Episode 173: How the Performance Review Serves as a Valuable Business Tool

Welcome to the Workplace, a podcast by Cal Chamber. I'm Matthew Roberts, the Labor Law helpline Manager and Employment Law Council with the California Chamber of Commerce. Hello, listeners. We welcome you back to another episode of this show to talk about a personal management tool that is often underutilized or underappreciated. Performance reviews. I know I'm a little bit excited there with that. And performance reviews often, for many of us, can be a pain. This bureaucratic task that just kind of gets in the way of all of the other priorities that we have going on, especially when there are no major issues for most of our employees. But with a tight labor market also accompanying a weird shifting economy that we're looking at these days, providing tangible positive or negative feedback to our employees will really help provide a competitive advantage for businesses over those who don't. And it's these concepts that have started making national news. So to discuss how we can use performance reviews as valuable business tools, we welcome back Bianca Saad, Cal Chambers, Vice President of Employment Law, leading our training, content and advice units. Thank you for joining me today, Bianca.

Thanks for having me, Matt. Always a pleasure.

So, Bianca, you know, in our seminars and also as former litigators, we often spend some significant time talking with members and attendees about how performance reviews are an invaluable tool for personnel management. So I thought it'd be a good idea to start with the basics. And let's take kind of a moment to go over why these exist in the first place and generally how they're used in the employment context.

Yeah. So performance reviews are. They're really valuable tools that we use, and they help us to make decisions. Employment decisions. And as we all know, employment decisions can, of course, come with risk consequences. And so we want to have objective tools that we can look at when we're engaging in things like deciding who to give a promotion to, when we're looking at merit pay increases or taking disciplinary actions, even up to termination. So they can really end up playing this critical role if any of those employment decisions later on end up being challenged. Right. That's as you and I, you know, as you mentioned, former litigators. Right. The documentation is key. And what's even worse is about having maybe documentation that doesn't support it is, of course, having none at all, which means no performance reviews maybe were conducted during an employee's span with a particular employer, and now their termination decision is being challenged. Yeah.

You know what's really interesting about this topic, too, is I was recently talking with a friend who was let go he had taken some leave for baby bonding. He had taken some leave for bereavement, which, as we know, is now mandatory here in California. But just before he went out on the leave, his organization did do performance reviews. His performance review was great. And before he comes back, he's fired for the stated reason of performance. And I think this highlights. These are not just boxes to check, right? Because that story seems weird. You have great performance reviews. Next thing you know, they take some protected leave and they're gone for, quote, unquote, performance reasons. That's why these things are so important as evidence, as you and I have said in litigation, that these things need to be accurate and honest. Okay, so let's talk about the importance of these performance reviews. And as that story kind of illustrates, why we don't just check a box with these things.

Yeah, well, I think you hit it right on the head, which is, you know, saying they need to be honest. And we want to make them as, you know, accurate as possible. Now, obviously, that's going to differ, right? We have. People have different managing styles. There are different, you know, depending on the nature of the position, what are the standards? Certain things might be more important other positions, but for whoever is conducting that performance review, you know, and it's important that we, you know, train our managers that. That we're honest. And one of the hardest parts, you know, about the giving the performance reviews and giving that feedback is sometimes that negative feedback, right? Maybe we have the style of only focusing on the positive things. They don't necessarily want to negatively impact the morale of an employee. But it's important that if there are problems, right, that we're documenting them and we're making it known that this was discussed with the employee and then giving them the opportunity to make those improvements. So again, down the line, if we end up having a situation where we now have to let this employee go, it's. There's a story to be told there. Right? With. With all of that documentation and those discussions now, what do you think about.

The timing of these? Some people have some thoughts about, you know, I want to do them quarterly. I want to do them annually. I just do them every so often. What are your thoughts about that, Bianca?

You definitely want to have them done with. I think it's important to have them done with some regularity. Right. Whether that is annual. I would say annual, which should probably be looked at as the bare minimum. I think we are seeing trends now going towards a more frequent basis, like you said, maybe quarterly. Some may even do monthly Some kind of checking in. It doesn't necessarily have to be a super formal detailed, 10 page document. Right. Which I think sometimes people might envision when they hear the word performance review. They think of it something super formal. It doesn't have to be that. But again, you're making that opportunity so that the feedback can be given and it's documented. And if you have that done on a regular basis, then that's where you're again giving that employee the opportunity to address deficiencies. And if those deficiencies aren't corrected, then you're on, you know, solid ground with maybe making some difficult decisions.

