some days back a client called me.

It was towards the end of the third phase of the lockdown. It was likely that he would be able to resume his business but he was a worried man. With reduced revenues for some months now, he felt his first move should be to slash costs. Employee salaries were his largest expense head and naturally, he concluded that he had no other alternative but to let go many of his staff.

Like all of us, my client is basically a decent human being. He doesn’t want anyone to lose their jobs. He knows they need the money. He is aware that it will be impossible for them to get another job in these tough times. Yet, he felt he had no choice. He thought he couldn’t afford to keep them any longer. But, here’s the thing, he was so troubled in his mind that he decided to call me to talk it out before making any announcement. Just to see if there was any way out.

I hear him out fully. Then I asked him just two questions.

How much cash does your company have at this time?
How long will the cash last if there is zero sales?
After checking with his accountant he told me that they had cash for 2 months with zero revenue; But, and here’s the good news, they were doing around 30% of their normal revenue already. I then asked him how long it would take them to double that number. He said that he needed time to figure that out.

So a couple of days later, he called me again. He said that he had gone into a huddle with some his senior staff and they discovered that the changed environment had thrown up new opportunities. Nothing earth shattering, but enough to get the cash flow going again.

Now, here’s the thing, He said that by tweaking their strategies a little, they could get back to 70% of their pre Covid revenue in just 3 months! He could see a light at the end of the tunnel.I now sat with him and together we examined the impact that employees would have on his business given this ‘new normal’. We realised that instead of retrenching people in bulk, we could work out a ‘win win’ solution by implementing graded pay cuts.

People would still have their jobs.

Revenues would return.

And expenses would be manageable.

His firm has 50 employees – 30 of them in Accounts/admin/operations and 20 in sales or other client facing activities.

We first segregated the employees into the following buckets

Bucket 1

Employees who are absolutely critical for the business

4 in Accounts,

6 in Operations

10 in Telesales

Bucket 2

Employees who cannot do any work because of the Covid 19 situation

4 in Sales

5 in Logistics

3 in Operations

Bucket 3

Employees who can do at least 40-50% of their work

3 in Accounts

4 n Admin

5 in Sales

8 in Operations

We went into each role and employee deeply, especially in Bucket 1 – what is expected of them, what constraints they will face and their competence/ability.

The next step was to segregate employees salary wise

Group A

CTC less than 25000 per month

Group B

CTC of 25000 to 50000 per month

Group C

CTC of 50,000+ per month.

Note: This grouping was based on the average payroll of this particular company. It may vary from company to company.

Now we had a clear idea about where we stood with respect to the employees.

With this in hand, we laid out the following grid with percentage cuts in salary based on both criticality of work and salaries.

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We realised that we would need to let go of only 3 employees because of lack of performance or because their roles were not relevant for the new plan.

The next step was to communicate this decision to the employees, which was the most critical aspect of the whole exercise. My friend held a townhall with all the employees though video conferencing and discussed the situation frankly and transparently:

In brief, he spoke about

1. The current business scenario

2. The need to make changes

3. The method he had adopted

4. The timelines for its implementation

5. Expectations from employees and what can be expected of the management.

6. And finally, this is the most important point

He also stressed that this was a temporary measure. That things would revert to the previous levels once revenues normalized in a sustained manner. He also put a timeline for this. He patiently listened to all queries and addressed them. He was in full control of the conversation.

Net result: Most of the employees were relieved that their jobs are still intact and were enthused with new business plan. They went to work with a will.

There were three key reasons for my client’s success

1. Thinking solution and not problem

2. Realising that your people are your partners – that you share a symbiotic relationship with them; both need each other.

3. And, finally, recognizing that you have a problem and getting help to solve it