How to conduct a performance review [with template]

In this article, we’ll discuss what performance reviews are, how to conduct them in the modern workforce, and how to solve some of the issues that the process poses. We’ll also detail how performance reviews can feed into an overall feedback culture that builds trust between employees and the organisation.

A performance review is a formal evaluation process where managers and employees discuss job performance, achievements, challenges, and future goals over a specific period. This structured conversation goes beyond day-to-day feedback to provide a more comprehensive assessment of how an employee is contributing to the organisation. It also offers an opportunity to discuss pay and benefits. 

A performance review both reflects and looks forward. Past performance can dictate any goal setting for the future and can affect discussions surrounding progression and pay. 

What are the different types of performance reviews? 

Organisations can take several approached to performance reviews. Annual reviews are the most traditional format of performance reviews; however, both employees and organisations are now moving away from this model as 12 months is a long time to reflect on. It’s no wonder that Deloitte reported that 64% of employees view traditional performance reviews as a “complete waste of time” that don’t help them improve. As such, organisations need to look for more engaging ways to assess performance and support progression. 

Quarterly reviews offer more frequent touchpoints, allowing for course corrections and maintaining momentum on goals throughout the year. This approach tends to keep development conversations fresh and relevant, rather than trying to recall achievements from many months prior. 

The 360-degree review takes a more comprehensive approach by gathering feedback from multiple sources. This can include supervisors, peers, direct reports, and sometimes even external stakeholders like clients. Peers can also include mentors and allocated buddies, which can offer a slightly different response than those higher up the management chain.  

All these forms of performance reviews can feed into a continuous feedback culture, where feedback flows regularly. Real-time recognition systems reward employees for their day-to-day impact, which can promote trust, loyalty, and performance. For more benefits of a continuous feedback culture, read our blog, ‘How can a continuous feedback culture transform performance?’.

What is the purpose of and what are the benefits of performance reviews? 

Performance reviews can create a sense of accountability and trust by establishing clear expectations and measuring progress against defined goals. Trust is an important theme when it comes to human performance management as Deloitte point out in their 2025 Global Human Capital Trends survey; 61% of managers and 72% of workers could not say that they trust their organisation’s performance management process. This also pulls all employees and teams together under a shared understanding of what organisational success looks like. Paired with a continuous feedback culture, these expectations can then be re-assessed and responses to them can be more agile. As a result, organisations are more prepared to react to a fast-paced environment. 

From a development perspective, reviews provide structured opportunities to identify skill gaps, discuss career aspirations, and create targeted improvement plans. They also offer another platform for recognising achievements, on top of the day-to-day recognition as part of a continuous feedback culture. 

For managers, performance reviews provide valuable insights for making decisions about promotions, compensation adjustments, and resource allocation. They also help identify high performers who might be ready for additional responsibilities or struggling team members who need additional support. It’s important to have agility when these gaps or shortcomings pop up; regular feedback and more frequent performance reviews can give managers the ability to be proactive. 

Are performance reviews effective? 

The results of performance reviews can often depend on the effectiveness of the implementation. The overall strategy will also impact how successful your review process is. For example, if you stick to the traditional method of yearly performance reviews, staff are far less likely to be engaged, as they may be unsure of their goals. 12 months is a long time and business (and life) moves incredibly fast. 

Gallup note in their research that only 23% of employees worldwide (and 9 out of 10 in the UK being not engaged or actively disengaged) fall into the "engaged" category. They continue to emphasise that employees who receive regular feedback are more engaged, and that effective feedback is timely and relevant, which is strongly linked to one-on-one interactions. 

There’s an element to stress further; performance reviews as part of a continuous feedback strategy can be effective. However, independently, they may fall short. Gartner report that fewer than 18% of HR leaders believe performance management is effective at achieving its primary objective. Focusing on the human element of performance management is ultimately most impactful. A continuous feedback culture where managers build trust with employees can positively impact how effective performance reviews are. As relationships develop, this two-way relationship can find innovative ways to tackle issues with performance and progression. Employees may then feel more appreciated and fulfilled. 

Conducting an effective performance review requires thoughtful preparation. In the next section, we’ll explore what makes a great performance review template, but first, here’s how to structure the meeting itself. A well-run review often marks the difference between a meaningful development conversation and a tick-box exercise.

1. Schedule adequate time

Begin by allocating sufficient time for the discussion. Most meaningful reviews require at least an hour, sometimes longer for senior roles or when significant development planning is needed. Rushing through a performance discussion sends the wrong message about its importance. 

