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How to Conduct an Effective Performance Review

image for Rommel Canlas/Shutterstock
Rommel Canlas/Shutterstock

Giving a performance review can be an uncomfortable situation for both the employer and the employee. The good news is that there are several tips and tricks you, as a business owner or manager, can adopt to make the process much easier, even if you have to deliver negative feedback to an employee.

The best way to conduct a performance review is to make it conversational, as opposed to a lecture, according to Sherry Ailsworth, partner and executive recruiter at Chameleon Collective.

"It's a two-sided opportunity to explore an employee's performance and allow them to take control and give input on how to improve moving forward," said Ailsworth. "Even so, leaders are ultimately in control of the direction of the performance review. It's their responsibility to stay on target, cover each point, ask for feedback and keep the employee focused for a productive meeting."

Ailsworth recommended sending the agenda to the employee before the performance review even occurs and asking them to provide feedback. By doing so, you offer them co-ownership of the conversation.

"You also signal there will be a balance of some bright spots and some room for improvement, but you expect that you will both learn something from the dialogue," said Ailsworth.

"Starting with 'suggestions for improving how we work together' sounds so much more constructive than saying, 'Let's talk about the problems I have with you,'" said Ailsworth.

Consider these examples:

  • "I appreciate how forward-thinking you are for our customers, like the time when you reached out to Mr. Abbott at ABC Construction to congratulate him on the new building contract he closed. So thoughtful!"
  • "Your attention to detail is incredibly helpful; your succinct footnotes on the February sales report saved an hour of explanation to the CFO. I appreciated your efforts."

Providing that extra detail accomplishes two things. One, it grounds your feedback in a real situation and validates the employee's behavior as valuable to you, as well as the company. Second, it signals to the employee that you pay attention to their work, according to Ailsworth.

"Managers should be direct, positive without flattery and critical without sounding harsh," said Wendy DeCampos, senior employee relations specialist for the city of West Palm Beach, Florida. "When employees hear only the positives, they may be misguided to think they are performing better than expectations, which may lead to expected merit increases or promotions." 

When there is a mismatch in perception, added DeCampos, it can lead to disappointment and discouragement. Robert Charming, head of people at Kustomer, agreed: "The tone should be appropriate for the level of performance. Yes, it may be a hard conversation. Yes, there may be a risk of losing that person if they don't hear what they want. It's better for everyone involved if the tone is appropriate for the feedback that needs to be delivered."

Carefully choose your words when critiquing an employee's performance or behavior. If you use extreme or emotional language, there's a chance the employee will immediately become defensive, cautioned Erik Mott, a blogger, consultant and intrapreneur at Creatorbase. This hinders the performance review.

Peggy Myers, human resources director at Levatas, agreed: "As a manager, there is no reason to be defensive or emotional during the review. You have a thorough document with examples of performance. The best approach is to prepare for the discussion, have your examples of performance, celebrate the successes and focus on areas for development."

Ailsworth added that supplementing your criticism with hard data lessens the likelihood that you will lose control of the conversation or, worse, that there will be an emotional display. The words "always" and "never," which are examples of extreme words, should also be avoided.

"For example, if one of my employees is not satisfying their daily call requirements, it would be inappropriate to say, 'You never make your daily calls,'" said Mavis Norwich, senior manager of sales development at business text messaging platform Zipwhip. "I could instead say, 'You consistently fail to meet your daily call requirements.'"

It's easy for conversations to veer in a different direction from what you had planned. In a performance review, it is crucial that the conversation stay in line with what needs to get accomplished.

"Instead of asking, 'Why are you so upset?', invite them to open up by asking, 'We seem to have hit a disconnect. It might be because I misunderstood you. Will you talk to me about that?'" said Ailsworth. "The first question forces the employee to explain their emotional upset, which creates anxiety. The second question forces you to own the problem and provides the employee with a good reason to open up. If you're listening, you will both learn something important in the answer."

Preparing an agenda and sharing it before the meeting with the employee can really help, added Charming.

