How to Conduct an Excellent Performance Review

Because performance reviews can be highly emotional, especially for the employee, it is best to approach a review with a specific agenda in mind. Plan in advance what you are going to say during each part of the review. Make sure you can successfully deliver the message you intend regardless of the employee’s response.

Your Greeting Sets the Tone

Start the review with a warm greeting and perhaps some very brief small talk to help relax tensions and create a more conducive atmosphere for the review.

Next, unless the employee’s performance is totally unsatisfactory, I would tell him that you appreciate his work, appreciate his being part of your company, and that you view his contribution as significant. Every employee, especially every full-time employee, is at least at this point in time giving a significant portion of his or her life’s effort in helping create value for your company. Employees care about their work, they want to feel appreciated, and they want to feel appreciated by you.

Lead with the Summary

Make sure that the employee understands exactly how her overall performance ranks. Summarize the overall performance first, and then explain what the rating means. Don’t announce any salary changes at this point. If you don’t give the summary at the beginning of the review, the employee will spend the rest of the review trying to figure out what her overall performance is, based on your comments.

The employee may want to discuss the rating immediately after you offer it. Try to put this off until you have been able to thoroughly review the employee’s strengths and weaknesses.

Strength Before Weakness

Unless an employee’s performance is unsatisfactory, compliment him on both major and minor strengths as they relate to the job. Avoid saying anything negative until you have reviewed his strengths. You can be either specific or general in describing strengths.

Weaknesses Are Areas for Improvement

Unless an employee’s performance has been truly exceptional, you should provide feedback on areas of weakness, or at least suggest room for improvement. In reviewing weaknesses, be as specific as possible. For example, rather than saying, “You have a poor attitude,” cite a specific example of her behavior, such as “You are often late for company meetings and several times throughout the year you complained incessantly about company policies.” 

Be a Good Listener

After you have discussed an employee’s weaknesses, you should give him an opportunity to air his thoughts. Listen politely until the person is done. Avoid being argumentative, but do let the employee know that his feedback has not affected your review. For example, you may want to say, “I understand that you don’t agree with what I have said, but my perception of your overall performance remains as I have stated it.”

If the employee contests your review and you are fairly sure that is appropriate, you could offer to give another performance review at some point in the future. If you do this, I suggest you set the time point at least three months into the future so you can measure whether the employee’s improvement is sustainable. Remember, however, that you are probably setting the employee’s expectation up for a better performance review at that time.


Recap the employee’s overall performance rating. Announce the new salary, if any, and the date on which the new salary will be effective.

Close on a Positive Note

Unless the employee’s performance is truly unsatisfactory, try to end the review on a positive note. You might say, “The company and I very much appreciate your work, and we are glad to have you here!” Or better still, I would also try to find a few positive points to build on, to make the employee feel good about herself and working at your company. Even if her performance were somewhat below average (but not really terrible), I would try very hard to end the review session on a positive note.

Takeaways You Can Use

  • Your employees are giving a good portion of their life to creating value for your company—be appreciative.
  • Lead with the summary to eliminate tension and anticipation.
  • Discuss strengths before weaknesses—it will make the employee more receptive to performance critiques.
  • Closing on a positive note will set the stage for future improvement.

About Bob Adams

Bob Adams is a Harvard MBA serial entrepreneur. He has started over a dozen businesses including one that he launched with $1500 and sold for $40 million. He has written 17 books and created 52 online courses for entrepreneurs. Bob also founded BusinessTown, the go-to learning platform for starting and running a business.