Legal and ethical issues in performance appraisal systems

¶ … Standard for Performance Appraisals

Performance management is a systematic process of continually monitoring employee performances to set expectations for employee within a workplace. On the other hand, performance appraisal is a developing capacity to perform periodical rating performances in order to reward employee performances. Managing employee performances is an integral part of the performances appraisal, and performances management is as important as managing organizational financial resources. In a contemporary business environment, setting performances goals and expectations is critical to enhance organizational objectives. Legal and regulatory requirements are critical to guide effective performances planning. In the United States, legal issues guiding the process and performance standard vary from state-to-state. Nevertheless, principle of equity and fairness is a fundamental aspect of performance appraisal principle. (Rao, 2004).

Fundamental objective of this paper is to investigate the process and standard for performance appraisals.

Legal Issues within Process and standard for Performance Appraisals

Performance appraisal is one of the most important aspects of HR (Human Resources) decision which include promotion, pay, transfer, training, and, termination. However, appraisal system is one of the common legal disputes between employers and employees especially with issues related to bias and unfairness on employees. Aswathapp, (2005) provides several procedures that could guide employers and employees to avoid legal battles within the performances appraisals practice:

Performances appraisal content should be based on job analysis

Employers should avoid performances appraisal based on traits

"Personnel decision should be based on a formal standardized appraisal system." (Aswathapp, 2005 P. 259).

Employers should avoid age discrimination in implementation of performance appraisals process.

Employers should use an objective verifiable performances data in sales, and productivity in the process and standard performances appraisal system.

Despite the regulation process that guides organizational performances appraisal management practice, there are still legal tussles that arise with the implementation of performances management and appraisal. One of the legal issues that arise was the case between Cortez V. Wal-Mart stores. The case was an issue of practicing age discrimination thereby violating an Employment Act. Wal-Mart was accused of denying Cortez the position of general manager because of his age. Cortez was 48 when he was an assistant general manager of the company. While Cortez was due for the position of general manager, the company constantly denied him the promotion because of his age. The court passed the case in favor of Cortez because Wal-Mart violated the Employment Act and the court awarded damages to Cortez. (Aswathapp, 2010).

Performance Appraisal Privacy

Performance appraisal is an ongoing process that employers implement to evaluate employee performances. Major objective for conducting performance appraisal is to assist management to make appropriate decision about employees within an organization, which allows management to improve organizational productivity. The performance appraisal process is the connection between organization objectives and mission. Privacy of employee data is one of the most important aspects of performance appraisal implementation. The Federal Register (1999) reveals that employee privacy is one of the most important aspects of performance appraisal practice. Employers must observe the Privacy Act with respect to the performance appraisal implementation. Management must maintain all employee records in a locked file and only an authorized individual should have access to the information. Coupled with the performance appraisal privacy, performance appraisal standard and process is very critical for organizational performances.

Taking corrective actions

However, performance appraisal standard and process should be just in line with the law. Typically, legal issue could arise with the implementation of performance appraisal standard and process within a workplace. Example is the case of Raytheon Technical Services Co. v. Hyland and the case reveals considerable risks that employee may face within a workplace. The case was an issue of a confidential assessment made by an employee on a supervisor and later published by CEO. In the assessment, the employee provided a negative written performance evaluation on his supervisor, which the supervisor considered defamatory. In retaliation, the supervisor presented the employee with negative performance evaluation resulting the supervisor to fire the employee used his negative feedback to justify his decision. The employee later sued the supervisor and the court awarded $2 million in punitive damages and $1.5 million in compensatory damages for the employee. (University of Richmond, 2007).

