How to Conduct an Annual Performance Review

24 min read If you’re planning to implement performance reviews for the first time, want to overhaul your company’s approach or just need a reference guide, here’s everything you need to know to create a foolproof system. Plus, we’ve included some performance review sample questions you can start using today.

Annual Performance Review Best Practices

How to conduct an annual performance review

Here are the basic steps you should take to conduct a performance review:

1. Prepare for the review

Start by reviewing the employees performance review from the previous year and any mid-year check-ins that you may have conducted. Review the employees self-assessment as well as any notes you made throughout the year about their performance. Make note of specific progress they made towards goals, accomplishments, areas where they exceeded expectations, additional responsibilities they took on, challenges they encountered and areas where they need to further develop and improve upon their performance. Also, make note of any specific information you want to communicate during the performance review.

2. Write the review

Next, write the employees review. You can use bullet points if you prefer. However, its important to use clear and concise language and provide examples of their strengths and opportunities for improvement. Include specific examples of successes to praise their hard work and position any challenges or shortfalls as opportunities for growth. Make sure the feedback you give is actionable so they can start working on making improvements right away.

3. Prepare to discuss the employees review

The most important step in the annual performance review process is the one-on-one conversation you have after preparing the review. Taking the time to prepare for this conversation will help you ensure its productive and runs smoothly. Take some time to consider what you want to communicate and what feedback you would like from the employee. Plan to review the employees accomplishments, strengths and areas they can improve. Plan to discuss their interests, goals and what, if any, training may be necessary to reach those goals. Determine how much time you will need to have the conversation and what setting is most appropriate.

4. Review the performance evaluation with the employee

Meet one-on-one with the employee, reviewing successes since you last spoke and identifying specific results they achieved for the organization. Discuss any obstacles they may have encountered and what they can do to overcome them and improve upon their performance in the future. Establish SMART goals, which are goals that are specific, measurable, attainable, realistic and time-bound.

Why are annual performance reviews important?

There are a number of reasons why annual performance reviews are important. Regular performance reviews:

Improve the overall performance of team members

By evaluating the work of your team over an extended period of time can help you identify areas they need to improve upon and find solutions to help them improve in those areas.

Increase engagement among employees

Regular performance reviews help employees to get a better understanding of how their position contributes to company goals and helps them feel more invested in the success of the organization.

Help you identify training needs

Regular performance evaluations help you identify areas where team members need additional training. It also gives you the opportunity to identify whether team members are interested in specific types of professional development opportunities that could improve their performance. By investing in training to improve your teams performance, you increase their engagement and loyalty to the company.

Improve loyalty

By setting aside time annually for a one-on-one conversation with each person you manage, you can strengthen your relationship with them. It gives you the opportunity to praise their efforts, reward them for their hard work and dedication and listen to any concerns or complaints they may have. This regular communication helps employees feel their opinion matters and that their company is invested in their growth, which has a substantial impact on retention and performance.

Identify opportunities for promotion

Meeting with employees regularly helps you better understand their strengths and weaknesses as well as their specific interests, which can help you identify promotional opportunities they may be well suited for.

Tips for holding a successful annual performance review

Here are some tips to help you hold successful annual performance reviews:

Discuss the evaluation with the employee in advance

Before actually beginning the review process, communicate to the employee how you will be assessing their performance and what their role will be in the process. For example, if you are having employees perform self-evaluations, discuss what that entails.

Document throughout the year

To make a performance most effective, its best to document positive and negative events throughout the year. This makes it easier for you to give a thorough evaluation that examines their performance throughout the entire review period. It also makes it easy for you to make note of accomplishments and obstacles when youre conducting the review.

Request feedback from colleagues

Request feedback from other managers and coworkers who worked closely with the employee during the review period.

Consider giving the employee their review in advance

If there is a form you fill out as part of the evaluation or if you have a written document detailing their performance, consider giving it to the employee before meeting them in person. This will give them the opportunity to review and process the evaluation in advance before having a conversation with you, which can make the conversation go more smoothly and be more productive.

Always prepare in advance

Always take time to prepare for the one-on-one conversation with the employee. By preparing in advance and making note of key messages you want to convey, you can feel confident that you wont miss any opportunities for feedback and improvement.

Focus on accomplishments and growth

The majority of the conversation should focus on the positive aspects of the employees performance and their accomplishments, as this will motivate the employee and make them feel rewarded for their efforts. If youre meeting with an employee who consistently performance above-average, the discussion should center on steps they can take to grow professionally and further improve upon their performance.

Encourage the employee to talk

The best reviews are those in which the employee spends a large portion of the conversation talking. Encourage them to talk by asking lots of questions, such as what they expect to be most challenging, what they hope to accomplish in the coming year and what you could do to be a better manager.

Follow up

Plan to check in with the employee at a later time to see if they have questions or want to discuss further. Follow-up conversations also give you the opportunity to check on the employees progress working towards goals.


What should be included in an annual performance review?

Writing the performance review

Performance compared to agreed-upon expectations. Key accomplishments and contributions. Examples of strengths and development opportunities. Key expectations for the coming year.

Are companies eliminating annual performance reviews?

Accenture, Deloitte, Microsoft and General Electric are just four of the many US companies that have done away with the annual performance review.

How do you write an annual performance report?

5 Steps to Prepare for Your Annual Performance Review
  1. Get clear on your goals. This is your time to dream. …
  2. List out your accomplishments. …
  3. Decide on some questions to ask. …
  4. Plan to ask for (at least) one thing you want. …
  5. Be ready to receive feedback.

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