How to provide constructive performance review

According to Knight, performance reviews "aren't just tedious professional chores; they're also stress-inducing conversations that bring together high stakes, intense emotions, and a healthy dose of personal ego." Performance reviews can also be more difficult to give when your business is struggling, especially in the currently shaky economy.

In these situations, managers will need to "balance realistic expectations for the future while also fostering a sense of leaderly optimism," Knight writes. "… Your aim is not only to review the past year but also to equip your employees for potential challenges in the coming one."

To help managers provide constructive — and motivating — performance reviews, here are eight tips:

1. Be prepared

According to Tonushree Mondal, who runs a boutique HR consulting firm, conducting a thoughtful performance review requires both groundwork and reflection from managers.

"Too often managers go from meeting to meeting without clear purpose," Mondal said. "But for these conversations, you need to be prepared with written evidence."

Before a performance review, Mondal recommends identifying any achievements or areas of improvement. You can also collect input from colleagues who work closely with your employees, as well.

2. Acknowledge external factors that may be impacting performance

Karen Sedatole, a professor at Emory University's Goizueta Business School, recommends framing a performance review inside the broader economic context. "Acknowledge that there are factors that drive performance that are outside the control of the employee and the organization," she said.

Addressing economic challenges can also help you provide context for any changes, such as bonuses being smaller this year.

3. Explain how employees' roles fit into long-term goals

After you explain how the wider economy affects your company's performance, you should help your employees understand how their specific roles align with the organization's long-term goals.

Talking about how day-to-day tasks or projects contributed to your company's financial results can help employees "see how what they did over the past year supported or undermined what the company achieved," Sedatole said.

Providing employees with this kind of clarity can help improve their work, strengthen their sense of purpose and commitment, and help them align their priorities with the company's business objectives.

4. Approach conversations with a coaching mentality

Although performance reviews may be straightforward with high-performing employees, those who are not performing at their best may push back or find ways to justify their performance.

With these employees, Mondal suggests approaching the conversation with the mindset of a football coach debriefing a player after a challenging game in harsh weather. It's important to balance recognition and constructive criticism. You should acknowledge what an employee did well during difficult circumstances, but also where they could have done better.

5. Be transparent about any issues

When talking to employees who are underperforming, Sedatole recommends being frank. "Don't make promises you can't keep," she said. "You don't want to unnecessarily alarm people, but transparency is important."

Performance reviews are also a good opportunity to discuss where employees are falling short of expectations and to offer support and encouragement where it's appropriate. "It can feel personal," Mondal said. "But a mediocre or poor review doesn't make them a bad person; they've just had a bad year."

6. Consider non-monetary forms of motivation

"During tough times, your role is not only to motivate and inspire your team members, but also to keep them from becoming demoralized about the lack of raises and promotions on the table," Knight writes.

Some non-monetary ways to motivate your employees include providing them with more autonomy, offering growth opportunities, and giving them meaningful work. Sedatole also recommends asking employees about what would increase their job satisfaction during performance reviews. Some may be interested in mentorship opportunities or cross-country projects while others might care more about flexible work hours and locations.

7. Listen to your star employees

According to Mondal, managers should pay close attention to what their best workers say during performance reviews. "Your high potentials and top performers are especially in need of inspiration," she said. "They are motivated by a steep learning curve. When they get bored, their curve flattens so you need to get creative and keep it at a steep angle."

Offering new challenges and providing ways to increase their visibility to senior leaders can be highly motivating for these employees. It's also important to emphasize that opportunities for advancement will be available once the economy improves, even if a promotion isn't imminent right now.

"Give them a sense that they play a critical role in helping the organization pull through and when things do turn around, they will personally benefit," Mondal said. "If they can stick it out and ride the surf, they can become future business leaders and grow within the company.”

8. End on something positive

Overall, you should end performance reviews on "an optimistic note," Knight writes. "… Show gratitude for their hard work and remind them of 'their true north star,' whether it's delivering top-notch services or products to customers or coming up with innovative solutions to problems or creating a supportive work culture."

"Make sure they understand that they are valued," Sedatole said. "Tell them: 'Your work matters and here's why.'" (Knight, Harvard Business Review, 12/20)

Managers and team leaders can use our guide to account for effects of identity when guiding employees through quarterly performance conversations. This tool is designed to initiate effective conversations around the employee's strengths, areas of improvement, and plans to meet career objectives while considering how identity and values can affect feedback.