November, 2014

LIFE’S LESSONS* Winter 2013, Real Issues…Reconstituted Facts


As year-end nears, many businesses are engaged in employee performance review processes. The approach differs – some conduct formal reviews tied to job descriptions and/or defined performance objectives; some solicit 360 feedback from peers, clients and direct reports; and some provide informal feedback reflecting on employees’ progress in their roles, accomplishments, or areas for improvement. Some businesses do not engage in any such process. Why are annual reviews a recommended HR best practice? And what pitfalls should you consider when providing performance feedback?
Let’s consider Joe, age 49, who works for Small Enterprise. Small Enterprise began with five employees in 2008, but business picked up substantially 2 years ago. Presently, Small Enterprise has 50 employees and is poised for significant expansion in the coming year, particularly in Production. Joe heads the Production Team and has been with Small Enterprise since shortly after it was founded. While Joe is pleasant and knows the mechanics of the function, senior management does not believe he has the drive and determination to oversee Production in its further expansion. They have identified a talented manager from outside, 13 years’ junior to Joe, with whom they would like to replace him.

Small Enterprise’s HR processes have not kept up with its expansion. Performance feedback still consists of a passing comment from a manager, never documented. The COO was to have met with Joe 18 months ago to discuss concerns with his leadership and require him to create an action plan and budget forecasts. It is unclear if that conversation happened; it is not documented in Joe’s personnel file, the COO left a year ago after a dispute, and current senior management attributes the growth of Production to-date to sheer luck, carried by the other aspects of the business, rather than any affirmative planning or strategic thinking on Joe’s part.

The new COO invites Joe for coffee, discusses the expansion plan and explains that senior management feels Joe is not up to the task. The meeting does not go well – Joe asserts this is the first he is hearing of any issues with his performance, and that he has always been a dedicated employee. Joe notes that he turns 50 next month, and asks if this is really about his age. Despite the COO’s denial that age is a factor, Joe huffs out.

Can Small Enterprise terminate Joe’s employment?

Not without risk that Joe will file an age claim, contrasting his age with that of his identified replacement. The problem for Small Enterprise will be in proving that Joe’s performance was lacking. No performance issues were ever documented, Production has grown, and the criticism that Joe lacks “drive” could be interpreted as code for “he’s too old”. Also, it may be difficult to fault Joe for not having produced an action plan and budgetary forecast if Small Enterprise cannot show that anyone ever requested those items from Joe.

Consider a better approach

Considering the legal fees and lost productivity that come with litigation, perhaps there is a better approach that will enable Small Enterprise to move its business forward. One option is to offer Joe a severance package in exchange for a release, and hope he accepts. Alternatively, senior management can take a step back and address Joe’s performance shortfalls in a manner that feels fair and appropriate to Joe. What if the former COO never had that meeting with Joe? Or perhaps the meeting occurred but the critique was so mild that Joe did not appreciate his performance needed improvement?

Document feedback
Ideally from an employee relations perspective, now that Joe has received pointed feedback he should be given a meaningful opportunity to improve. To protect Small Enterprise, the current COO should document her meeting with Joe and follow-up with specific deliverables and a timeline in which to complete them. Joe should be told if he is not progressing as expected and he should receive written notice that his continued employment is at risk.

Consider other roles
Senior management may conclude the stakes are too high to retain Joe in his current role, but perhaps an alternative role is better-suited to his skill set. Depending on the anticipated pace of expansion, if Joe is a competent manager but lacks strategic vision, perhaps the business can layer someone over him and retain Joe as a team lead, possibly with a special project assigned to offset the reduced scope of his role. These avenues should at least be explored before Joe’s employment is terminated.

Update management procedures
Regardless of the final approach taken with Joe’s role, Small Enterprise also should introduce a documented performance management process. Annual, written feedback on each employee’s performance will provide staff with direction, and also serve as evidentiary support if Small Enterprise’s employment decisions are challenged in the future.

* In my years of legal practice, there are certain recurring issues that cross a range of industries and circumstances. This column presents a hypothetical factual situation as a vehicle to substantively review these recurring legal and employee relations issues.

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