How to conduct an employee performance review: A 5-step guide

As you take your first steps into your new managerial position, one of the key functions you’ll be required to do is employee performance reviews.

It’s a big deal you shouldn’t take lightly.

Employees are the lifeblood of your organization and so, the better they are at doing their jobs, the better your organization will function and thrive.

And, the better you’ll be as a manager!

It will probably come as little surprise that most employees are by nature cautious and suspect of being reviewed by a higher-up at their company. You may have felt that way yourself at one time. If so, you know firsthand there’s good reason for employees to be apprehensive.

Most managers simply go through the basic motions when doing a performance review. For instance, they rate employees on a scale of 1 to 5, which may look good on paper, but doesn’t help the employee understand their weaknesses, or how to improve on them.

Worse, poorly done reviews can create alienation and division between a worker and a manager, or the worker and the entire organization. 

Instead of fostering a sense of cohesion and understanding, poor reviews create misunderstanding and tension.

A Lowly 2

A classic example is the employee who feels they are exemplary at something, while the manager only gave them a lowly “2” in that area, with no real explanation why.

That’s sure to leave a scar.

According to the Harvard Business Review, too many times managers “hold people accountable for past behavior at the expense of improving current performance and grooming talent for the future, both of which are critical for organizations’ long-term survival.” 

To help you avoid pitfalls and get the most out of a performance review, what follows is a  structured employee performance review process that includes specific, objective evaluation and offers insight into how to give constructive feedback that can improve job performance and overall productivity.

Step 1: Prepare for the review

Set meeting time

Once you feel comfortable that you have the info you need, set aside the time for a review meeting. You’ll need a private, quiet space to have the conversation. No interruptions.

This lets the employee know you think this is an important function and that you value their future in your organization.

When you first inform the employee about the upcoming review, be sure to clarify with them what the process will be and what is expected of the employee before the review begins.

Let the person know you’ll be talking with their co-workers and others, perhaps their former manager, as well as HR, to gather as much useful information as you can to have a more complete review.

It’s OK to ask the person what they would like to see in the review. For instance, ask them what they believe are their own strengths and weaknesses, or what they’d like to do more or less of. Those can become critical pieces of the review process.

Step 2: Focus on specific behaviors and outcomes

While there are no hard and fast rules, the verbal portion of the review should last about one hour or less. Dragging it out any longer could have the effect of diluting the main focus.

It’s a good idea to take notes to better help you construct the final written review document.

Use the employee’s job description and performance goals as a reference point for the review, and don’t be surprised to learn there are considerable differences between how the employee perceives themselves, and how you see them.

Most employees naturally tend to think very favorably about the way they do their jobs.

Your key role as manager is to put things in perspective and keep employees reality-focused.

Reality based evidence

The best way to do this is to use specific examples and evidence to support your evaluation of the employee’s performance.

Again, hard performance data, like quotas, are very helpful. So is feedback from customers and co-workers. If customers and co-workers find the employee great to work with, use specific examples from the feedback you got from them.

Avoid making general or subjective statements and instead focus on observable behaviors and results.

Here’s an example: The statement “It’s very cold outside” is subjective because it depends on personal opinions and experiences. The statement “It’s 32 degrees outside” is objective.

The statement “You’re undependable” is subjective, while the statement “Eight of your last 11 assignments were submitted late” is an objective observation that speaks to the employee’s ability to meet deadlines, while giving them something concrete to correct.

Step 3: Provide constructive feedback

Constructive criticism is the key to employee improvement. If you get no other part of the employee performance review right, it’s essential to master a good technique to deliver constructive criticism. It pays to share both positive and negative feedback in a balanced manner.

Feedback sandwich

A proven way to do this is the “feedback sandwich” approach. Here’s how it works.

You start with a positive comment, followed by a specific area for improvement, and then end with another positive comment.

The feedback sandwich looks something like this:

The Bottom Slice of Bread: “Bob, I wanted to point out how well organized I thought your production demonstration was for our clients. You had everything you needed and the equipment ran flawlessly. You did a good job preparing your crew.”

Next, deliver your constructive feedback thoughtfully. Try to focus on the behavior or action, and not on the person – you’re not trying to change who the person is, just what they did.

The Meat: “As good as the demonstration was, Bob, I don’t feel that the cleanup went very well. There was waste and debris scattered about and some of our guests ended up having to help clean it up. Next time, maybe you can be sure to recruit a couple of teammates to help when the demonstration is over.

Follow up with a second positive comment. This continues the tone you set at the beginning, reassuring your teammate your goal is not to tear him down.

The Top Slice of Bread: “Overall, I’m pleased with how well the demonstration ended up and thankful that you were able to put so much energy into it. With you in charge, I’m sure the next event will be even better. Thanks for your help.”

Using the Feedback Sandwich Method, you can get your point across better without offending the employee. By shrinking the critical part between two slices of positive feedback, you have delivered two positive compliments and one fixable observation, and ended the discussion on a high note.

Actionable steps

As you can see in this example, it pays to avoid using negative or judgmental language and instead focus on providing actionable steps for improvement. In this case, the manager recommended recruiting teammates in the future to help with clean-up.

As you move through the oral part of the performance review, offer feedback and insights to the employee on each specific issue at the time it is being discussed. It’s always best when employees are encouraged to find ways to solve their own problems and accept responsibility for the results.

Step 4: Set clear goals and objectives

Once you are comfortable you’ve highlighted the employee’s areas of competence, and fully discussed those areas that need improvement, it’s time to focus on setting clear and measurable goals for the next review period. 

Be sure to ask the employee what they think they need to improve on.

Also, stay alert for any hidden frustrations the employee might be feeling. Sometimes these frustrations are easy to remedy; sometimes they aren’t. But they provide an opportunity to explain the rationale behind certain company policies, which brings some clarity to the worker’s understanding.

Review goals

An excellent list of effective review goals can be found here, courtesy of Indeed. As the article lays out, these goals can be adapted to combine an employee’s needs and desires with those of your company to create a mutually beneficial objective. 

Along the way, it’s important to be sure you offer the support and resources the employee will need to be successful.

This is where your HR Department can be a resource for training and as well as helping to create a useful improvement plan.

Step 5: Follow-up and check-in after the review

So, you just finished your first-ever performance review meeting with an employee, and you feel good about it. Moreover, the employee says they feel pretty good about it, too! Congrats! Take a bow. You’re almost done.

The last step in any successful employee performance review is to schedule regular check-ins with the employee to review progress and offer additional support as needed.

Open door

First, make sure the employee knows your door is always open and they can come see you anytime they have a question or issue to discuss. But after that, set a time, like once a week initially, to discuss how the improvement efforts are working.

Routine discussions

What you’ll find, after two or three meetings, is the topics of improvement become more a causal and routine part of your daily discussions with this particular employee. So, after the first two or three weekly meetings, you might move to once a month. That’s OK. Just be sure not to drop the ball on the improvement efforts.

The check-ins after a review are also a great opportunity to set the stage for ongoing communication and development.

For example, you may learn that the employee is really good in one training area, and so, might become a good candidate to train co-workers in that area. Growing an employee’s job responsibilities by playing to their strengths is by far the best way to keep them feeling like an integral part of your team.