Most managers and supervisors see the annual employee performance review as one of the most dreaded work tasks.  Most employees, however, view it as one of their defining moments.

Money incentives alone do not increase employee motivation levels.  The development and communication of accurate, comprehensive performance reviews can significantly increase an employee’s motivation (and thus performance).  Towards completing an effective and meaningful employee performance review, consider the following tips:

1. Be predictable.  Apply the same criteria and measurement standards for all employees with the same job descriptions.  Also, avoid looking at performance reviews as an annual one-shot moment to formally praise or criticize an employee’s performance.

• Schedule a periodic – ideally a monthly or, at least, a quarterly – review with each employee to assess general performance levels, acknowledge accolades,  and address any concerns.
• Use the same appraisal criteria for all employees of the same job position.  In fact, avoid evaluating employees in areas going beyond the relevant job descriptions. 

2. Be objective.  Use objective and measurable standards for evaluating improvement in the employee's performance as well as the employee’s workplace behavior.  For example, you can account for the number of projects the employee completed successfully.

• Commenting on the employee’s personality traits, personal characteristics, or personal appearance is generally not appropriate. Of course, certain aspects may be related to his or her performance, but focus on the relevance to the job.  For example, if an outside sales representative has been wearing extremely wrinkled clothing with unkempt hair, does that image represent your company well?  If not, then a discussion about the employee’s professional appearance and how to change it would be reasonable. 

3. Be open.  Motivating employees requires providing ongoing, periodic feedback.  In addition, talk with the employee’s peers, previous managers and current clients to gain a broader perspective on the employee’s performance.

• You gain better historical understanding and improved feedback by talking with multiple sources.  For a new manager taking over a work team of which he or she has little familiarity about its employees, this can be especially helpful
• As importantly, collecting feedback from various individuals in various jobs within the company reduces the risk for unlawful discrimination claims due to race, gender, age, etc.
• You also can assess more comprehensively any specific needs for training. 

4. Be diligent.  Accurate performance reviews stem from a regular process of assessing information gathered throughout the year. Document any evidence regarding an employee’s performance in the employee’s HR file.

• Examples include letters of client praise or complaints, certificates of appreciation, professional publications, industry awards, etc. 

5. Be professional.  Maintain a professional approach when writing and presenting the elements of the performance appraisals.  Conducting your employee performance reviews in a respectful manner will be an especially important factor if you are ever sued for wrongful termination. 

• You may find it prudent to have a third-party member (e.g. another manager) present during the review, particularly if you believe you may be facing a potentially hostile employee reaction to a less-than-favorable performance appraisal. 

6. Be empowering.  Work with the employee to create and agree upon action plans and goals to help the employee further succeed and grow with your company. 

• For those who have been recently under-performing, consider providing any coaching, mentoring, or training support options.  For those who have continued to struggle in their performance, you may need to formally design an Individual Development Plan with the employee.
• For those performing exceptionally well, find ways to keep them motivated and challenged.  One example is to designate the person to take a new project lead on an important or exciting company initiative. 

Financial incentives and the occasional disciplinary actions motivate employees in a limited capacity.  By communicating accurately, clearly, consistently and personally with employees, however, about how their contributions affect the success of the business, employees are more likely to stay motivated and to aim to improve.