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PPERFORMANCE REVIEWS SHOULD be a time of energy and engagement, not a time of dread for both managers and employees. Managers can make sure that the right dynamic occurs, but it takes planning and a shift in priorities.

Typical performance reviews focus on the past, often with too much attention to an employee’s failings. While it’s fine to learn from one’s past mistakes, it’s more important to focus on what’s working and how to build on that going forward. To do this, a manager should set the foundation by analyzing skills, establishing clear goals, providing feedback throughout the year, emphasizing progress, and improving review skills by avoiding pitfalls. Because the process is designed to go beyond a standard performance review, it also helps to give it a new name—professional development planning (PDP).

Skills Gap Analysis

The manager should begin by analyzing the employee’s existing skills related to the demands of the position and determine both areas where skills are lacking and possible future career paths within the organization. What skills does the employee have now and what does he or she need to grow and move ahead in the organization? This is called a skills gap analysis, and it should form the foundation for the PDP process.

The month before the PDP meeting, the manager should prepare thoroughly by pulling together all of the observations and discussion points from throughout the year. The manager should double-check all the preparations to make sure there are no surprises. This would include a review of the job description and the performance development plan from the previous year, which can be compared to the employee’s actual progress.

With this preliminary information in hand, the manager should meet briefly with the employee to determine what additional topics should be discussed. The manager should then schedule a date for the PDP meeting, ensuring that there is sufficient time allotted to have a relaxed discussion.

The Meeting

Managers should first share with the employee the constructive purpose of the discussion. Many people get defensive about performance reviews, and managers can help reduce defensiveness by sharing their goals for the meeting. These goals are to focus on future performance and plans, not to go over every misstep the employee made over the past year.

The manager should let the employee talk first. Employees should give their input on job performance and identify career goals within the organization. By letting the employee take the lead, the manager gains insight and perspective. Also, identifying goals helps the manager further clarify what skills the employee needs to develop.

The manager should briefly give the employee concrete examples of how his or her behavior over the prior 12 months met or failed to meet expectations. Again, this backward-looking portion of the performance discussion is a small part of the meeting, so these issues should be reviewed quickly and without rancor.

None of the performance issues raised in the meeting should come as a surprise to the employee, because these incidents should have been discussed when they happened, but the review helps to put these issues into context.

The next step is for the manager and the employee jointly to identify strengths and areas for improvement. They should discuss what specific skills the employee needs to add or enhance to progress within the organization. The only way to help employees grow is to determine what they need to work on to advance their career goals. The manager must set clear priorities for the employee as well as follow-up dates to check progress.

Before ending the meeting, the manager should summarize the key points and show support, which will end the session on a positive note. Overall, PDP meetings should focus one-third on past history and two-thirds on future performance.

Following Up

The manager should follow up throughout the year on the goals set during the review meeting. Doing so entails keeping detailed records and observing the employee’s performance on a regular basis. Communication about performance should be ongoing. Workers should be given positive recognition immediately when goals are being met. Similarly, problems should be discussed at the time they are discovered.

It’s advisable to hold periodic impromptu meetings to give constructive feedback, especially when performance needs improving. This step is critical to avoid surprises during the annual review.

Managers should not hesitate to coach individual employees when necessary. Helping an employee get beyond any weaknesses, shortcomings, roadblocks, or skill gaps helps both the individual and the department as a whole.

Pitfalls

When discussing past acts, managers can fall into several traps. Each of these can damage a manager’s credibility and derail the review. Pitfalls include the following.

Halo effect. One of the most common errors is to generalize ratings, giving an employee who has done some things very well good ratings across the board. The employee is given a straight “A” report card, even though he or she may not excel in all areas. This can make it difficult to concentrate on improvements in the future.

Pitchfork effect. The pitchfork effect occurs when the employee has done something wrong that stands out in the manager’s mind and casts a pall over how the manager perceives everything else that the employee has done during that review period. It is the opposite of the halo effect. Sometimes the cause is emotional, rather than substantive; the employee’s performance may be average or above, but the manager dislikes him, resulting in an unfair review process.

Nondifferentiation. Managers afraid of insulting or praising employees rate everyone as average. This method has the most detrimental effect on high performers, who tend to leave jobs working for such managers as a result of this bias.

Immediacy effect. Managers who fail to monitor employees throughout the year or to keep adequate records tend to rely on the most recent performance when conducting a review. Obviously, that leads to inaccurate ratings.

Mixed motives. Some managers base their ratings on something other than performance. For example, a manager may avoid low ratings for fear of causing worker unrest. Another manager may refuse to rate anyone highly because he or she measures everyone against an unrealistic benchmark. Some managers are unable to separate their own performance from that of their subordinates. In these cases, a manager will ensure that subordinates will not exceed his or her performance rating—no matter how well they did.

Managers should consciously work to avoid these pitfalls. To help them do so, they should rate employees against well-established performance expectations and standards, monitor performance regularly, and hold ongoing performance discussions throughout the year. Rating people against an objective standard will ensure that reviews are thoughtful, productive, and unbiased.

PDP in Action

One of the Midwest’s largest and most successful automobile dealerships began using the PDP process with all 1,700 of its employees several years ago. The company refocused the review process, renamed it, and trained managers on how to conduct the meetings.

Specifically, the company decided to concentrate on guest service standards during the PDP meetings. Employees were given specific roles and knew what was expected of them. Within six months, employees reported that they were happier on the job, and managers noted that morale improved. Customer service improved and turnover was reduced.

Another measure of success was that one year after switching to the PDP process, the dealership won a major award in its industry—the Time/Goodyear Dealer of the Year Award. Managers attributed the award to a rededicated work force.

Ineffective managers allow performance reviews to be painful and demeaning experiences. A well-planned review process, by contrast, engages and energizes employees, improves productivity, and keeps workers focused on what is important—being a solid human asset within the organization.

Mick Hager is an expert in performance management and creating customer service cultures. He writes a weekly business column and is a business advisor, trainer, and professional speaker. He is the author of Monkey Business, 7 Laws of the Jungle for Becoming Best of the Bunch.