What is Performance Review? Made Clear with 6 Steps

What is performance review? Learn more in this complete article that also explains how to make effective performance review

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What is performance review? If you work in a company, no matter your role, you might have heard the buzzword “performance review”. You might know already that performance review is a way to assess how you are doing at work, but what is performance review exactly? How it is done, why it is done, and what are the common pitfalls? In this guide, we will see everything you need to know about performance review.

What is Performance Review?

We can start by directly answering the question “what is performance review?”. The following definition represents performance review.

Performance review is a periodic discussion a manager has with each of his employees to see how they are doing and how they can improve.

We can now break down this definition to better answer “what is performance review?”. Let’s start with the first part of the definition:

Performance review is a periodic discussion

The point here is that performance review is a meeting, either face-to-face or in videoconference, but it is a meeting, a moment of encounter and discussion. It is periodic, so it should be repeated every now and then, at regular intervals. How often depends on what you are trying to achieve, what is the nature of the organization, and the nature of the manager-employee relationship (more on this later).

a manager has with each of his employees

Here we are answering the “who” of “what is performance review?”. In this discussion, you have the manager and each of his employee. This means the manager will have a separate discussion with each and everyone of his employee, not a group discussion. This point is crucial because it allows the discussion to be more transparent and candid.

Another important thing to remember here is that the parties involved in each performance review are the manager and the employee. The manager is the one defining the work of the employee, and defining what performance is acceptable and what isn’t. Instead, the employee is the one actually doing the work and thus having the performance.

to see how they are doing and how they can improve.

Finally, the last step is about the content of the performance review meeting. If you were asking “what is performance review?”, probably this is what you were looking for the most. During this meeting, the manager and the employee review what were the objectives, if they were met or not, what is the gap between expectations and reality and so on.

Another important point most people don’t focus enough of their attention here is “how they can improve”. Performance review should also about correcting any issue, filling the gap. This is important, because if this is not discussed the gap will always remain there.

How to do Performance Review Effectively

Okay, now you know the basics of performance review and you can surely answer “what is performance review?” easily. But how do you actually do one? Whether you are the manager or the employee, knowing what an effecting performance review can help you a lot.

If you are the manager, knowing how to do an effective performance review will help you get the most out of your team, have more productive meetings and save time overall. Instead, if you are the employee, it will allow you to assess if the organization is putting enough emphasis on your development, and if they are managing your performance clearly.

So, let’s start to understand how to do performance review effectively.

1.  Have a Plan

We all know “failing to plan is planning to fail”, and this is true also with performance review. You should never approach performance review casually, but have a clear understanding of how to go about it. This plan should be created for each employee, to include details specific for the performance of that employee and should be reviewed periodically.

What is performance review? Should it be planned! Yes, documenting performance review ensures more consistent results
Like anything, also for performance review you should plan before acting.

This plan is nothing more than a simple text document that you can create with Microsoft Word, a few pages long should suffice. The goal of this document is to answer the following questions.

  • Who is involved in the process? Write the names, typically of manager and employee
  • What are the performance objectives, what do the employee must reach? Be specific, use numbers and metrics (e.g., “increase revenue” is a bad objective, “increase revenue from the airline market by 4%” is good).
  • For each objective, by when should it be met (the deadline)?
  • Why the objectives are important for the business? For example, reaching sales quota will allow the company to enter a new market. This is important because it allows the employee to see the bigger picture
  • Are there any consequences for the employee, positive or negative, for meeting the performance or not? For example, bonuses, disciplinary actions etc.
  • Optionally, some resources that can better help the employee understand what to do and give him the tools needed to succeed, if relevant (for example, a sales training, a link to download software needed etc.)
  • How often will you have the performance review meeting?

If you answer all these questions in detail in your performance review document, you are already ahead of the pack. It is now time to dive deeper into this document to understand better what is performance review, and how to make it effective.

2. Separate Performance Goals from Developmental Goals

In the performance review document, you will always have two types of goals: performance goals and developmental goals. They are both important, but it must be made clear what is what.

  • A performance goals is about things that need to be done to make the business succeed. It is about the employee’s job responsibilities, for example meeting sales quota, delivering a software on-time, opening a new production facility, and so on.
  • Instead, developmental goals are a little “detached” from the business and focus more on developing the employee, making his skills grow and fostering his career. They are things like taking an online course, obtain a certification from a vendor, learn a second language, and so on.

Developmental goals are not there just for fun, they should make employee better in a way that supports the business. For example, if the business as a strong presence in the Spanish-speaking Latin America, learning Spanish can be a good developmental goal (depending on the role). However, learning French would not be a good developmental goal, because having this skill adds no value to the business.

Performance goals are what keeps the light on, and they should be very precise with specific numbers so that it is clear if they are met or not. However, just with performance goals you would be exploiting the employee and he will soon leave. So, you need to think strategically and define some developmental goals that can make the employee better off, while also increasing the value of the employee to the business.

In your performance review plan, have two clearly separated sections to make clear what is developmental and what is performance, as missing a performance goal is typically more critical.

