Performance reviews have a way of slipping down the small business to-do list. You’re busy running the business, and employees may hear “performance review” and immediately picture a trip to the principal’s office.
But reviews shouldn’t feel like a once-a-year reckoning.
Regular conversations about performance help employees understand what’s going well, what needs work, and what you expect from them. And when it’s time for a formal review, nothing you discuss should come as a surprise.
Feedback matters, too. Gallup found that 80% of employees who say they received meaningful feedback in the past week are fully engaged. More frequent informal performance conversations can improve employee performance.
Formal performance reviews give you something those everyday conversations don’t: a structured opportunity to look back at an employee’s work, discuss goals, hear their perspective, and document the conversation.
Many businesses conduct formal reviews once or twice a year. Whatever schedule you choose, use regular check-ins throughout the year so employees always know where they stand.
Here’s how to prepare for, conduct, and follow up on an effective employee performance review.
| Looking for ready-to-use questions and prompts for performance reviews? Download our free guide “12 Self-Review Questions That Spark Real Reflection,” (printable employee worksheet included!). |
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Before the performance review
A productive review starts well before you sit down with the employee.
1. Set clear job expectations
Employees can’t meet expectations they don’t know about.
Make sure each employee understands their responsibilities, priorities, and what successful performance looks like in their role. Clear expectations make everyday feedback easier and give you an objective starting point when review time comes around.
Remember that the same review process doesn’t mean every employee should be held to identical job expectations. A new employee and a team lead might answer the same review questions, but their performance should be evaluated based on the responsibilities of their individual roles.
2. Create a consistent set of review questions
Using a standard set of questions helps keep performance reviews consistent from one employee to the next.
Your questions might cover:
- Accomplishments and results
- Job knowledge and skills
- Work quality and accuracy
- Communication and teamwork
- Dependability and deadlines
- Areas for improvement
- Professional development and future goals
A mix of open-ended and multiple-choice or rating questions can give you useful detail without turning the review into a novel.
Also decide who should answer each question. Some questions may work well for both the employee and manager, while others may be intended only for reviewers.
For example, both might answer:
- What accomplishments from this review period stand out most?
- What challenges affected your work?
- What goals should you focus on next?
Manager-only questions might include:
- Is the employee ready for additional responsibilities?
- Is the employee’s work complete and accurate?
- Does the employee consistently meet deadlines?
- How effectively does the employee communicate with coworkers or customers?
- What should the employee focus on improving during the next review period?
Decide ahead of time which manager responses will be shared with the employee.
Using consistent prompts can also help reviewers focus on an employee’s performance across the entire review period instead of relying too heavily on recent events or a general impression.
3. Set the review schedule in advance
Give employees enough notice to prepare.
Consider scheduling the review process a couple of weeks ahead of the meeting and setting separate deadlines for each step.
For example:
- Employee self-assessment due
- Manager review due
- Performance review meeting
- Employee acknowledgment or follow-up
Having the self-assessment due first gives the manager time to consider the employee’s perspective before completing the written review.
Try to schedule the actual conversation during a time when neither of you is likely to be distracted by a major deadline or unusually busy period.
4. Ask the employee to complete a self-assessment
A self-assessment gives employees a chance to reflect on their own performance before the review.
Ask employees about their accomplishments, challenges, areas where they’ve improved, and goals for the future. They may also identify obstacles or contributions you haven’t seen firsthand.
Reading the self-assessment before completing your review can help you understand the employee’s perspective and spot areas where your views align or differ.
How to conduct a performance review
Once the preparation is done, the meeting should feel like a conversation, not a reading of the employee’s report card.
1. Meet somewhere private
Choose a private space where you can talk without interruptions.
Performance conversations can involve sensitive topics, so employees should be able to speak openly without worrying about coworkers overhearing them.
2. Start with what’s working
Discuss the employee’s strengths, accomplishments, and progress before moving into areas that need improvement.
That doesn’t mean avoiding difficult feedback. It means giving a balanced picture of the employee’s performance instead of turning the conversation into a list of everything that went wrong.
