Legal Requirements in Implementing Performance Management System

Legal requirements have an important place in performance management systems.

In several organizations, the results of performance appraisals are used as a basis for making several managerial decisions including compensation structure, promotion policy, recruitment policy, etc.

Due to this, these appraisal results are generally the subject matter of many employment litigations.

It is noteworthy that both performance results and procedural dimensions of performance management systems can be subject to litigation.

For example, questions can be raised challenging the subjectivity or biasness of performance measures, standardization of routine procedures, or lack of organizational uniformity.

The two most important types of challenges that can be made against the performance management system of an organization are:

1. Disparate Treatment Case: In this type of case, a claim is made by the employee that he is being treated differently by the employer in comparison to other employees of similar professional standards.

For example, suppose that Rohit and Michael could not meet their individual sales target and on the basis of that the employer of the organization deducts the salary of Rohit alone sparing Michael.

Now, if the decision was guided by feelings of religious biasness, then the decision is unlawful and unjustified.

However, if the salary of Rohit has been deducted because he has consistently failed to meet his sales targets in comparison to Michael, then the different treatment meted out to Rohit is justified as it is based on an objective measure, i.e., performance.

2. Disparate Impact Case: In this type of case, a claim is made by the employee against his employer that the employer practices such behavior that consistently affects an entire section of employees negatively.

For example, an employer may adopt a fitness policy wherein each and every employee would have to go through a rigorous fitness test, involving running, jumping, etc.

Now, this policy may have little impact on employees of the younger age groups as compared to employees who are above 40 years of age.

This may lead to demotivation among older employees resulting in quitting of jobs.

To conclude, disparate treatment raises concern about treatment to an individual employee, disparate impact raises concern related to the treatment of a section of people.

In other words, disparate treatment is relatively narrower in approach in comparison to disparate impact, which is a broader approach.

Ways of Addressing Legal Requirements

Following are the ways through which legal requirements can be addressed by the employer:

  1. Job-relevant factors should be the basis of all performance results.
  2. Objective of the organization, expectations from employees, and performance standards should be clearly defined to the employees.
  3. Roles, responsibilities, and schedules for meeting the targets must be clearly spelled and written, both for managers as well as for employees.
  4. Employees and managers should be given required training about different aspects of the job they will be performing.
  5. Managers should record specific illustrations of successful M unsuccessful performance that explain their thinking behind assigning rates to different performances.
  6. Organisational systems should be so designed that they account for the manager responsible for on-time delivery of feedback reports.
  7. Deficiencies in the performance, if any, must be communicated to employees in time with enough opportunity to improve on their performances.
  8. Evaluations of performance must be reviewed by an official of higher ranking or by a panel of experts so as to ensure correct ratings and promotion of a standardized approach throughout the organization.
  9. Employees should be encouraged to contribute to their appraisal process and to comment on the performance results obtained by them.
  10. If performance results are the basis for various HR decisions, the decisions taken must be ill line with the results obtained.
    For example, it would be wrong to promote an employee who received lower ratings than his colleague.
  11. The management should include a formal appeal process that allows for the ratings to be reviewed for any errors and misconceptions.

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