Performance reviews are typically approached with a lot of anxiety by both managers and employees. Managers tend to put off preparing for performance reviews because they can be an emotional issue. They also tend to rush through them to get them over with.
This isn’t fair to employees and it's bad for morale, even if the overall performance is rated positively or above average. A quick, sloppy employment review sends a negative message. The person being reviewed will feel as though he or she is not important to you—that you really don’t care about them or their work.
Conducting a good performance review requires careful preparation in two different ways. You must decide what you are going to say and how to say it.
To set up an employee performance review you will need to:
Set goals. Work with the employee to establish relevant goals. These goals should be developed as soon as the employee is comfortably settled in their new job.
Write performance expectations. Have meaningful standards by which to measure performance for each employee in advance. This eliminates surprises at the review because both of you agree what good performance is.
Create critical event memos. Critical events in an employee’s day-to-day performance should be written and filed in the employee’s personnel file at the time they occur. Go over them at review time to add objective support to your otherwise subjective observations.
Conduct the annual performance and salary review. At last, the main event: time to compare actual performance with expectations and goals. Now is the time to review critical event memos, assign new wages, agree on bonuses and perks, and begin discussing goals and expectations for the upcoming year. These are all intended to motivate the employee to improve their performance in the upcoming period.
Schedule the follow-up review. The follow-up review should be held quarterly or semiannually. However, if performance is below acceptable standards, you should hold it monthly until the performance has improved to your expectations. These follow-up reviews should be informal but well-prepared, intended to provide feedback on progress since the annual review.