The disconnect between employee performance evaluations and base salary hikes

by on June 5, 2009 · 0 Comment POSTED IN: HR Info Center

Employee performance evaluations neither protect the company nor justify salary hikes

What I’m going to tell you here is, basically, you got to have money and they got to have room for them to get a raise. Are you paying them relative to market? All you HR people out there and a company with more than 100 people are going, “Yeah, yeah. I know that.”

Employee performance evaluations in the past, they implied a direct connect between last year’s performance and this year’s pay and we kind of get to the comparison discussion kind of late. But in reality, it’s more of a driver in somebody’s individual increase than last year’s performances.

If we have money and you have room, now, I do care about your performance, past. I better also care about your potential, future. In other words, you have more levels in you where you were going to take on more responsibility. Because if you do, I’m going to have to start, you know, I have to treat you more aggressively salary wise.

Okay. What is the saying, why are we talking about this because traditional employee performance evaluations were designed to justify your pay. The implication was this review process is going to give you some kind of labor grade which is somehow going to predict for you this year’s salary treatment. We know that that didn’t really work that way, it doesn’t work at all.

These other factors get involved first. The reason companies traditionally do performance evaluations is, “Hey look, if we get sued by an employee, we’re going to go to that file and say, “What do we have in there? What have we done to document this situation to make it such that we can’t effectively be sued?”

Lawyers tell you that you have to do employee performance evaluations in order to protect yourself.

Best practice out there says you got to do this and one of chief reasons why is to protect yourself. More often than not, when an employee takes you to court, who introduces in the evidence first, your employee performance evaluations? The company or the employee?

Well, you see right here, the answer is the employee.

That’s the opposite of what we are hoping for. We did performance evaluations to protect ourselves against our own employees and yet they use them against us in court. Okay. Why is that? Well, that’s just the way it is. Employee performance evaluations are better evidence against us than for us.

The problems your managers cause with employee performance evaluations

Theory number one, your managers and supervisors lack back bone. You know, it’s not that these employees suddenly became worthless. He’s been worthless for years. And finally, after seven years of telling him that he meets expectations, you come in and say, “Hey, you’re pretty much worthless. You know, you need to improve or, you know, you are unacceptable in your behavior.” That employee goes to his attorney and he comes back with seven years of being told that he meets expectations. You find yourself in court, trying to explain how all employees are above average but his performance was not.

Therefore, to be told your average is really below average. In other words, at your company a good grade is bad. And you look over and a jury of your peers are all shaking their head. It’s bad.

Two reasons why we do employee performance evaluations – to protect ourselves against our own employees and justify pay increases. It doesn’t do either one. It doesn’t do either one.

But that’s why the big companies are doing them and the little companies are doing them because they’re copying the big companies. We would call it “plagiarism”. If we were in school, it would be bad. We call it, “best practices” in business and it’s good. We’re stealing shamelessly from each other and it just turns out like I say, head of the class is a “D” student.

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