Legal Risks in Performance Management

Legal Risks in Performance Management

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Legal Risks in Performance Management

The method through which specific organization measures and increases performance in its workforce is known as performance management. Since there are diverse ways of measuring and increasing the performance, the organization can use it to monitor performance on an individual, organizational as well as on department level. Though performance management is commonly used to define an individual performance, it has other standard features that comprise of performance reviews, recognition and appreciation programs and also peer feedback. During the process of measuring and monitoring performance on employees, there are legal risks that are involved. However, these risks may contrast. According to Noe (2017), the performance management systems that are acceptable and fair to the employees are considered to be legally sound.

The performance reviews of the workforce are regarded as the most effective method of improving and also amplifying the employees’ organizational performance. Moreover, other than creating an organized platform for feedback, the performance reviews consents for an assessable process of employees’ involvement in the running operations of the organization. Every organization is considered to have its own method of evaluating its performance. This is the reason as to why performance management among different organizations tends to vary. Therefore an organization’s perfect approach typically depends on the kind of work the organization engages in and its culture. It is vital for an organization to note that the performance assessments can lead to legal risks during their implementation irrespective of the set-up and scope of the employees’ performance (Halligan et al. 2015). There are some reviews on the employees’ performance for example which can spread the issue of gender discrimination, and this signifies it is always essential to perform the reviews effectively.

The advantage of evaluating employee performance is that the process does not only give the records of an individual employee’s performance according to his time. This process generates a straight record of the worker’s involvement with some expectations of as well as the promises an organization has towards its employees (Johnson, 2014). In such a situation, this process can expose the employee to be an easy target for some vices for example being discriminated and having a termination of lawsuits wrongfully.

Under the discrimination lawsuits, if the review records of the employee performance depict that the organization does not treat all the workers equally, the organization be face or be charged with potential discrimination charges. This law is used to ensure that there are uniformity and inclusiveness in the company. Employer discrimination depends on its nature (Buller & McEvoy, 2012). The bias can, therefore, be categorized under two major parts: deliberate or inadvertent. The discrimination lawsuit risk depends on whether the organization’s fluctuating conduct towards the diverse groups of employees was centered on firm ground for example gender, race, and sexual alignment.

The other type of legal risk associated with performance management particularly the performance evaluation is the wrongful termination of lawsuits. To begin with, in measuring and evaluating the employee performance, the analysis requires the organization to provide opinions concerning a specific performance of the employees, and this seems to be an excellent method. Moreover, it implies that the organization aftermath manner and practices must be in line with the type of impressions that the company creates in its review settings. The process occurs under two methods: the first one is if the employee is not provided a job at-will, the organization has the power to end the job with an immediate effect. In the further description, the company’s feedback, as well as its actions during the process of employee performance review, can be used as proof of the job termination. Under such a situation, it becomes hard for the company to terminate the job of the employee being reviewed.

However, this typically happens if the employee can provide some evidence that the company’s performance review feedback validates their pleasing performance. This shows how performance reviews are significant in any organization as they can be used to solve numerous problems that arise in the company not only in performance evaluations but also in other sectors like the finance departments (Awadh & Saad, 2013). The second part under the unlawful termination of lawsuits occurs when an employee tends to be employed at-will, and the company might be damaging its capability to legally terminate the job if an individual makes promises concerning constant work in performance appraisals.

The legal risks usually result in some misunderstandings and endless conflicts in an organization. For example, an individual may decide to settle his case to the court when he feels that the company or organization might not help solve the situation. When some of these cases reach the public, they can taint its image and result in some negative effects on the organization. Therefore there is a great need for managing these legal risks. Some of the methods to decrease these issues that surrounds the performance assessments include: the company should standardize its employee performance appraisals to guarantee that it is functionally similar to all the employees. Another way is reducing the outcomes and inferences of each review, and the employees need to sign them. By doing all this, the legal risks will be minimal if they will be there.


Awadh, A. M., & Saad, A. M. (2013). Impact of organizational culture on employee performance. International Review of Management and Business Research, 2(1), 168-175.

Buller, P. F., & McEvoy, G. M. (2012). Strategy, human resource management and performance: Sharpening line of sight. Human resource management review, 22(1), 43-56.

Johnson, P. F. (2014). Purchasing and supply management. McGraw-Hill Higher Education.

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.

Van Dooren, W., Bouckaert, G., & Halligan, J. (2015). Performance management in the public sector. Routledge.

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