Double Performance Improvement Plan Standards

(Published May 15, 2008)

 

Reprinted from MANAGER'S LEGAL BULLETIN, a widely read employment law newsletter that communicates legal guidelines to managers through scenarios based on real-life cases. Click here to view a sample issue, get more information, or sign up for a risk-free subscription. 

 

No two performance improvement plans will be exactly alike.  That's because no two employees will have the exact same performance problems.  But the plans shouldn't be so different that a reasonable person questions whether the difference in plans has less to do with performance and more to do with employees' genders.

 

What's good for the goose...

When Julie Hutton, a financial advisor, lost her biggest account, she was devastated, but she chalked it up to tough economic times.  Manager Gavin Grother, however, thought her declining performance was to blame.  So he placed her on a business development plan, under which she was expected to increase her assets by 40% in the next six months.  The plan also contained disciplinary provisions; if she failed to meet the targets outlined in the plan, she would be fired.  Hutton found that troubling, since the goals seemed largely unrealistic.  No other advisors were expected to achieve similar targets in a depressed market, and only four out of 42 advisors had achieved them in a prosperous market. 

When Hutton was moved from her office into a cubicle a short time later, the seeds of sex discrimination were planted, because all those who retained their offices were male.  Grother claimed the move was the result of needing office space and, because she was the lowest producer, she was the first to lose her office.

 

The employee's sex discrimination suspicions became rooted after talking to the only other worker in the office who had ever been placed on a business development plan.  His financial targets had been half of what Hutton's were, in a good economy no less; the plan had not contained disciplinary provisions; and Grother had provided him with weekly coaching sessions. 

 

Following the implementation of Hutton's plan, not once did Grother give her advice on how to improve her performance, even though the assets under her management continued to decrease.  The only thing Grother ever gave her was a pink slip for failure to replace lost business.

 

Hutton filed a sex discrimination lawsuit.  She alleged that her gender was the real reason she was placed on an unfair business development plan and held to higher performance standards.  A jury agreed and awarded her $3.6 million in punitive, economic, and emotional distress damages.  A district court upheld the jury verdict, but reduced the total award to $401,000.

 

...is good for the gander!

Whether it's called a business development plan, a performance improvement plan, or a progressive appraisal, the goal is the same: to help employees improve their performance.  While you don't have to put employees on the same plan, similarly situated employees should be given a comparable chance to get their performance back on track.  Each plan should:

 

• Identify the problem.  Grother simply told Hutton that she was being placed on the plan because she lost the account.  He didn't go far enough.  He should have also explained what specifically about her performance he believed cost her the account.    
• Set realistic goals.  If an employee is not performing up to standards, the first goal should be to attain those standards, not surpass them. 
  Also, consider external circumstances; what's reasonable in certain situations is not in others.  It would have made more sense if Hutton's goals in a depressed market were half of what the male employee's had been during a more prosperous time.
• Make consequences consistent.  Grother raised a few eyebrows by attaching disciplinary provisions to Hutton's plan, but not to the male employee's plan.  While the specific consequences will vary depending on the situation, they should at least be of the same type, e.g., discipline, transfer, or training.
• Make coaching a part of the plan.  One of Grother's biggest missteps was coaching the male employee every week, but failing to coach Hutton even once during the course of her plan.  Some employees will need more coaching than others, but every plan should include a minimum number of formal coaching sessions.

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