Performance reviews provide a valuable opportunity to give employees feedback, set goals, and align on development plans. But without proper structure and execution, they can feel one-sided or even contentious.

In this guide, we’ll explore best practices for performance reviews that leave both managers and employees feeling engaged, empowered and focused for success.

Set the Stage with Clear Expectations

To alleviate anxiety, provide an overview of the process and agenda in advance. Communicate:

• Review structure and format
• Any forms or self-assessments to complete
• Date, time and location
• Topics to be discussed

Transparency sets the tone for an open and productive meeting. Share sample questions employees can prepare for, like:

• What contributions do you feel most proud of?
• Where do you want to grow and improve?
• What support can I provide to enable your success?

With expectations aligned upfront, all parties can participate thoughtfully.

Gather Insights from Multiple Sources

The more holistic the inputs, the richer the conversation will be. Explore:

• Self-assessments
• Peer feedback surveys
• Examples of the employee’s work
• Customers or partners’ perspectives
• Metrics or KPIs related to performance

Avoid relying solely on the manager’s viewpoint. Over a dozen data sources lead to deeper insights and less bias.

Make It a Two-Way Dialogue

Performance reviews should empower employees to assess their own performance and share their perspective.

Schedule ample time for a back-and-forth conversation. Start by asking open-ended questions like:

• What accomplishments are you most proud of from the past period?
• What areas do you feel you could develop or improve?
• What support can I provide to enable your success?

When employees actively participate, they feel heard. This builds engagement in the process and outcomes.

Focus on Development

Performance reviews shouldn’t just be about the past. They should shape the future through development plans.

Create SMART goals together:

Specific
Measurable
Achievable
Relevant
Time-bound

Align on development opportunities like:

• Mentorship
• Job shadowing
• Training programs
• New responsibilities
• Stretch assignments

Growth-oriented reviews boost motivation and signal investment in employees’ potential.

Share Constructive Feedback Respectfully

Critical feedback must be delivered with empathy and care. Follow best practices like:

• Ask permission to share areas for improvement
• Focus on specific behaviors rather than characterizations
• Explain why a change would lead to better outcomes
• Provide examples of positive behavior for contrast
• Share two positives for each negative
• Listen and have a two-way dialogue

Constructive feedback promotes growth when delivered with sensitivity.

Discuss Career Goals and Trajectory

Have an open discussion about the employee’s aspirations and options within the company.

• Where do they want to be in 2-5 years?
• Are there development opportunities to elevate skills?
• Can they expand scope or responsibilities in their current role?
• Are there other roles or teams they’re interested in?

This career planning ensures alignment between employee goals and company needs.

Conclude with Next Steps and Follow-Ups

Summarize key takeaways and next steps before ending the meeting:

• Recap strengths recognized
• Reiterate areas for focus
• Confirm follow-up dates for check-ins
• Share resources and support available

Finally, express appreciation for the open conversation and partnership moving forward.

Following up shows the priorities were heard and valued. It keeps momentum going.

Enable Ongoing Feedback Loops

Performance management shouldn’t just happen once a year. Touch base quarterly at a minimum.

Promote continuous feedback by:

• Meeting regularly 1:1
• Communicating openly day-to-day
• Checking on progress after large projects
• Leveraging pulse surveys and anonymous feedback

When feedback happens continually, reviews become far less anxiety-inducing.

Train Managers to Have Empowering Reviews

Provide managers guidance, resources and training on facilitating meaningful reviews focused on development.

Topics can include:

• Giving constructive feedback effectively
• Active listening techniques
• Formulating SMART goals
• Developing growth plans
• Having career path conversations
• Resolving conflicts or disconnects

With proper skills, managers can have performance dialogues that motivate.

Tie Compensation Conversations to Separate Process

Delinking compensation from performance reviews keeps the focus developmental.

Schedule salary and bonus discussions separately. Frame compensation meetings around:

• Organization budgets
• Market rates
• Standardized bonus structures

This enables rich, open dialogue around growth first, unclouded by money talk.

Conclusion

Done right, performance reviews align managers and employees around skills gain, productivity growth and career progression. Both should leave feeling heard, supported and focused.

With an empowering, developmental approach, reviews become something teams look forward to rather than dread.

By implementing some of these tips, organizations can transform performance management into an inspiring process. The resulting impact on retention, productivity and promotion is invaluable.