Annual Review Template

July 29, 2021If you run a small business with at least a few employees, chances are you'll have given them some kind of evaluation or review. On the other hand, if you're just starting up and hiring your first team, or are a new manager and have never had to review an employee's performance before, it can be a little nerve-wracking.Performance reviews are a vital part of your employee's career development, but it's common for both leaders and employees to view them with dread. With particularly bad annual reviews, managers struggle to know what to say and their direct reports leave not knowing how to improve or even if they're really doing a good job. Badly run performance reviews are a turn-off and can demotivate your team. An engaging performance review helps people progress in their careers and gives them a clear path for development, improvement and a concrete action plan that their managers can track. A well-run performance review highlights the behaviours you want to see in your employees and celebrates the wins. As well as letting them know what their direct reports have done right, a good manager will also highlight areas where they can improve, and won't shy away from giving critical feedback. Believe it or not, people want to receive criticism where it can help them improve. One study found that 92% of the respondents agreed with the statement, “Negative (redirecting) feedback, if delivered appropriately, is effective at improving performance.”Ideally, you will hold regular reviews and feedback sessions with your team, but at the very least you should hold an annual review to go over their goals, successes and career development. By setting out a clear plan for how your annual review will run, you can accurately gauge your employee's performance over the year and work out how they can best improve and continue to contribute to your business. This will also help to reduce any butterflies you might be feeling since you have planned out what you're going to say.

How do I hold an engaging annual performance review?

It's vital that you hold performance reviews that motivate and engage your employees. Just asking "How's it going?" or "Where do you see yourself in 5 years time?" won't cut it, and will likely lead to a monosyllabic reply followed by an uncomfortable silence. Instead, you need to plan what you're going to ask, work out beforehand what areas your employee needs to work on, and map out how you as their manager can help them achieve their goals. By creating an agenda, which you can fill out ahead of time using our handy template, you can create an annual performance review that is helpful to you and your direct report. You can share this template with your employee ahead of the meeting, giving them ownership of it which will help them stay engaged with the process.It's also important to make sure that you have the right set-up to lead a performance review. This isn't a conversation to have by the water cooler, or just as you're heading out the door. You need to show your employee that you care about this review by carving out time to meet with them and banning all distractions. If you demonstrate that these annual reviews are important to you, then your team will pick up on your behaviour and will be more likely to treat them as a vital part of their development.Once you've set the tone and created an agenda that you and your team can get on board with, you'll have an engaging performance review process that you can put into practice each year, and even more often.

Set the scene

Before you hold any kind of performance review with an employee, you need to find a space to talk that is quiet and private. Your employee is hardly likely to open up to you if you hold this conversation out in the open, and it'll be hard for either of you to be honest with each other. Criticism (which should always be present in any performance review) should always be delivered in private, and you can't do that if you're holding this review while perched on the employee's desk in front of other team members.Book a meeting room or a private space ahead of time. Make sure that it is quiet and free of distractions so that you can give your direct report your full attention. Put the meeting in your and your direct report's calendars so that neither of you is tempted to cancel it.Speaking of distractions, make sure that your phone is switched off. You don't want to be tempted to check for emails or pick it up if it rings. Turn it off and put it away. Close your laptop and focus entirely on this meeting.This is a meeting that should be kept face-to-face. If you're nervous about delivering criticism then it can be tempting to hide behind an email, but you'll pick up more on non-verbal cues and body language if you meet in person. In COVID times, it might not be possible to meet up, especially if everyone hasn't been vaccinated yet and some people may be nervous about coming back to the office post-lockdown. If this is the case, then schedule a video call (not just a phone call). As with face-to-face meetings, this should be done in a quiet space, away from others.

Set stretching goals

During your annual reviews, you and your teammate will go over the goals that they have achieved, and what they hope to achieve in the upcoming year. You should help them to set goals that are achievable but motivating. To do this, set "stretch goals". These are goals that go above and beyond what is expected. They encourage people to get outside their comfort zone, push a little harder and really challenge themselves.Rather than you setting goals for them, your employee should choose the goals themselves. You can help to guide them, but by picking their own goals, they will feel ownership over them, giving them a sense of autonomy which is also extremely motivating.

