Corporate trendsetters are moving in the direction of eliminating a historical function of human resource departments: the annual performance evaluation. Accenture recently declared its independence from the evaluation process, but it is certainly not alone in its departure from this time honored tradition. In fact, approximately six percent of Fortune 500 companies have jettisoned the practice of annual employee evaluations, including Deloitte, Gap, Medtronic and Adobe.
Several factors have contributed to the revolution against the annual performance evaluation. Companies have cited to the massive expenditure of time and effort in a process that they no longer believe advances the goal of improving employee performance. For starters, evaluation processes that aim to rank the performance of employees or that otherwise compare the skills and abilities of employees are less effective than those types of evaluations that focus on the employee as an individual. Human resource professionals doubt the accuracy of traditional performance evaluations, citing to concerns regarding the difficulty of consistently interpreting data from numerous different human evaluators. Moreover, the traditional process is time consuming and burdensome, particularly given the questionable results that the process yields. It seems that great business minds agree that annual performance evaluations have outlived their useful purpose.
However, the downfall of the annual performance evaluation should not be interpreted by employers as an excuse to cease the uncomfortable task of actually documenting the deficiencies with employee performance. Of course, documenting employee performance gives the employee concrete information about how to improve his performance. Documentation also provides a verifiable track record on which the employer can rely in making disciplinary decisions and will protect the employer in the event a disgruntled employee alleges that he has been treated unfairly or differently from his peers. Recently, in Brown v. Home Depot U.S.A., Inc., 2015 U.S. Dist. LEXIS 56874 (E.D.La) the employer successfully obtained summary judgment on a former employee's claims of race discrimination based, in large part, on documentation of the employee's poor job performance which included written disciplinary notices. The court found that the Home Depot had met its burden of showing a non-discriminatory reason for the employee's termination and the employee was unable to show that his documented poor performance was a pretextual reason for his termination.
Given the vital role of documentation in protecting employers from employment litigation, how is an employer supposed to eliminate annual performance evaluations while simultaneously remaining faithful to the need to create documentation about employee performance? The best practice is to create a fluid process that provides the employee with frequent feedback to address deficiencies and motivate employees to strive for improved skills and performance. Honest and timely evaluation geared to individual performance appears to be the wave of the future.