"Set expectations when the meeting starts that you want to cover the items that were shared in the agenda," he said. "If a tangent happens, gently call it out as a topic that's worth discussion at a later time and then return the conversation to the agenda at hand. It's on the manager to drive the conversation forward to the outcome they're looking to produce." 

It could be helpful to let the employee know that if they have off-topic items, they will be addressed at the end of the review if there is time, or they can schedule a separate conversation.

"Personally, I prefer to do it at a separate time," Myers said. "This is the time that's been set aside specifically for discussing the employee's performance." 

It is important to remember that performance reviews are opportunities to guide your direct reports. DeCampos and Charming suggested asking the following open-ended questions, which will yield the best responses from your employee:

  • How do you feel about what was discussed? In what ways can it be turned into an action plan for next month/quarter/year?
  • What are your thoughts regarding your career path?
  • What are your three favorite functions about your job?
  • What are you passionate about?
  • How do you think you're technically performing against your role?
  • What's working? What isn't?
  • Do you think you're where you need to be technically?

"Questions can drive a conversation," said Charming. "Open-ended questions can be better for self-reflection and drawing out how someone is thinking." Closed-ended questions can help the reviewer more closely control a conversation. "Varying these questions, and how they're framed, is a skill, but it can be useful for driving a conversation forward."

Myers recognizes that open-ended questions during a review discussion support an open conversation. "Share your feedback on a topic and ask the employee, 'How do you feel you performed in this area?'" she said. "Also, be curious. You may learn new skills or interests about that employee that could shape the future with the organization."

"Performance reviews are an opportunity to sit down with a direct report and have a candid, empathetic discussion about what's going well (the pluses) and areas for improvement (the deltas)," said Charming.

He added that it's much easier to give positive feedback and highlight things that are going well. "Everyone loves to hear how great they are. It's much harder, and can even be scary, to deliver less-than-positive news. However, when you shy away from hard feedback, you're doing the individual a disservice by not emphasizing an area they can continue to grow in, which not only hinders them, but hinders the broader organization."

There shouldn't be any surprises in performance reviews, said Myers, especially when it comes to negative feedback. "The performance review should be an interactive discussion. Bringing up areas for improvement or performance issues for the first time isn't fair to the employee, as it is then memorialized in their employment record before they've had a chance to address the issues and improve. It's also demotivating to the employee to work hard all year only to be surprised by negative feedback."

It's also a good idea to tie the criticism or negative feedback to some kind of performance expectation and avoid personalizing the discussion.

"For example, instead of telling an employee they get sloppy with their data entry after lunch, explain you noticed their error rate for the last two hours of the day is 40% higher than expectations," said Myers. "It's a lot easier to have a positive discussion when discussing expectations versus making judgments."

No one likes being criticized just for the sake of being criticized. On the flip side, no one enjoys giving criticism just for the sake of doing it. It doesn't help a situation in any way.

"A critique with clear action items on how to best move forward can make a tremendous difference in the outcome of a conversation," said Charming. "Before providing feedback, give thought to how it will be received. If possible, tie the critique to the person's own goals and strengths. This will lend value to the conversation, aligning the feedback to how they want to grow."

Once you've delivered the bad news to employees about their performance, point out their good qualities. "Regardless of an employee's performance," said Ailsworth, "leaders should be able to [highlight] the positive qualities or contributions that are worth addressing."

Knowing what to say – and what not to say – during a performance review can result in a fruitful discussion with the employee, which could lead to a meaningful change in an employee's performance or behavior going forward.

"Performance reviews are not just tools to uncover opportunities," said Ailsworth. "[They] also reveal the value the employee brings [to the company] … the review should reflect both sides."

Jennifer Post

Jennifer Post graduated from Rowan University in 2012 with a Bachelor's Degree in Journalism. Having worked in the food industry, print and online journalism, and marketing, she is now a freelance contributor for Business News Daily and Business.com. When she's not working, you will find her exploring her current town of Cape May, NJ or binge watching Pretty Little Liars for the 700th time.