3. Do it together, from the beginning

At this point you might be storming with ideas, and if you are a manager you probably have already in mind the killer performance review document that will amaze your employees, that will make them so happy and also make the business so much better off. That’s great enthusiasm, but performance review is never pushed from the top down.

In fact, answering “what is performance review?” we know that it is a mutual process, a discussion where both the manager and employee have their voice.

The better approach is to study well what should be included in the performance review plan (see point #1), and then walk in in a first meeting with the employee with a blank document (you can always use a template, of course). Write the document together with the employee, ensure it is doable and that the employee is motivated.

Of course, this does not mean you have to compromise on goals, but it means you can start to sense at the beginning the goals the employee feels he can do with no problem, the one he is enthusiast about, and the one he is trying to push back. You need to evaluate yourself as a manager if the pushback is reasonable or not, and if it is acceptable for the business or not.

The two main benefit of this approach is that you ensure the employee understands the goals, and you increase his commitment. In fact, research has shown that we are more inclined to meet objectives that we participated in defining, as opposed to objectives pushed onto us by others.

So, don’t wait for the objectives to be defined to sit with your employees. Define them together!

4. Provide immediate feedback

Whether things are going good or bad, provide immediate feedback to the employee. Do not wait for the performance review meeting, acknowledge things in the moment, even as they are small.

Why this? Because you are reducing the feedback loop, allowing the employee to immediately understand and reinforce what he is doing right, and promptly correcting what is doing wrong. If you wait for the performance review, you will have a lot of bad behavior that went uncorrected for a long time, and the employee is typically unaware of that – in fact, he often thinks he was behaving as expected from him.

With feedback, the golden rule is to provide it early and often. Many small feedbacks are better than one big feedback.

I recommend also to take note of the feedback you give through the year so that you don’t forget about past performance or that many smaller achievements are not overshadowed by one big failure (or vice versa).

5. Meet, discuss, and document

Finally, you should regularly meet with your employee and discuss how performance is going with the performance review document in front of you. You should revise it and edit every time, to make it fresh and current.

What is performance review? It is a discussion between manager and employee, like here the manager is trying to present a concept to his employee
Performance review it is about discussing, and it is often better when done face-to-face.

Review each objective one by one and see where you are at. Evaluate if the employee is focusing on developmental goal “forgetting” about performance goals, or vice versa. Don’t forget to probe the employee for morale, ensuring he is satisfied by both the work and the objectives. Morale can’t be too low for too long; people will jump ship and search another employer.

Most importantly, listen before speaking, and make sure the employee understand he can and should speak candidly and his voice will be heard.

Update the document with the outcome of the discussion so that it is documented. It should be made clear which part of the document has been added when, so it is often useful to create a new section at the end named with the date of the performance review. After the meeting, shar the document with the employee and ask him to certify it is correct and integral. This will ensure the employee understand what is going on and will give you a better standing in legal terms in case of employment lawsuit.


Whether good or bad, no surprises. Performance review is not a Christmas gift, it is a business process and should be treated like that, with professionalism.

If the employee is not performing well, it should be made clear to him with early and often feedback, without sugarcoating it, and ensuring he is getting the feedback immediately. On the other hand, if the employee has outstanding performance it should be made clear to him.

If you come in the formal performance review meeting with feedback never heard before (aka “a surprise”), it won’t be good for anyone. It will simply create a disconnect between you and the employee, whether the feedback is good or bad.

Why can a “good surprise” create a disconnect? Maybe the employee did something great by chance and didn’t know that this was the best way to work. If it was clear to him from that moment, instead of waiting for the performance review, he might have applied the same approach to other circumstances, resulting in even better performance. In other words, a good surprise withholds the employee from growing immediately.

What is Performance Review, in Summary?

We can close simply restating the definition of performance review, which better answer the “what is performance review?” question and that should now be crystal clear to you.

Performance review is a periodic discussion a manager has with each of his employees to see how they are doing and how they can improve.

Finally, let’s briefly recap what makes performance review good and effective:

  1. Have a plan, a formal document that describes how you will manage it
  2. Separate performance goals (business objectives) from developmental goals (employee growth)
  3. Create the document together with the employee
  4. Provide feedback as things happen, don’t wait for the performance review meeting
  5. Meet, discuss openly performance, and document the discussion in writing
  6. Never, never, never come to a meeting with “surprise” feedback

If you are interested in learning more about Performance Review, you can take this Human Resource Management course by University of Minnesota on Coursera. Instead, if you want to be more effective in meetings in general, learn how to take effective meeting minutes in this quick read.

Picture of Alessandro Maggio

Alessandro Maggio

Project manager, critical-thinker, passionate about networking & coding. I believe that time is the most precious resource we have, and that technology can help us not to waste it. I founded ICTShore.com with the same principle: I share what I learn so that you get value from it faster than I did.
Picture of Alessandro Maggio

Alessandro Maggio

Project manager, critical-thinker, passionate about networking & coding. I believe that time is the most precious resource we have, and that technology can help us not to waste it. I founded ICTShore.com with the same principle: I share what I learn so that you get value from it faster than I did.

Alessandro Maggio