How To Write A Performance Review: A Comprehensive Guide

A small business owner sent us a question asking how to write a performance review for an employee.

“How do I write a performance review? My company is growing, and while I give verbal feedback, I feel the need to get more formal. But I am at a loss about where to start. I need performance review examples, a tat and a step-by-step guide. Can you help?”  

  –  Tomas from Miami 

How to conduct an employee performance review

In this step-by-step guide, we show small business owners and managers how to give an annual employee performance review and get good results from employees year-round.

You will find practical guidance with an emphasis on writing performance reviews. Also included are sample performance phrases, a downloadable performance review template, and even a completed sample review which you can use for guidance in your own small business.

This guide is based on my years as a Vice President of Human Resources in a large corporation. Added to that background is my practical experience running my own business for 20 years. This performance review process is scaled to work in any small business regardless of the type of industry you are in.

5 steps in the performance review process

Implementing a structured review process in your company with manager feedback to employees is crucial for good performance management.

An effective review process works all year long. Think of an employee performance review as a year-long cycle, not a one-time event. After all, your employees don’t just “sit on ice” until a once-a-year event, do they? They are performing. And you are (hopefully) coaching them all year long.

Without a doubt, the keystone of each year’s review cycle is the formal written performance review. However, it’s best to view written performance reviews in the context of a broader year-long process.

5 steps in the annual performance review process:

1. Give regular feedback throughout the year
2. Ask the employee to do a self-evaluation
3. Write the performance review
4. Conduct the performance review meeting
5. Communicate any pay increase

Once you finish the five steps in the annual performance review, the review cycle starts all over again. Continue to give informal feedback throughout the upcoming year. Performance feedback then becomes a continuous ongoing process. The written performance review from the current year becomes a good starting point when it’s time to write next year’s review.

Let’s break down each step into more detail.

1. Give regular feedback throughout the year

The annual review shouldn’t be the only time you discuss the employee’s performance or give feedback. Regular interactions and feedback lay the groundwork for a performance appraisal once a year.

Here are some guidelines for giving performance insights:

• Give informal feedback. Employees will be less fearful and more receptive if you give little bits of constructive feedback on a regular basis during the year. Weave informal feedback into daily interactions. Share feedback in a quick phone call or conversation.
• Give more positive than negative feedback. If you want more of something, positive reinforcement works. This doesn’t mean you must avoid correcting or making a critique. It simply means to focus on strengths and find positive points and employee strengths to highlight, along with constructive criticism. Some employers adopt a ratio of 3-to-1 or even 5-to-1 positive to negative feedback. Read more about strengths-based employee development.
• Deliver proactive guidance, too, not just after-the-fact critiquing. Team members need to know what you expect – no matter what their level of experience or how many years on the job. Take the time to ensure employees understand work expectations required for the job. Don’t just critique the employee’s past performance. Read more tips for improving employee performance.

Meaningful feedback is crucial for employee development. Effective and thoughtful feedback throughout the year fosters understanding, motivation, and engagement, which are vital for employee growth and good business outcomes. Remember, writing performance reviews is easier if you give regular feedback over the entire review period.

2. Ask the employee to do a self-evaluation

As the annual review approaches, ask the employee to write a self-evaluation. Employees can use the same performance review template that you will use to review them. The employee simply completes a version of the form reflecting on his or her own performance. (See below for our review template example.)

The benefits of a self-review are powerful:

• It makes employees more self-aware. When an employee has to sit down and reflect on all the attributes or behaviors that he or she is being evaluated on, there will likely be a few private “uh oh” realizations. Employees start to imagine how they appear in others’ eyes, which will make them more effective employees in the upcoming year.
• A self-review instills confidence. The self-evaluation encourages employees to consciously reflect on their achievements. If they know you welcome hearing from them, they are encouraged to provide specific examples to support their reflections. They will feel empowered, boosting their confidence.
• A self-evaluation could be illuminating for you as the boss. You may have forgotten some of the employee’s accomplishments. And you may start to see things through their eyes better. For example, working conditions that may negatively affect performance sometimes reveal themselves — conditions you can fix once you learn of them. I’ve often changed my written evaluation after reading an employee’s own evaluation.

Ask the employee to give you the filled-out self-appraisal form slightly before your scheduled review meeting. A day or two should be enough time to consider it before the performance review meeting. Don’t forget to give employees time in their workday to complete it.

Is it absolutely necessary for an employee to fill out a self-evaluation form? No, it isn’t. The form’s purpose is simply to encourage self-reflection and give employees a mechanism to be heard.

Occasionally employees have trepidation over filling out the form. Remind them that it’s for discussion purposes and not any other reason. But don’t insist if they are uncomfortable. Also, in some environments (such as a small business with manual laborers), asking the employee to complete a written self-evaluation form may not be feasible.

You can achieve a similar result through a verbal discussion. Instead of insisting on a written form, ask the employee to tell you how they think they performed, during the face-to-face meeting.

3. Write the performance review

Now, we come to the heart of things: writing out a formal performance review for employees. A thoughtful, well-written review is powerful. But before you start writing, collect your thoughts. Reflect on the work of your staff member. Consider their performance throughout the past year, not just the last few weeks.