2. Set a collaborative tone

Rather than positioning yourself as judge and jury, frame the discussion as a partnership focused on growth and success. 

3. Begin with achievements and strengths

Structure the conversation around key themes rather than rigid agenda items. Start with what has gone well, where the employee has exceeded expectations, and what they're most proud of accomplishing. This positive foundation helps maintain engagement throughout more challenging discussions. 

4. Frame development areas as opportunities

Move naturally into areas for development but present these as growth opportunities rather than failures. The language you use matters enormously here. Instead of "weaknesses" or "problems," consider phrases like "growth areas" or "skills to develop further." This subtle shift in terminology can dramatically change how feedback is received and acted upon. 

5. Encourage dialogue throughout

Ask open-ended questions like "Where do you feel you've grown the most this year?" These questions invite reflection and ensure the employee remains an active participant. 

6. End with future-focused discussions

Reserve time toward the end of the meeting for career aspirations, development opportunities, and resource needs. If you’re looking to learn about ways to support progression in your workforce, read our blog on ‘10 strategies to support employee progression’. This ensures the review doesn't become entirely focused on past performance but also addresses future potential. 

All of this information can be found in an effective performance review template. Producing a template for your organisation can be impactful as it standardises your review process. 

As we’ve mentioned, an effective performance review template can promote consistency whilst also providing flexibility for meaningful dialogue. The framework a performance review template provides should capture all the necessary information but leave plenty of opportunity for the conversation to flow naturally. 

Performance categories – technical skills and behavioural tendencies 

Your template will benefit from clearly distinguishing between technical capabilities and behavioural competencies. Technical skills are more straightforward to assess, have clearer benchmarks and more objective measures of proficiency. 

Behavioural tendencies require more nuanced evaluation as they vary significantly depending on each employee. Behavioural categories can include: 

• Communication effectiveness 
• Collaboration skills 
• Leadership potential 
• Adaptability 
• Problem-solving 

As they’re soft skills, they’ll often have a larger impact on team dynamics and long-term success. Promoting positive behavioural tendencies and investing in their development can have a knock-on effect on business success. 

Keep in mind that different roles will have different requirements, therefore the criteria will change. A sales position may emphasise relationship building with clients, whereas project managers may need to prioritise organisational skills.  

Rating scale 

Generic rating scales can leave a lot of room for interpretation, which can cause confusion. When you can, use more specific terminology. For example, rather than just "excellent communication skills," describe what excellent communication looks like in practice: "Consistently adapts communication style to different audiences, facilitates productive discussions, and ensures complex information is understood by all stakeholders." 

Consider splitting out your rating scales to 5 descriptors, as opposed to just 3. A wider range gives the evaluators more room to distinguish between low, middle and high performers. Rating scales with 3 levels will often skew towards the middle, rather than the two extremes. 

Each rating level benefits from including examples of observable behaviours or outcomes that justify that rating. This allows employees to have a clear understanding of expectations at each level. 

Goal review section 

It’s beneficial to evaluate each goal separately and focus on not just whether they were completed, but how they were accomplished and what was learned in the process. Acknowledging the learning process, whether successful or not, can demonstrate to employees that progression and growth is important. 

Including space to document any changes made to goals throughout the review period acknowledges that flexibility and adaptation often demonstrate good judgement rather than poor planning. 

Much like the performance categories, measuring both quantitative and qualitative metrics can give you a fuller picture of an employee’s performance. Tracking both measures can also indicate to employees that their development is as important as the raw output. 

Achievements and strengths 

An achievement and strengths section in your performance review template works most effectively when you list measurable achievements. Encouraging documentation of both planned achievements and unexpected contributions that emerged throughout the year captures the full scope of employee value. These can be recognised throughout the year with employee recognition schemes; read our blog to learn more, ‘What are employee recognition schemes: a comprehensive guide for businesses’. 

Areas for development 

Framing this section around growth opportunities rather than deficiencies creates a more positive foundation for development conversations. Including space to identify specific skill gaps alongside concrete resources for addressing them. Resources can include training programmes, mentoring opportunities, or professional development courses. Mentoring is one of 10 strategies to support employee progression. This can transform potential criticism into actionable employee growth plans. 

Ultimately, this area is about shifting mindsets. Development areas are best viewed as an exciting challenge to build capabilities. 

Future goals and objectives 

Structuring this section to guide SMART goal creation (Specific, Measurable, Achievable, Relevant, Time-bound) without being overly prescriptive helps ensure meaningful objective-setting. We’ll address the SMART principle later in this article. 

