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How to Downsize Using Performance Appraisals

In times when downsizing is necessary, using performance appraisals can be the most effective method of selection. If done correctly, the remaining employees will be comforted in the company’s handling of the downsize and the company will not be at risk of being sued.

Employees must be able to trust management in order to efficiently transition with the downsized company into new roles with a higher level of morale and satisfaction.


5 Steps to Downsize Using Performance Appraisals

Performance Appraisals

1. Review Current Performance Evaluations.

List all the necessary skills and tasks that are important to the particular job, then determine if each question properly and objectively evaluates those skills and tasks.


2. Revise the Evaluations.

Ensure that evaluations are geared to the appropriate department or position. The questions should be quantifiable so that employees across the department or within the position can be compared.


3. Communicate with Employees.

Notify employees formally about the company’s plan for downsizing and the reasons why it is necessary. Allow employees to review the new performance evaluations and let them provide feedback to ensure approvals.


4. Evaluate Employees Objectively

Ensure that comments refer to the employee’s performance, not his personality. If providing negative feedback, provide specific examples instead of general observations.


5. Compare Results of Performance Evaluations

After all employees have been evaluated, review the evaluations per each department or job role at a time. Look at the skills and tasks which are the most critical and determine which employees are not only excelling at those, but that show potential and motivation of taking on higher workloads.


Tips and Warnings

  • Previous performance evaluations must not be used since they are most likely subjective, and are not in a suitable format to be compared with others.
  • To avoid discrimination lawsuits, do not consider salary amount, age or gender when comparing performance evaluations.


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