How to Run a Great Annual Performance Review in Six Proven Steps

For many employees, the annual performance review is the most nerve-wracking meeting they will attend at their workplace all year. For managers, this meeting is just as stressful. How should you, as a manager, go about conducting an effective annual performance review?

Employees all over the world dread the annual performance review. They often look to this yearly evaluation with anxiety, annoyance and anger as it’s a measure of their whole year of work bottled into a short meeting that will determine their chances at getting a promotion, a raise or a bonus.

Leaders don’t like the review much, either. Organisations have a lot of expectations for managers from this process, which usually takes them at least five times longer than it takes their employees.

Yet, despite the natural aversion from both sides of the table, the annual performance review is an inevitable (and important) part of the job, and very vital to your team’s growth. So, if you are aiming to be a superstar manager, it’s time to learn how to conduct a great annual performance review.

Plan, plan, plan

As a manager it is tempting to “freestyle” the performance review and just tell your employees whatever feedback come to your mind during the meeting but we both know that’s definitely not the way to go. You need to think of the annual performance review as a process  that lasts all year long, culminating in that one meeting.

This is why you should give it a lot of thought and consideration long before the actual meeting so that by the time it comes around, you are well prepared to execute it well.

Ample planning ahead of time enables you to give more detailed and personalised feedback and, when the performance review comes around, there will be no surprises for you or your employees – and that’s exactly what you should be aiming for.

Nothing about a review – from the content to the timing – should ever come as a surprise.

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Set goals and expectations

At the start of the year, hold a meeting with your staff to share your annual objectives and expectations for the team. Next, sit down with them one by one to set their personal performance goals. This not only makes sure that everyone knows exactly what is expected of them throughout the year, it also gives both of you a clear map to follow each time you meet regularly to discuss performance over the coming months.

The best way to set goals is to use the SMART (Specific, Measurable, Achievable, Results-oriented, Time-bound) framework.

Remember that while goals should be specific to each person’s role, they should also be clearly aligned with the organisational goals so that employees can see and understand how their performance affects the performance of their team, and the organisation as a whole.

Hold touch-base meetings

You should be tracking your employees’ goals and giving them feedback all throughout the year. Whether you choose to have monthly or quarterly check-ins, pre-schedule these meetings at the beginning of the year so that they always enjoy top priority status in your calendar.

Ahead of every meeting, prepare a short agenda to follow. It should include a quick review of the employee’s annual goals and expectations (both as a team member and as an individual) as well as an update on any current projects plus any questions or new assignments you have.

You should also make it a point to go outside the formal confines of the meeting and give each one of your employees informal feedback on their performance – a quick chat in the hallway is the perfect time to congratulate any exceptional performance and bring attention to any ongoing or potential issues.

Addressing issues with employees is sometimes tough for managers but one helpful tip is to frame comments in terms of behaviours someone should startstop, or continue: Perhaps you’d like an employee to start cc’ing you on emails to other managers, stop taking long lunch breaks, or continue to turn in projects ahead of the deadline.

Also remember to make time to listen and make this a conversation not a lecture, ask each employee to share their own thoughts and questions on the issue.

After each of these meetings, make sure to take notes for yourself about what you discussed. It is these notes that will help you to knowledgeably summarise the year and remember what you discussed with each one of your employees earlier in the year when the end of the year rolls around.

Ask your employees to prepare too

A couple of weeks before the actual annual performance review, ask your employees to start pulling together a compilation of their annual results. Ask each employee to put together a summary of their key job responsibilities, current project work, and a recap of goals and achievements.

Another useful tip is to have each employee submit a self-evaluation in writing. This not only helps employees feel like they have an actual say in their performance review, but it forces them to face the mirror and take an honest look at what they have done throughout the year, and this really aids the conversation during the meeting.

A great self-evaluation usually takes into account 5 – 10 open-ended questions, such as:

  • What achievements are you most proud of this year?
  • Where have you fallen short of your team and individual goals and expectations?
  • What areas do you have potential for growth in and how are you addressing them?
  • What can your manager do to help you accomplish more?
  • What do you hope to gain from this performance review?
annual performance review

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Prepare yourself as a manager

You need to start putting together your own summaries and results for each employee at least a month before the annual performance review.

You should make sure to gather both quantitative employee performance data, such as sales reports, call records, and deadline reports, as well as qualitative employee performance data, such as client feedback and your own personal observation. This is where the notes you made during the regular touch-base meetings throughout the year come in handy.

As you review the results, ask yourself the following:

  • Is this individual hitting their targets and meeting your expectations?
  • Are they performing well according to the company’s KPIs?
  • If not, why – and can you change this? How?
  • If yes – how can you rewards, acknowledge, or promote them?

Get specific goals out of the review

Make sure the meeting produces tangible results. You and the employee should agree upon specific actions to be taken by each of you after the annual performance review.

Both the manager and the employee should leave the meeting with items on their to-do list. The lists do not have to be long and they do not have to contain an equal number of items. The goal is to have a written action plan that is achievable and valuable to both parties – including deadlines.

In Summary

The annual performance review, when done well, can help align leader and employee, connect your team and organisational goals and be a catalyst for employee growth.

A well-planned annual performance review gives both the employee and the manager feedback to be successful.

Gerald Ainomugisha

Gerald Ainomugisha

Gerald is a freelance writer with a pen that is keen for entrepreneurship, business and technology. When he isn't writing insightful articles on employee engagement and corporate culture, Gerald can be found writing for a number of media outlets.