When possible, connect strengths to areas where the employee could continue growing.
3. Give specific feedback
Specific examples make feedback easier to understand and act on.
Instead of saying:
“You’re sometimes late completing tasks.”
Explain what happened:
“Last week, Joe’s delivery was scheduled for 1:00 p.m., but it arrived at 1:30 p.m.”
Concrete examples help employees understand exactly what behavior or result you’re discussing.
Keep the employee’s self-assessment nearby, too. Address the points they raised and talk through areas where your perspectives differ.
4. Ask for the employee’s perspective
A performance review shouldn’t be a one-way conversation.
Give employees time to explain challenges, ask questions, and respond to your feedback. You may learn about workload problems, unclear expectations, missing resources, or other issues affecting their performance.
You can also ask what you or the business could do differently to help them succeed.
5. Discuss future goals and development
Don’t spend the entire review looking backward.
Talk about what the employee wants to accomplish next, skills they’d like to develop, and responsibilities they may want to take on.
Understanding an employee’s longer-term goals can help you identify training, projects, or opportunities that support both the employee and your business.
6. Be prepared before discussing pay
Performance reviews and compensation conversations often overlap, but they don’t have to happen at the same time.
If you plan to discuss a raise or other compensation change, know what you can offer before the meeting.
If the employee raises the topic and you’re not prepared to make a decision, don’t make promises on the spot. Set a separate time to discuss compensation after you’ve had a chance to review the details.
After the performance review
The meeting may be over, but the review process isn’t.
1. Share the written review and get acknowledgment
Give the employee access to the completed written review so both of you have a record of what was discussed.
You can share the review before the meeting or afterward, depending on your process.
Ask the employee to acknowledge that they’ve received and read the review, and record the acknowledgment date.
An acknowledgment does not necessarily mean the employee agrees with everything in the review. It simply documents that they received it.
2. Set clear goals
Turn the review conversation into specific next steps.
Goals should tell the employee what they’re working toward and, when possible, how success will be measured.
For example, instead of telling a salesperson to “increase sales,” you might set a goal to increase sales by 4% during the next review period.
If performance concerns are more serious, you may need a more formal performance improvement plan (PIP) with specific expectations, deadlines, and a follow-up.
3. Invite feedback about your management
Performance reviews are also an opportunity to learn what’s working for your employees.
Ask whether they have feedback about your communication, management style, workload, processes, or anything else that could help them do their jobs more effectively.
You don’t have to save these conversations for formal reviews. Make it clear that employees can provide feedback throughout the year.
4. Keep performance reviews on file
Store completed evaluations with the employee’s other personnel records.
Past reviews can help you track improvement, prepare future evaluations, and support decisions involving raise percentages, promotions, performance concerns, or other employment actions.
Federal and state laws may require businesses to retain certain employment records for specific periods, so make sure you understand how long to keep payroll records.
Continue retaining the appropriate records after an employee leaves your company.
Patriot’s HR software can help you manage performance reviews and keep employee information organized in one place.
5. Schedule follow-up conversations
Don’t set goals during the review and then forget about them until next year.
Check in periodically to talk about progress, answer questions, and address anything getting in the employee’s way.
These conversations don’t need to be formal. A short check-in can help keep goals from disappearing into the Bermuda Triangle of everyone’s to-do list.
6. Recognize progress
When employees improve, tell them.
If someone reaches a goal, changes a behavior you discussed, or makes noticeable progress, acknowledge it instead of waiting until the next formal review.
Regular recognition reinforces expectations and shows employees that their effort is being noticed.
Make performance reviews an ongoing conversation
A good performance review isn’t just a meeting on the calendar. It’s one part of an ongoing conversation about expectations, progress, feedback, and growth.
Prepare ahead of time, give employees specific and balanced feedback, listen to their perspective, and leave the meeting with clear next steps.
Most importantly, keep talking after the review is over. When employees regularly know what’s going well and what they need to work on, the formal review becomes less intimidating and a lot more useful.
This article has been updated from its original publication date of October 14, 2016.
This is not intended as legal advice; for more information, please click here.