And you know, Bianca, no one really wants to hear lawyers talk about documents and evidence and lawsuits. So what we've started to see, interestingly enough, is that there's some other means beyond just documentation, documentation and documenting performance. You know, we've seen a common theme with our current generation of workers and something that helped spark the great resignation a couple years ago is that loyalty to an employer is just down. It's down compared to where it used to be. There's, you know, no more ideas behind the 25 years, get a gold watch and a pension kind of deal with the same employer. But as you'd expect, studies show that tenure with a company is one of the most effective ways to get higher levels of productivity out of the employee. And I think that makes sense because this person knows your procedures, they know what your goals are as a business. And it's not just the experience they bring, but it's the experience with you that they bring. So how can performance reviews really assist with increasing tenure among our employees?

That's a great question. And it helps us shift away from, I think, what has been. Obviously I laid out some of the more negative aspects of performance reviews in terms of dealing with negative performance. But when we have our strong employees, our star performers, the performance reviews are really a great opportunity for us to give them that positive feedback. Right? The affirmation that, yes, you're doing a great job, we value you, we want you to stay with us. All of these things, like you said, they're going to increase, you know, longevity, overall retention with an organization. And as we all know, at least many can, I'm sure, can appreciate the time and effort that goes behind recruiting. You know, when we can keep our strong employees, that is, is really something important that we can do. And so having these performance reviews, again, it's not just to address the problem employees or to cover ourselves right from that litigation aspect or anything like that. But really, again, we're communicating to our strong performer. And yes, you're doing a great job and we value you. We want you to stay with us. I think that is something that can be overlooked by many when we talk about performance reviews.

Excellent. Okay. And, you know, most recently, we've seen some news stories of employers that are starting to use performance reviews as kind of a reduction in force tool. Right. As I mentioned at the outset, the economy is a little bit weird depending on the kind of labor market that you're in or the industry that you're in. And so some employers are using performance reviews to encourage employees to leave without actually going through the process of laying them off. So what are your thoughts there, Bianca?

Well, it's certainly something that might be an outcome just naturally of. Right. Again, going through these performance reviews, given the climate that we're in, if it's known that, you know, businesses might be making decisions. And through that, and through the performance reviews that you have, employees that maybe are not getting such great feedback, they may decide on their own to look elsewhere and to make moves of their own, which sure is great, but that's really outside of the employer's control. I think, you know, one thing that's important is again, we're doing our performance reviews so that if an employer is in a situation where, let's say, they don't have the luxury of just waiting to see which employees are going to leave, but again, needing to make some decisions on their own, you have the performance evaluations as, again, that objective tool on how you're going to make some of those decisions.

Yeah. And I think something that strikes me about this is that you probably already have to have an established practice of doing these performance reviews. Right. Bianca, it would seem to me a little bit weird if all of a sudden, out of the blue, we're writing a bunch of negative performance reviews because we want them to leave as opposed to dealing with the layoff and all the stuff that comes with that. I did want to leave us really, with kind of some best practices in what you think, Bianca, as what an employer should do if they don't really have a program in place and they want to start one now.

Yeah, I think it's a great time to be looking at, you know, what are your practices, if any. If you don't have practices, then look at what do we want to accomplish with performance reviews? What are your goals and main objectives? And then you can, based on that, look at, again, you know, things like the frequency, what is the style and nature of communicating the performance reviews, you know, giving that feedback to your employees. A lot of that might come down to, again, the nature of the business, the needs of the business, the type of roles that you're dealing with, and the overall culture of the organization. So definitely no time like the president if there isn't something in place. And again, for the whole host of reasons that we talked about in terms of why you would want to have them and certainly do them regularly.

Well, Bianca, I found this to be a really interesting discussion on performance reviews, especially with some of these new different angles than we've heard in the past. So really, thank you for taking the time to chat with me today.

Thanks so much for having me, Matt.

And thank you listeners, for joining this discussion on the workplace. Please comment, share and subscribe to Cal Chambers podcast by visiting calchamber.

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