Training and Development

Creating training and development tools is critical to achieve effective performance appraisal. Effective performance appraisal assists management in achieving effective management decision process and assisting in addressing the problem that might have arisen with the performances appraisal issues. Training and development is essential to provide opportunity for employee to achieve self-development. More importantly, training and development prepares employee for higher jobs, which assists in reinforcing higher level of behavior as well as preparing employee for higher-level positions. However, the federal law prohibits discrimination in relation to training and development. The Equal Employment Opportunity Act of 1972 reveals that employer should not reflect bias based on race, religion, age, nationality, color and disability. Bias appraisal process with relation to training and development could lead to conflict between employer and employee. One of the examples of proof of discrimination was the case between "Hoffman V. Caterpillar 256 F. 3d 568 (7th Cir. 2001)." (American Bar Association, 2001 P. 826). Shirley Hoffman was born with no left arm below his elbow and Hoffman needed several accommodations to perform the job effective, which include typing stand, and a system to assist Hoffman to improve her finger grip. Hoffman requested to go for training on high-speed scanner, which her supervisor denied on several occasions because of his physical disability. Denial to go for training made Hoffman to file a case against her employer under the Disability Act; and district court granted Caterpillar a summary judgment. (Walsh, 2012).

Workplace Privacy Protection

Within a workplace, employees have the rights to privacy. However, in some cases, employee privacy will be weighed against employee legitimate need. Employee privacy should be stipulated against organizational business need. Nevertheless, employer still needs to provide reasonable privacy to employee. Ahmed, (2005) argues that privacy in a modern workplace has turned out to be fundamental business issues. "Privacy is the trusting way other treats us, resulting in a conception of ourselves as worth being trusted." ( Ahmed, 2005 P. 16). Employers have the obligation to protect employee information and letting other know about employee information is considered a breach of privacy. Varieties of federal and state laws are currently in place to safeguard employee privacy. To abide by the laws; employers are obliged to protect:

Personal information of individual employee

Personal health information of employee

Despite that laws provide employee privacy within workplace, the development of information and communication technology (ICT) has made the protection of employee privacy to be challenging making protection of employee communication to be quite limited within a workplace. It is essential to realize that employers need to monitor employee communication to make employee abide by the workplace policy as well as making employee more productive. It is essential to realize that several cases have turned up where courts have to weigh employee privacy against business interests. Typically, legitimate business interests permit employer to intercept employee communication to achieve business objective.

Personnel record

Personnel records are data pertaining to employees which consist of factual and comprehensive information of employee. All employee information is kept in systematic order which assists human resources manager to make an effective decision about employee. Typically, personnel records consist of employee past records, medical report and employee progress. Personnel record also consist of payroll records, leave records, and benefit record and turnover record. Training and development record contains training schedule, transfer cases, and appraisal reports. Health and safety record contains medical history, safety provisions, sickness reports, and insurance reports. The service record contains essential records that consist of bio-data, family information, residential information, and marital status, academic qualifications, past address and employment records. While some critics argue that personnel records is a waste of time and money, however, Yoder (1942) provides several benefits that organization could derive from personnel record:

Personnel record assists managers to identify crucial information regarding employees.

Personnel record also assists managers to make decision regarding employee training, and development program, allowances, salary revisions, and other benefits related to personnel salaries.

More importantly, it assists government organization to collect information about employee turnover and rate of absenteeism.

Thus, personnel records are not wasteful resources and rather vital to an organization.

Monitoring and Investigation of Employees

In a contemporary business environment, electronic performance monitoring (EPM) has become a process where organizations use electronic computer or other non-human methods to monitor employee performances. In the last 20 years, organizations using electronic monitoring to monitor the performance of employee have increased drastically. By 1990, one-third of employee in the United States was being monitored electronically. By 2001, about 78% of employees were monitored electronically, and in 2010, the number of employees being monitored electronically increased. One of the reasons for using electronic monitoring is that it enhances organizational productivity. Typically, EPM assists management to understand whether employee are actually working or doing other personal things during working hours. However, there are some criticisms against electronic monitoring on the basis of ethical issue, the questions are raised whether organizations have the right to monitor employee electronically. There are also issues of legal concern on whether employers are violating employee privacy using EPM. Despite the criticisms against EPM, the electronic monitoring has been revealed to increase productivity since organization needs to maximize productivity to achieve organization performances. However, organization still needs to be very careful on how they implement EPM because of the legal issue.

Conclusion

The paper addresses the issue of performance standard and performance appraisal practice. With the increase in the global competitions, organizations will continue to implement performance standard to enhance employee performances. However, organizations still need to abide by different aspects of employment laws to guide against the legal issues that might have arisen with the implementation of the performance standard and performance appraisal process.