Start the writing process with a review form or template. The form gives structure to the review and ensures you do a thorough performance assessment and don’t miss important aspects of the employee’s work.

Example performance review template

In the section below is a link to a performance review template that I developed over the years. It incorporates an example review to show you how to use it.

The review form covers seven factors:

• Job Knowledge
• Work Quality and Quantity
• Work Timeliness
• Initiative
• Interpersonal Skills
• Communication
• Attendance

These areas address what is expected of most employees in small businesses, whether in management or non-management. You can tailor the performance review template any way you like to fit your business. Include other factors if you wish, by adding another rating section.

Managers also assign an Overall performance rating. The Overall rating is equivalent to the average rating of all factors taken together.

Where to get the performance appraisal form

Go here for the performance review template. It opens as a Google Doc. Once you are on the Doc, click the “File” menu, then click “Make a Copy” to save a copy in your Google Drive file. Or you can click the “Download” menu to download the document to your computer.

To trigger ideas, I’ve included some sample verbiage in the performance review template. Simply delete the sample verbiage, and you are free to use the form to do performance reviews in your business.

Apply ratings and write feedback

After you download the review form, it’s time to fill it out. Set aside some time to think and reflect as you complete the form.

Managers rate their staff members by assigning one of the following ratings for each area: Outstanding, Exceeds Expectations, Meets Expectations, Needs Improvement, and Poor.

Check off the appropriate box to apply a rating. In addition to checking off a rating box, managers should write a few sentences underneath each factor, to explain their rating. Adding an explanation is vital, as it demonstrates a thoughtful evaluation of the employee’s contributions, accomplishments, and growth opportunities within the company.

Tips for writing performance reviews

Length: When you write performance reviews, keep it brief. Summarize a few key takeaways under each factor.

Style: Write plainly and to the point. Put it into your words — you can speak casually as long as you remain businesslike. Make sure everything you say is factual and unemotional. Avoid sweeping or exaggerated statements. Don’t make jokes. Treat the review with gravitas, or you could undermine your own credibility. After all, you are dealing with the employee’s livelihood and career.

Revisions: After you’ve rated the employee and written a few sentences for each factor, set the appraisal aside for a few hours or a day. Return to it later and re-read it with fresh eyes. This gives you an opportunity to make sure your verbiage doesn’t come across as unfair or harsh. Revise as needed before the actual meeting with the employee.

Sample phrases: Start with a sample list of performance review phrases, like the ones below. They save time by providing inspiration for what to say.

Example phrases for a performance review: positive feedback

Some managers get writer’s block when it is time for writing performance reviews. Here is a sample list of accomplishments for a performance review:

• Effectively managed two major projects this year.
• Made tremendous progress in improving communications and teamwork.
• Expressed ideas and information clearly in emails, presentations, reports, and verbal communications.
• Consistently met deadlines in a timely manner.
• Increased throughput by implementing software automation solutions in his department.
• Was punctual and timely in delivering work product.
• Adapted quickly to unexpected business changes requiring an adjustment in his workload.
• Exceeded targets and goals.
• Open to feedback and coaching, which improved the quality of his work product.
• Showed resourcefulness when faced with challenging problems.
• Developed an innovative new product solution, increasing profit potential by 10%.
• Regularly seeks creative alternatives to solve problems.
• Handled customer questions promptly and effectively, earning positive feedback. Was thanked by name in several customer reviews.
• Exhibited a high degree of teamwork.
• Paid attention to detail and was thorough in her work.
• Communicated effectively in customer presentations.
• Maintained excellent customer relations.
• Worked harmoniously with coworkers on cross-departmental initiatives such as [BLANK].
• Actively pursued learning opportunities to grow his skills. Attended several conferences and took online courses to help the company be more effective in [BLANK].
• Took the initiative to solve the [BLANK] problem with an inexpensive software solution.
• Effectively managed the [BLANK] project. Project deliverables were on time and on budget.

Use this sample list of accomplishments to help ensure a thorough evaluation. Tailor phrases to fit the employee’s role. Above all, be honest. It’s one thing to give good performance reviews and emphasize the positives. It’s another thing to fail to give accurate feedback that, in the long run, will be more valuable to the employee’s career. That brings us to the next set of phrases.

Example phrases: areas for improvement

Performance reviews aid in employee development and growth. But a good performance review isn’t all glowing and positive. Confront areas where improvement is needed. Give specific examples of any poor performance and provide constructive feedback.

Whenever possible, precede constructive or negative feedback with a positive note. Soften your delivery so the employee can still feel good about himself or herself.

The following are sample phrases that highlight areas needing improvement:

• Your work is of excellent quality but isn’t always timely. This year, I’d like you to address timeliness and promptly meet project deadlines.
• I’d like to see you bring the same enthusiasm to G as you do for H, where you’re very effective.
• You are very thorough and pay attention to detail. This year, I’d like to see you work on increasing the quantity of your output. Balance thoroughness with speed.
• You have a great sense of humor. Use that humor to improve your interpersonal relationships with every team member.
• You are a strong individual contributor. In the upcoming year, I’d like to see you work on meeting team expectations.
• Project [BLANK] was successful under your management. It could have gone a little smoother by emphasizing planning. Planning is something I’d like to see you work on this coming year.
• You’re very effective when working with coworkers on your team. We need you to bring that excellent teamwork attitude to interactions across departments and with outside vendors.

