The Ethics of Performance Evaluation

The performance evaluation system developed by an organization should be built on the ethical principle of fairness. Performance evaluation is a way of sending a message to employees about how they are performing with respect to the goals and long-term strategies of an organization. A truly ethical performance evaluation system provides constructive feedback in a non-threatening environment. Performance evaluation systems should be built on the values of an organization, its mission, and linked to the code of ethics.

I recently received a letter from an employee who will remain nameless who works for a major corporation that is known for its commitment to social responsibility. The employee asked me if performance evaluation should be part of an organization’s commitment to its responsibility to society. It is an interesting question because traditional CSR looks at issues such as the environment, community activities, and sponsorship of worthy events. The employee felt that the corporation had devalued her worth as a person and it negatively affected her performance evaluation.

There is no doubt that performance evaluation should be part of an organizational commitment to society in the sense that employees are part of that society and should be treated in a way that enables them to be contributors to societal goals. Like so many things in life the devil is in the details. We all set goals for ourselves but it is the journey – the road taken and not taken – that defines who we are. A performance evaluation system that enhances the journey is one that has achieved a higher level of CSR. An evaluation system that is punitive and unfair to one employee group versus another impedes that journey.

Here are my principles of an ethical performance evaluation system.

1. Develop the goals of the evaluation system consistent with the mission of the organization. For example in a not-for-profit organization the mission clearly includes to serve the public interest. How does the system incorporate this important value? Does it create markers to assess achievement of that goal?
2. Develop the measurement tools of performance evaluation to meet the goals. It is questionable to say that maximizing shareholder wealth is a tool of performance evaluation. The reason is the manner in which an employee, such as a CEO or CFO, gets to the goal is most important. By now all organizations – especially publicly-owned corporations -- should have learned the lesson from the Enron and WorldCom debacles that the pursuit of self-interests to the detriment of all else is not an ethical performance evaluation system. Enron’s “rank-and-yank” system that led to the firing of a certain percentage of employees each year regardless of performance was unethical and ultimately led to a culture that brought the company down.
3. Treat employees the way you would want to be treated. The “Golden Rule” is just as applicable to performance evaluation as it is to all things in life and work. The evaluator should ask “How would I like to be treated?” In other words the performance evaluation system should be built on the universal values of respect, fairness, responsibility and accountability.
4. Provide a channel for employees to raise questions about performance evaluation. An organization should ensure that employees understand just how they will be evaluated – what are the criteria for measurement? What is the mechanism for employee input? How can an employee challenge the performance evaluation received in an open and fair way?
5. Constantly revisit the system and make needed changes. Experience with the system should be used to make changes that enhance performance evaluation. The process should be built with a constant feedback loop. The performance evaluation system should consistently evolve and become better and better, fairer and fairer, and move the organization closer to achieving its goals.

Deepak Chopra has said that “The highest levels of performance come to people who are centered, intuitive, creative, and reflective – people who know how to see a problem as an opportunity. I agree and would add that the best way to instill these values into the performance evaluation system is to emphasize the importance of creative problem solving in a professional setting informed by analytical reasoning skills and a healthy appreciation for the importance of ethical behavior in achieving the organization’s goals and enhancing its mission that should include the betterment of society.

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on October 9, 2014. Professor Mintz teaches in the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.ethicssage.com.