Hartford Business Journal

HARTFORDBUSINESS.COM| JANUARY 9, 2023 29 INDUSTRY OUTLOOK | LAW Here's how to better manage your employees' performance in 2023 By Abby Warren and Kayla West F ollowing a global pandemic and resulting tight labor market, and with a potential recession on the horizon, employers should consider focusing on active perfor- mance management for a number of important reasons. Implementing a consistent perfor- mance management system, both formal and informal, and integrating it into business operations is a valuable managerial tool. It can increase efficiency, create consistency in employee reward and discipline, mitigate employer liability in case of accusations of wrongdoing, and provide an important framework in the event that tough workplace deci- sions must be made, such as layoffs. What are successful perfor- mance management practices? It is critical that employers are thoughtful about what is measured and documented, and how infor- mation related to the employee's performance is communicated. Employers may want to review the job descriptions for the employees being evaluated to determine what skills, knowledge and experience are important and/or essential for each position. It is generally a good practice to document information in a clear, consistent and thorough manner. Employees should be able to under- stand whether they have made improve- ments or met or exceeded expectations and where they can improve. Where areas of improvement are consistently noted, employers can create a workplace culture that is transparent and in which constructive feedback is regu- larly provided and readily received. Additionally, performance manage- ment should provide a touch point for managers and employees to communicate about the employee's performance, career and future with the company. Eliminating surprises and allowing employees the oppor- tunity to ask questions and clarify their understanding of feedback and how to implement it can be helpful to both managers and employees. UTILIZING PERFORMANCE MANAGEMENT TOOLS Managing and retaining employees Effective performance manage- ment tools provide a rubric or guide- post for employees whether the actual review takes the form of an evaluation sheet, fillable online form or some other mechanism. This helps to set clear expectations and puts employees on notice of the metrics used to evaluate employees. Establishing clear expectations allows employees to determine their strengths and areas for improve- ment. Employers can then work with employees on how to set and achieve performance-related goals that benefit the employee as well as the company as a whole. Employees appreciate recognition of their successes. Employees also tend to appreciate knowing exactly what they need to be doing to meet or exceed expectations, as this gen- erally informs whether they will get a bonus or be considered for pro- motions and other opportunities that arise within the company. Further, having performance man- agement tools can also help identify areas of improvement on a larger scale, such as within a group or department. In such cases, training and resources can be implemented or uti- lized to help improve company systems and practices for those individuals. Guiding employment decisions Whether employees are exceed- ing expectations or operating below expectations, performance man- agement tools help to highlight for managers where each employee excels or struggles, how employees compare to their peers, and what action should be taken, if any. Relatedly, it is important to develop consistent practices with regard to compensation that might be tied to performance reviews. For example, it would be problematic for two employees to have similar perfor- mance reviews in the same department but to receive different bonuses. Defending against employment claims While not the intended purpose of performance management, docu- mentation related to performance can play an important role in disputes or litigation arising out of claims of retal- iation or wrongful terminations. For example, when employers defend against employment discrim- ination and retaliation claims, they typically present evidence of the legitimate, nondiscriminatory reason for taking the adverse employment action (i.e., suspension or termina- tion) against the employee. Where an employer can show, for example, that the employee had consistently failed to meet expec- tations, and that the employer had taken similar actions against other employees in the past, this can sup- port the employer's defense that the employee was disciplined based on a legitimate, nondiscriminatory reason (poor performance), rather than an unlawful reason. Abby Warren and Kayla West are employment lawyers at Hartford law firm Robinson+Cole. Kayla West Abby Warren INDUSTRY OUTLOOK | ACCOUNTING 2023 economic forecast: Ignore the headlines By Andrew Lattimer R ecession is a word that comes up consistently in conversa- tions about the 2023 economy. But this year's outlook is far more complex than "will there be a reces- sion or not?" While higher interest rates may lead to a slowing of economic growth, we do not see a repeat of the severe downturn last seen during the 2007- 08 financial crisis. In fact, we see companies able to maintain healthy profitability in 2023. This year is an opportunity to retool. You can play it safe, but there are also opportunities to stay invested and benefit from a possible turnaround. There is good news ahead. As with any cycle, normalization occurs. Think of 2021 ― supply chains were out of whack. During the most recent holiday season, you could finally buy a PlayStation 5. Normalization happens. Expect the labor crunch to improve. Expect interest rates to fall. Also, expect inflation to continue dropping after data shows price hikes peaked in summer 2022. Economic tailwinds in 2023 There are a lot of factors in play in the 2023 economy, including both tailwind and headwind economic indi- cators. Consider these big ones. The economy: Robust consumer spending (at 70% of GDP) is expected to continue while inflation is likely to continue to trend lower. Industry: Wall Street analysts are forecasting growth in business profit- ability during 2023 and given the cur- rent shortage of labor, we expect the use of data insights and outsourcing to increase. Financial markets: Attractive val- uations in equity, fixed income, and alternative markets are available. Your portfolio: Well-constructed portfolios can participate in market upside while mitigating volatility to help achieve your goals. Concerning headwinds The economy: Slowing GDP growth is expected in 2023. Industry: Tight labor markets and the rising cost of capital may chal- lenge unprepared business owners. Financial markets: Expect more restrictive credit conditions as the Fed continues to withdraw liquidity in a bid to fight inflation. Your portfolio: Remember, recov- eries take time and reward patient long-term investors rather than market-timers. Economic and market recommendations What does this mix of tailwinds and headwinds mean for you? Here are some key takeaways and recommendations. For businesses • Despite higher interest rates and slowing economic growth impacting areas such as housing, consumer spending and labor, markets are resilient. For the most part, we recommend continuing to manage your business as you have. • For businesses feeling the pinch from top-line price increases, carefully manage your expenses to drive bottom-line growth. This includes focusing on technology to drive efficiency to maintain margins and utilize outsourcing to address labor needs. • 2023 is shaping up to be a year that Andrew Lattimer

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