Remember, the written review becomes part of the employee’s permanent file, so anything you write becomes part of his or her record. Be measured in how you phrase things.

Goals for the coming year

A key part of the performance review template I recommend is a section highlighting a few accomplishments over the past year and a place to set goals for the upcoming year.

When setting goals, limit them to no more than five goals per year. No one can focus on a lot of goals, and you will overwhelm the employee. Even two goals are enough.

Goals can be company initiatives or self-improvement targets. Simply signal to employees a few things you consider important for them to do in the coming year. Goals provide growth and development opportunities and help the employee know how to meet expectations for the coming year.

4. Conduct the performance review meeting

Effective performance reviews involve sharing feedback in a two-way conversation. The annual performance conversation is best held face-to-face. Schedule an hour in a private office or conference room in advance. Make it clear to others that you don’t want to be disturbed. Put your mobile phone away!

Try to put the employee at ease. Make eye contact and smile. For instance, you could offer the employee a beverage. Make a bit of small talk, and ask after their family, spouse, etc. Be conversational.

Get them to open up and talk to you. Ask them to tell you how they like their job and the company, what they are proud of, and whether they feel good about their performance over the past year. Use active listening techniques (nodding, paraphrasing, etc.). Giving feedback is a two-way street.

Then, talk through your evaluation. Emphasize as many positives as possible upfront. Use friendly and enthusiastic language at the outset to set a positive tone. Talk about the employee’s future with the company or how you look forward to working with him or her this coming year.

Discuss a few goals for the upcoming year, and make sure the employee is comfortable with the goals.

To wrap up, ask the employee if he or she has any questions or has anything to add. Once you complete your discussion, let the employee take the written review and look it over. Encourage him or her to come to you with any questions or comments. Ask the employee to sign and return the review by the next day.

5. Communicate any pay increase

If your company gives pay increases due to a performance review, communicate the pay increase at the end of the review meeting.

State something like, “Thank you for all your hard work and contributions. We value what you do, and I’m delighted to say we will be increasing your pay to X.”

If performance needs improvement to the degree that a pay increase is not warranted, then explain that to the employee. Some managers will ask the employee to improve for, say, three months and agree to evaluate compensation again at a later date. Read more about employee pay raise criteria.

Some small businesses do not give annual pay increases connected with performance reviews. For example, let’s say your company gives a cost of living increase or profit-sharing bonuses, in lieu of performance-based raises. If that’s the case, then presumably, your employee already knows that. Then no discussion about compensation needs to take place.

Place the signed copy of the appraisal form in the employee’s personnel file (either paper or digital). Keep it confidential.

In conclusion, employee performance reviews can be a positive and beneficial experience if done correctly. When the process is fair and based on a thorough assessment of skills and qualities, it can increase employee engagement and retention and result in better business outcomes.

Good luck!

FAQS for performance reviews

Here are common questions about employee performance reviews.

How do I review remote workers?

For remote workers, use video conferencing, FaceTime, Skype, or some other solution where you can see each other during the review conversation. Reading body language and facial expressions is very important during a performance review. Deliver the written review electronically and have the remote worker sign it using an e-sign application or by sending you an email acknowledging they received the review.

Do I need performance management software to write a review?

Performance management software can help with the review process, but is not essential in a small business. A simple review form is effective as a performance management solution in small businesses because (1) it doesn’t cost anything, and (2) it is easy to use. A form you fill out involves much less learning curve than learning a software program.

Performance management software is often part of a comprehensive HR suite designed for numerous functions, such as applicant tracking, payroll, benefits, onboarding, timesheets, employee document management, etc. Unless you need that other functionality, it probably isn’t worth the investment for a small business.

What if I need to terminate an employee during the review?

An annual performance evaluation is not the time to terminate employees. Instead, address serious performance shortcomings promptly throughout the year. Waiting until the annual evaluation time is poor practice and unfair to employees. Business outcomes suffer when you delay.

When I was head of human resources, an inexperienced manager from a company we recently acquired came to me and said, “Joe isn’t performing well. I plan to terminate him next month when it’s time for his review.” I asked if she had discussed the performance issues with the employee, documented them in writing, and given him an opportunity to improve. In fact, she had never even spoken to the employee about the issues, even though they were long-standing and serious.

I asked why she would let serious performance problems continue for months without taking action. It turns out that in her last company, managers often waited to take corrective action until the annual evaluation.

The best use of employee reviews is for employee development, employee retention, and growth opportunities — not termination. Work on performance management with your direct reports all year long. Take prompt action during the year if there is a serious performance issue. Do not wait for annual reviews!

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This article, “How To Write A Performance Review: A Comprehensive Guide” was first published on Small Business Trends