It’s not news that performance reviews are an important tool in keeping your workforce encouraged and engaged. What isn't talked about is how critical it is to do them right. They can do more harm than good if it feels like you're going through the motions, or if you’re only conducting them because you took Bureaucracy 101. I've tried many techniques, from informal conversations to 1-5 rubrics and three-sixties. But what is more important for a meaningful performance review than which technique you use is what approaches you include.
Require a self-review
This forces your employee to think critically about their own performance, and opens their ears for you to do the same. It also shows you whether they are clear on their role and what they're supposed to be doing.
Find outlets for strengths
It’s not enough to simply acknowledge that your employee is strong in certain areas. If you take the time to recognize them for being particularly talented without following up on it, at best it makes you seem like you aren't taking reviews seriously and at worst that you don't care about them as people. Sure, a raise or promotion sends a powerful message, but just because you are in a flatly structured or tightly budgeted organization doesn't mean there aren't ways to reward, recognize and incentivize your employees. Try assigning an interest-oriented project or empowering them to teach and share their areas of excellence with others.
Discuss weaknesses in context
Make sure to communicate that reviews aren't personal. You are their boss with your own responsibilities to superiors, shareholders and investors. It’s important to establish that everyone has their part to play, and that this is about getting the job done right in a timely fashion. With this understanding, you can simply point to the areas where they are falling short and tell them that you need to see improvement if they want to continue filling out the demands of the position they hold.
Work together to identify goals
If your employee walks out of the review and doesn't agree that their goals make sense and can be achieved, then you have a problem. Establishing goals requires an honest conversation: you represent what you and the organization needs, while they represent their interests and an innate understanding of their capabilities. You should come up with a compromise that works for everyone, or consider the fact that this person may need to go.
A great way to undermine the effectiveness of your reviews is to take the time to set good goals and then never follow up on them. The follow-through on good goals is deciding what indicates success, and the timeline along which you’ll check for it. Don't wait for the next round of reviews. Most companies move too quickly for annual or even semiannual reviews to be effective as the only opportunities for feedback. Pick measurable objectives and actively measure if they have been reached.
While it’s important to enter into this process with clear thoughts about how you view the employee's performance and what you want them to focus on, don't prepare a monologue. The mere act of listening to their thoughts and asking thoughtful follow-up questions can provide the empowerment that facilitates the next step of their development.