Nonprofit and for profit employers should conduct periodic evaluations of their employees. An annual evaluation process is sufficient for established staffmembers, but new hires or underperforming employees should be given more frequent performance reviews. The benefits of early, consistent feedback are reaped by both the employer and the staff. Some of these benefits include:
• Identification of performance problems early in the employment relationship;
• Opportunity for the adaptive employee to modify performance to meet standards;
• Ability to reassign a valuable employee who is badly matched to his or her current role before job dissatisfaction results in loss of this employee;
• Reducing risk for the employer in the event that termination of the employee becomes necessary;(1)
Performance evaluations should be recorded in writing and kept in a locked file. Maintaining written records of employee evaluations will enable a firm to establish relevant facts in the event of litigation. For example, if an employee who was regularly late for work is let go and then claims that he or she was fired due to racial discrimination.
Small organizations can use the same evaluation form for all employees. The use of a consistent form helps the employer to support promotion, demotion or firing decisions by referring to performance data in particular categories. Larger companies can invest the time and resources in a tiered evaluation process, distinguishing various staff levels and upper management. Similarly, even a start up nonprofit organization could use a more detailed form to evaluate the Executive Director.
Many agencies use a "360 degree evaluation" process. A 360 degree evaluation elicits peer reviews and reviews of supervisors by their direct reports, in addition to the usual top/down evaluation stream. Naturally, staff tend to say nice things about their supervisors, whether they are deserved or not, due to concerns that any criticism will result in retaliation. Large companies can shield employees with anonymous reporting. In smaller companies, however, a supervisor can easily figure out who provided the negative comments.
As a result, even the worst supervisors may accumulate many "positive" evaluations in their files, making it more difficult for the agency to take appropriate actions to correct problem behaviors. There are no perfect solutions to this problem. Some agencies have formal top/down evaluations and informal bottom/up reporting, allowing upper management to "take the heat" off reporting employees. Others use a focus group approach, bringing groups of employees together to discuss issues or problem behaviors. Ultimately, the success of any 360 degree review process will come down to company culture. A workplace that fosters fairness, creativity and collegiality is more likely to hear about ideas for improvement that originate at all levels of the company structure.
Just the simple act of creating an evaluation sheet can help owners and managers to clarify the agency's standards and better communicate those expectations to their staff. Nonprofits and businesses interested in developing evaluation forms for their use can contact a small business or nonprofit attorney. My firm offers these services for a fixed fee of $85.
No matter what kind of evaluation process your company adopts, the trick will be making sure evaluations actually get done. A streamlined and easy-to-use form can help. Incentives can also motivate managers (or yourself, if you're a small business owner) to take time to conduct the reviews and write the reports. Build good habits and protect the hard work you're putting into your company. Talk to other employers who have faced an employee lawsuit or defended an unemployment insurance claim. They'll tell you how much of a difference it makes having written records of that employee's performance problems, instead of an empty personnel file.
(1) In the review of unemployment insurance benefits claims, an important distinction is made between employees discharged for "inability" and those discharged for "misconduct". If an employee has been evaluated early, counseled regarding their performance, and provided with written instructions for how to improve his/her performance then the employee is more likely to be characterized as having willfully failed to perform their duties, sparing the company or nonprofit the expense of having employment insurance benefits charged to their tax account.
