Performance reviews are important for ensuring that employees are successfully meeting their job requirements, identifying under-performance issues and providing employees with an opportunity to raise any concerns they may have.  Effective performance evaluations should align employees’ development and professional growth with that of your business. 

Employees are generally more productive and motivated when they understand the role their contributions play in achieving the company’s goals and objectives.  The performance review process can be a great way to strengthen the relationship between a manager and employee by promoting open communication in a relaxed environment.

It’s essential to prepare yourself to minimize the stress level for both employees and their managers, as well as maximize the effectiveness of your performance review process. 

Best practices for conducting employee performance evaluations.

Employee evaluations are nerve-wracking for both the employee and the manager giving the reviews. Make the process a lot more comfortable by preparing yourself using the following tips:

1. Have a system in place for measuring performance. 

Make sure you have a clear system upon which to measure performance and that employees understand the performance standards against which they will be evaluated.  This could be as simple as tracking the number of clients contacted or the number of sales per month, or it could be obtained from sources like customer satisfaction surveys. 

2. Be direct, factual and detail-oriented. 

A well-prepared and honest performance review is the key to managing employee performance.  It helps to achieve your company's goals by aligning your employees' development with the performance of your business.

3. Document all points covered in a work performance evaluation. 

Accurate documentation allows for ongoing feedback and can help measure an employee's progress.  Performance records can also provide important documentation for your company in the event a disciplinary action, termination or other adverse personnel decision becomes necessary.

4. Get employee feedback.

Request comments, views, and thoughts from the employee. Listening to what your employees have to say about you can teach you a lot about yourself and how effectively you are managing your employees.

5. Give praise.

Be sure to highlight good performance and explain why it was good and how it helped the team and the company as a whole. Recognition is key in making your employees feel valued for the hard work they put in.

6. Guide the evaluation and record outcomes.

Remember to be honest with your review.  If you provide a very positive review of an employee without detailing the problems, you now have documentation that does not support a decision to discipline or terminate.  If a lawsuit surrounding the termination occurs, it may be more difficult to defend your company's actions.  

7. Have the employee reflect on their own performance. 

Ask the employee to analyze and evaluate their own work performance. Find out what the employee thinks they can improve about themselves, and what they think they do well. 

8. Remember the performance review is a discussion. 

A review should never be a one-sided conversation. Talk about different topics and discuss why you both think it was either a good or bad outcome and how it could have been different, for better or for worse.

9. Pick your words carefully.

Be aware of how you word or phrase questions and statements to help eliminate the potential for misinterpretation. 

10. Agree about the game plan moving forward. 

Agree that there is a need for a change in the employee’s performance before developing a plan of action.  Discuss a plan of action for helping the employee to improve work performance and encourage the employee to contribute ideas on how to reach performance goals. 

11. Don't hold all issues and praise until the review.

Don't wait to discuss employee performance management issues until their annual review.  When it comes time for the formal review, there really shouldn't be any surprises if there has been ongoing communication and feedback between the supervisor and employee.  Provide a clear, concise explanation of the issues you wish to address with the employee and provide specific examples. 

12. It is very hard to change personalities. 

It is not your place to critical of personalities or try to change them. Learn how to work with the employee and discuss forms of communication that they best agree with.

13. Have the difficult conversations.

Don't avoid or dodge difficult discussions. Having these discussions may be tough, but ultimately have to be said.

14. Be clear and concise.

Avoid using closed-ended or rhetorical questions. Ensure that your employee understands which aspects in their performance can be improved, and vice versa. 

15. See the review through the employee's eyes.

Don't forget that change can be threatening to an employee. Explain the situation and be sure to answer all questions thoroughly. 

16. Stay away from negative comments.

Don't make negative comments that attack an employee's attitude rather than work performance.  Be sure to review the employee's overall performance based upon specific, job-related criteria and provide concrete examples of performance problems. 

Remember to treat all of your employees fairly when it comes to performance reviews and avoid any statements or actions that can be construed as discriminatory.  If you have any questions regarding discrimination matters, contact an employment law attorney who knows your state laws.

Small business HR: Staying compliant the easy way.

Overwhelmed by everything you just read? The managing process can be daunting. We agree – especially because we know it only scratches the surface of human resource management. But we do have a solution for you and it’s called HR Advisory.

Click here to learn more about your options or fill out the form below to get in contact with a representative.

Disclaimer: Please note that this Q&A is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding specific application of the information to your own plan.

Editor's Note: This post was originally published in June 2012 and has been updated for freshness, accuracy, and comprehensiveness.