Including space for discussing the resources, support, and authority needed to achieve these goals prevents common implementation failures. Often, goals fail not because of lack of effort but because of insufficient planning around what success requires. 

Self-assessment 

Encouraging reflection with open-ended questions can yield valuable insights. These insights can be far more revealing from employees in an organisation with a continuous feedback culture. In such a culture, openness is encouraged and welcomes because it supports growth across all employees. 

The self-assessment section can also reveal career aspirations that employees may have and what’s required to help them achieve those goals. From there, managers and employees can find the resources to aid those aspirations. 

Feedback 

Opportunities for two-way feedback are beneficial to the whole performance review process. Encouraging input from employees about the wider team dynamics and organisational factors can give them a sense of engagement and ownership. These discussions shift from being prescriptive to collaborative and focused on development. 

Employees interact with many members of different teams daily and may have valuable input that can contribute to how things work. For example, if an employee has a mentor from a different team, they can learn different ways of working that could be implemented. 

Action plan 

Concluding with a structured approach to translating review discussions into concrete next steps ensures that meaningful conversations lead to actual development. Documenting specific actions for performance improvement or development, complete with timelines and accountability measures, increases the likelihood of follow-through. 

Including provisions for regular follow-up conversations rather than waiting until the next formal review helps ensure action plans remain relevant, and progress stays on track. Shared accountability is also important as employees and managers need to be aware about the specific steps they need to take to fulfil action plans. 

Effective performance review comments strike a balance between being specific and actionable. When addressing areas for development and progression, focus on framing them as growth opportunities rather than fixing shortcomings. The key is supporting every comment with specific examples that illustrate your point. 

This approach makes feedback feel fair, relevant, and actionable, giving employees clear understanding of both what they've accomplished and where they can focus their improvement efforts moving forward. 

Effectively setting goals requires collaboration as both individual aspirations and organisational needs should be considered. When the employee and manager both contribute ideas towards goals, there’s a collective motivation to achieve them as they benefit everyone. 

The SMART framework provides essential structure for goal development but avoid treating it just as a checklist. The letters stand for the following: 

Specific – Goals should be clearly defined, which prevents any confusion 

Measurable – Needs to be trackable to encourage progress 

Achievable – Challenging but attainable to maintain motivation 

Relevant – Align with overall organisational and personal objectives and values 

Time-bound – Specific deadline to encourage accountability 

Development plans work best when they connect directly to goals and include specifics. Rather than simply identifying skills to develop, outline concrete steps such as training programmes, mentoring, project assignments, or cross-functional experiences that will build those skills. 

Performance reviews can suffer from several problems, particularly if they’re not supported by a wider culture of continuous feedback. To learn about how this culture can impact your organisation, read our blog, ‘How can a continuous feedback culture transform performance?’. 

The potential challenges can all be solved and we detail how below: 

• Recency bias – Continuous performance tracking and feedback can recognise and reward successes throughout, rather than being forgotten 
• Employee defensiveness – Constructive criticism that focuses on development can help to solve defensive reactions to reviews 
• Inconsistencies across teams – Standardised review criteria in the form of performance review templates 
• Poor preparation – Preparation checklists and templates 
• One-way communication – Self-assessment sections and dialogue prompts in templates 
• Lack of specific examples – Use the STAR (Situation, Task, Action, Result) method for giving feedback to promote clarity 
• Limited focus on development – Dedicated meetings to career pathing 
• Lack of action after reviews – Set deadlines and a follow-up schedule, alongside continuous feedback 

Managing performance reviews becomes significantly more streamlined when you have the right technology supporting your processes. PeopleXD Evo integrates all aspects of performance management into a single, cohesive platform, eliminating the need to juggle multiple systems or track conversations across different tools. This integrated approach ensures that performance discussions, goal tracking, and development planning all connect seamlessly, creating a comprehensive view of each employee's journey. 

PeopleXD Evo’s employee performance tracking capabilities provide continuous visibility into progress against objectives, making performance reviews more meaningful and data-driven conversations rather than periodic check-ins based on fragmented recollections. Regular check-ins become part of the natural workflow, encouraging ongoing dialogue between managers and team members throughout the review period rather than saving all feedback for formal annual discussions. 

PeopleXD Evo’s AI assistant Copilot can also surface the results of reviews almost instantly, allowing employees and managers to revisit any previous conversations quickly. This can help to transform a performance review into an ongoing development journey.