Conducting a Performance Review…That Actually Improves Performance

Most small business owners dread delivering performance reviews.

And let’s be honest, most employees roll their eyes. Far too many view it as a waste of time and don’t see the point. Why? Because when it’s done, nothing really changes.

There’s a problem with how many companies approach the performance review.

But when done right, a performance review becomes one of the most powerful tools businesses have to align goals, develop the team, and build long-term loyalty.

In this post, we’ll break down how to conduct a performance review that actually works for everyone, and how they can lead to clarity, accountability, and growth.

What’s Wrong with Traditional Performance Reviews?

Most businesses do performance once a year. The problem is that this once-a-year, check-the-box approach doesn’t work. It’s outdated, awkward, and often disconnected from real-time performance. It can potentially leave real problems unaddressed for far too long.

Here’s what typically goes wrong:

• Poor behavior was tolerated for weeks, or even months.
• Reviews are vague and inconsistent.

• Feedback is either too soft or overly critical.

• There’s no follow-up or action plan.

• Managers lack training, structure, and appropriate accountability.

• Employees leave feeling confused instead of motivated.

The result? Missed opportunities, disengaged team members, and wasted time.

What a Great Performance Review Looks Like

A well-run performance review creates alignment between the employee and the business. It builds trust, clarifies expectations, and sets the tone for the next 90–180 days.

Here’s what it includes:

• Preparation: Both parties come ready to discuss wins, gaps, and goals.

• Structure: Clear agenda (past, present, future) and performance categories.

• Honesty: Direct but respectful feedback with real examples.

• Dialogue: Employees talk just as much as managers or supervisors.

• Follow-up: Written notes and action items with accountability.

It’s not about judging someone. It’s about helping them grow in the right direction. And remember this above all: There should be nothing new on the performance review! Any performance issues should have been discussed and addressed before the date of actual review with real time leadership management.

Step-by-Step: How to Run a Strong Performance Review

1. Prep Ahead of Time

Do not wing your performance reviews. Spend time reviewing goals, metrics, and prior feedback to the employee. Ask employees to self-evaluate prior to evaluation using the same categories you’ll use (hint: use the job description). Give them a few days’ notice and the structure you’ll follow.

2. Start with Positives

Begin by recognizing what’s gone well. Be specific. Don’t just say, “Good job.” Make it clear and specific, more like, “John, I appreciate the way you stepped up during the March sales initiative, you exceeded our Company expectations in calls per day and overall new clients.” Now the employee knows what they did that was good, and how to repeat it in the future. Continue to highlight wins, growth, or contributions. Set a supportive tone from the start.

3. Address Gaps and Opportunities

Talk through necessary areas of improvement. Be direct, not harsh. Like the positive, use specific examples. Ask how they’ve experienced those challenges, what support they need to grow, and the standard used to measure progress.

4. Discuss the Future

Where does the want to grow? What are your expectations for the next quarter or year? Co-create 2–3 key goals or focus areas. This gives them purpose and direction for the future.

5. Document It All

Summarize the performance review in writing. Outline what was discussed, agreed upon, and committed to. Have the employee sign the document, then share a copy with them revisit it at the next check-in.

How Often Should You Do Performance Reviews?

At a minimum, an employee should be reviewed every year, usually from their initial date of hire. More ideally, every 6 months. This keeps the growth tangible and speeds up the review time, leading to sped up success.

What about for high-growth teams or new hires?

Every 90 days.

More frequent reviews mean smaller course corrections and stronger relationships.

The ROI of a Strong Performance Review System

Done well, your performance review system becomes a growth engine:

• Employees get better faster.

• Managers lead more effectively.

• Teams communicate with more clarity.

• Turnover drops.

• Accountability increases.

That’s not just good for culture, it’s great for business, and will actually deliver the results the business is after.

Ready to Build a Review System That Works?

We help small businesses design performance review systems that are simple, fair, and effective, so you can grow your team without the stress.

Book a free consultation and let us calculate the ROI of HR for your business before your next hiring or compliance mistake costs you.