Performance reviews are an excellent opportunity to retain top talent, and not necessarily because raises in salary and other forms of compensation are often part of the process.  By handling reviews in the correct fashion, you can send the message that your employees work for a top-of-the line company.

Below are eight steps for creating an effective performance review process:

  1. Be willing to experiment—It’s not a good idea to implement an annual performance review process and then not touch it for 15 or 20 years.  It must be updated, modified, and tweaked from time to time.  There are a number of different methods you can use for your performance reviews.  These include peer reviews and upward assessments (which allow employees to review their managers).
  1. Solicit employee feedback—An effective review process includes the active participation of your employees.  Give your employees ownership, or input, into the review process.  This starts with some form of self-evaluation prior to the actual review meeting, usually in written format.
  1. Create the proper atmosphere—Set a positive tone for the review meetings by initiating some small talk beforehand.  Chances are good that your employees will initially be a bit uncomfortable (which is normal human behavior, considering the circumstances).  Make them feel more at ease before progressing to the next step.
  1. Start with their accomplishments—Discuss those things that you believe the employee has done well since their last review.  Be sure to offer sincere compliments if they are merited.  This will help to further create a positive atmosphere and better prepare the employee mentally for the next portion of the review—a discussion of their weaknesses and how they can be improved.
  1. Use examples—When discussing weaknesses, be sure to cite specific examples.  Don’t rely on vague generalizations.
  1. Ask for even more feedback—Offer suggestions about how the employee can improve their weaknesses and ask for feedback, as well.  Ask them what they might need to accomplish more and to do their job more effectively.
  1. Discuss goals and objectives—Set goals with your top employees for excelling during the next six to 12 months, and outline steps for improvement with under-achievers.  Come to a consensus about what should be done.
  1. End on a high note—This can be accomplished rather easily, if you’ve followed the steps outlined above and the review itself isn’t a particularly poor one.  Let the person know that they are valued as an employee and that you’re looking forward to working with them in the future.

If you have any questions about the review process, or any other question concerning employee relations or retention, contact me at