Appraising Employee Performance in a Downsized Organization

The experts call it "ghost work"; it's what's left for the survivors to do when layoffs have cut an organization's staff to a bare-bones minimum. Work that still has to get done is reassigned to people who may not have the skills — and certainly don't have the time — to do it.

The strain of "ghost work," the specter of more downsizing and restructuring, the disappointing news that raises and bonuses have been reduced or eliminated this year — they all can combine to make performance-appraisal season particularly stressful for employees and managers alike.

But even though managers may be tempted to avoid performance appraisals, it's no time to back away. Done right, performance appraisals can give employees a better understanding of the new and different demands of their jobs in the context of the company's changing needs. Don't duck the tough issues, say the experts, but don't overlook the opportunity to emphasize the future, either. The performance appraisal is a great opportunity to emphasize that employees have a stake in reengineering work processes and helping the company stay competitive in tough times.

"It's important in the appraisal process that we let employees know that our dreams for them and for the company aren't being abandoned; rather, they are being postponed until the company finds a way to adapt to the new circumstances it faces," says Dale Furtwengler, author of The 10-Minute Guide to Performance Appraisals (Macmillan, 2000) and president of the St. Louis-based consulting firm Furtwengler & Associates. That way, he says, "we can refocus their talents and energy toward finding solutions."

No matter what challenges confront the company or the business unit, a manager must avoid the temptation to give all her reports a good review. Malachi O'Connor, vice president of the Center for Applied Research (CFAR), a management consulting firm with offices in Philadelphia and Boston, believes that managers who give all their reports positive reviews just to avoid trouble are in fact creating it for themselves. Especially if the unit's results are average or worse, others in the company will know not to trust the consistently good assessments that manager gives.

"We know many cases where the evaluations in a person's file are filled with 'exceeds expectations,' but they're not being promoted. It's because of the more realistic conversation about that person that takes place outside of the evaluations," O'Connor says. "That does a disservice to everyone, especially the people not getting the feedback they deserve."

Performance appraisals strengthen the organization
In a downturn, employees' concern about their own performance is greater than ever, even among the star performers, says Lila Booth, a Philadelphia-area management consultant. In the face of silence about performance, she warns, people are apt to think, "I'm next in line for the ax." Employees need ongoing feedback on performance and on the financial state of the company, she says, to avoid "the fear and fury" such anxiety can cause.

Patty Hargrave, a human resources specialist at Administaff, in Kennesaw, Georgia, agrees. "Especially now during this economic crisis, businesses are scrutinizing what is important and what is not," she writes in a recent blog post. And, while companies may want to weigh the costs versus the benefits of employee performance appraisals, "when appraisals are done correctly — meaning fairly and consistently and for the right reasons — the benefits can be well worth the efforts." Hargrave stresses the importance of keeping the appraisal a two-way conversation. "Employees need to be considered as equal participants in the process, and managers need to place an emphasis on coaching or counseling in order to inspire improvements."

To make performance reviews more effective, experts offer the following advice:

Make the bottom line clear
Furtwengler stresses the need for managers to set expectations about raises and bonuses long before appraisal time. If a company's financial picture has darkened, he suggests senior management get a notification out as quickly as possible, describing the potential lost raises and bonuses. Establishing this context can make all the difference in how a high-performing employee interprets a below-average raise.

Say an employee typically has received 4% raises in years past, but this year is getting only a 2% raise. "An employee's interpretation of a 2% raise is going to be different with the information that most employees are getting no raises and only those doing very well get 2%," says Lynn Oppenheim, president of CFAR. Similarly, if employees hear that raises are being reduced so that jobs can be saved until demand in their industry increases, "no one will be happy about this, but it may serve to limit the damage."

Spend compensation dollars wisely
Judicious use of what money is available for raises is key, experts say. Some managers admit to giving all their people a standard raise just so they can avoid having to explain subpar pay increases to underachievers. While the approach may succeed as a strategy for avoiding conflict, think of the cost to an organization. Not only has the manager undermined the effectiveness of compensation as a means of rewarding and motivating, but he has probably stirred resentments among the high achievers, who are left to feel as through their initiative and hard work have been in vain.

"If I just give an underachiever the 'standard raise,' I am failing as a supervisor," says Booth. "Each person along the line must be held accountable with consequences, positive and negative, for meaningful assessment of performance — or the organization will fail."

Reshaping after downsizing
What about employees who are struggling with new work responsibilities in the wake of a layoff? How should managers answer those employees who protest, "This isn't what I signed up for"?

Furtwengler suggests that the manager and the employee evaluate the new responsibilities together to determine which aspects of the "new job" interest the employee and which do not, which work is a "must have" from the manager's perspective and which is just a "nice to have."

"Reevaluating work, especially if done jointly with the employee, will help [her] find effective ways to deal with the new workload," he says, and discover efficiencies. "Because we are all creatures of habit and comfort, we no longer question the usefulness of what we're doing or whether there are better ways to accomplish the task. That's why a joint reevaluation of the work will often diminish the workload and allow the employee to become more interested in the 'new job.'"

This conversation also "conveys your concern about the possibility of her becoming overwhelmed," he says.

A problem of skill or will?
And what happens with an employee who is in a "reshaped" job and not performing up to standard? Managers need to determine first if the poor performance is a "skill" or "will" issue. In the first case, the employee feels he doesn't have the skills needed: "I've got to maintain this database, but I don't have enough background." In the second case, the employee simply dislikes the new chore: "I hate all the detail work I have to do now."

Says Oppenheim: "Organizations still have an interest in keeping good people, but good is in part defined as able and willing to carry out roles and responsibilities that are needed. If you can reshape to align with skill and will, this should strengthen the connection. If you can remedy the will gap, the organization and the employee benefit."

With employees who resist change, Oppenheim urges managers to be sure the employee has a good sense of the company's current needs. "Listen closely to understand how the employee views his or her work world — and be prepared to understand that not everyone can change," she says.

"Reshaping of jobs is very common — the appraisal is an opportunity to listen if the particular shape of a job fits the employee," she says. Sometimes the performance appraisal forces the manager to face a harsh reality: that the employee just isn't a good match for the company anymore.

In a time of layoffs and restructuring, performance appraisals bring challenges to both parties in the conversation. The employee confronts the task of adapting to a changed role in a changed context. The manager has to determine how best to support the development and morale of the employee in that changed role, while recalibrating performance expectations.

Says Booth: "If the dimension of creativity is added to the performance assessment process, if the process is truly participative, new opportunities can be created to benefit the company and the associate."

Tom Krattenmaker is a freelance writer and associate vice president for public affairs and communication at Lewis & Clark College in Portland, Ore