After CEO's comments go viral, Canadian employment lawyer explains how to balance data, trust and legal risk in performance management
AT&T CEO John Stankey’s recent viral internal memo to management spoke a lot about culture and performance – it also mentioned the use of employee data to identify what he referred to as “outliers”.
“As technology and the ‘information economy’ evolves, each of our respective contributions are going to become increasingly measurable,” Stankey wrote in the section of his memo entitled “Contribution, trust, and effectiveness”.
He went on to explain that inconsistencies in behaviour that could run counter to “our stated priorities and employment expectations” would be targeted for potential linking to an employee’s name.
While the memo’s tone was not ideal, the approach of monitoring data for employee performance metrics is not uncommon in Canada, according to Melanie Sutton, employment lawyer at Nelligan Law.
“Most companies, to some degree, measure their employees’ performance, whether it’s the hours they’re working, their sales targets, customer satisfaction, any of those kinds of metrics,” she says.
“Employees typically know that that information is being measured. They know that they’re being evaluated or their performance is being measured based on certain measurable criteria.”
Sutton notes that as long as employees are aware of the metrics being used, risks to employers is limited.
“It’s a practice that employers can and do engage in often, as far as generally looking at how their employees are performing and how their customers and clients are perceiving their employees.”
Legal boundaries and human rights risks
However, problems can arise when these metrics are used in blanket applications, and don’t account for the different reasons individuals have for flagging performance, especially under protected grounds in the human rights context.
“The biggest risk is always when it comes to not taking account of reasons why someone might be an outlier,” Sutton says, "such as a medical accommodation that’s required, or any other … protected ground under the Human Rights Code. That’s maybe the reason behind why someone may end up being the outlier of a trend.”
Sutton goes on to explain that these scenarios commonly arise when blanket policies or rules are applied from higher up in an organization without consultation with direct or middle managers.
“You may have an employee who has an arrangement with their boss, with their manager, that there’s an awareness that there’s some type of medical reason why their sales are lower, and so they have an accommodation in place,” she says.
“If someone from head office just goes and says, ‘You know what, all these people, we’re just going to fire them all' … then you could run into an issue with a breach of the Human Rights Code.”
Constructive dismissal and performance metrics
Stankey’s memo acknowledges that “some may view this approach as a matter of trust, and that perspective is understandable.” He does however add that by being transparent in talking about their use of data, employees who are working to company expectations can be assured that outliers are not undermining their efforts: “Addressing these exceptions is important to ensure we’re fair to the vast majority of employees who support their colleagues and deliver for the organization every day,” he wrote.
Sutton agrees that transparency is key, advising employers to be upfront about how they are using employees’ data and why.
She adds that although U.S. employers may have broad discretion to terminate without notice, employees in Canada have many more protections around termination, meaning that constructive dismissal claims are a concern when altering performance metrics significantly.
This could particularly be true if metrics affect compensation or fundamental terms of employment, says Sutton.
“If the policy creates a change in, for example, incentive compensation and the criteria for achieving that, like bonuses and things like that, in a way that makes it much harder to achieve, in some cases, that can be a constructive dismissal.”
Best practices for use of employee data
For Canadian employers considering the use of employee data to identify outliers, as in the potential example of AT&T, Sutton recommends clear communication and individualized assessment.
“Employers do have discretion to manage their businesses the way they want to and to create the culture that they want to within their company, and create policies that promote that culture that they want,” she says, adding that blanket approaches could backfire.
Bias can come into the picture when looking at data, she explains – for example, where employees interact with customers, she says.
“Depending on the metric that they’re considering … there could be bias from the customers that’s impacting their score, looking only at customer satisfaction without also getting data from managers, from other people, that can be a problem as well.”