Give open and honest feedback

During an annual review, you have the chance to offer feedback to your employee. When giving feedback it should be honest, fair and specific.It's important to let your employee know that you want an open and honest dialogue with them, which you can do by giving them feedback that is fair and clear. This includes critical feedback. Show your colleague that you care about them and want them to improve by taking time to get to know them. When you offer criticism, be sure to include guidance so that they know how they can improve.To keep the conversation going, you should also give your employee the opportunity to offer feedback to you. Show them that you can take feedback as well as dish it out. During your annual review ask your direct report if they have any feedback for you. You can also do this throughout the year simply by asking people what they think you should have done differently after a pitch, a meeting, a presentation, anything. It can be tough to give the boss feedback, so treat the feedback as a gift and say thank you.If they do give you criticism, or make suggestions, make sure that you follow up on this, or they'll be discouraged from doing so again. When you offer praise, make sure that you are specific. Instead of just saying "great job" say "you did a great job when you...". Make sure your employee knows what behaviours you want to see more of, and what you want to see less of.

Focus and listen

It's common to daydream when other people speak to us, but during an annual review it is vital to give your employee your whole focus. Most of us think we're good listeners, but in fact, research has found that we only remember 25%-50% of what we hear. Give your employee your full attention, rather than crafting a reply in your head really pay attention to what they're saying.This annual review is more for your employee than it is for you, so don't treat it as a lecture. Listen more than speak. If an awkward silence falls, don't be tempted to fill it with chatter. Instead, wait for your employee to speak up, or just say to them "go on" to encourage them to elaborate.A good way to show that you've listened and understood what the speaker is saying is to paraphrase what they have said back to them. For example, "I hear you saying that...". You can practice active listening by mirroring the speaker's body language, asking them questions and by holding off on judging the speaker.Less than 2% of professionals have had any kind of formal training when it comes to listening, so it's important to practice it with your employees. Not only does it show that you care, but you can learn a great deal from them and become a better leader.

Encourage a growth mindset

A growth mindset (a phrase first coined by psychologist Carol Dweck) is a mindset where people believe that they can grow and improve through hard work and practice, rather than being good at something through natural talent alone.You can nurture this kind of mindset during an annual review (and throughout the year) by rewarding effort and hard work, as well as the outcome. You can also encourage your employee to work on improving a skill, by telling them "you're not there yet", implying that they will get there eventually.

Confirm the next steps

There's no point in having an annual review if you both go away and forget everything. You'll need to confirm the next steps with each other.Confirm with your employee how you will track their success. Decide on the metrics that you'll use to measure their goals and track their progress.Share a copy of the review template with your direct report so that they have a reminder of everything that they've done well, and know what they need to improve on.After the annual review meeting, send a follow-up email to your employee, asking them how they're feeling after the review and to make sure that they're happy with the next steps. Give them time to reflect on their accomplishments and where they want to go next.

How do I track employee goals?

There are several ways that you can help your employee keep track of their goals. One way is to refer back to them in regular one-to-one meetings. Ask how it's going and whether the goal needs to shift, especially if there has been a recent change in priorities.You could also ask your employee if they would like to make their goal public and visible to others in the company, as another way to hold them accountable. The whole company can then step up to cheer them on, which can be very motivating and a nice little boost!There is also a range of apps and software which can help you track employee goals and monitor objectives. Some of these solutions also offer collaboration tools that may be useful to companies working remotely following the COVID-19 pandemic.

Informal feedback throughout the year

Feedback shouldn't be limited to once a year performance reviews. You can encourage a culture of feedback in your business by offering regular informal guidance throughout the year.This can be done by simply saying "can I give you some feedback?", preparing your colleague to receive feedback and putting them in the right frame of mind. It also keeps things informal, by giving feedback in the moment, rather than waiting for a meeting or an appraisal. Keep it specific and timely, don't wait until too long after the event.The key thing to remember with feedback is to offer praise in public and to do it often. When it comes to criticism, this should always be done in private and face-to-face (either in person or via a video call).You can also model the behaviour you want to see by asking your colleagues for feedback. If you show that you're willing to accept criticism, then your colleagues will feel more comfortable with it as well.

Create an annual review template

Before you sit down for your next annual review, you should create an agenda and write down a list of questions to ask them, and include ones that link to their goals. Your colleague should also have the chance to reflect on their goals, strengths and weaknesses, so it helps to share this agenda with them.We've created a template for you to download and use, and we've also created a guide below of what should be included in an annual review. There are other items that you can include in your performance review so don't feel constrained by what we've suggested. Use our template as a starting guide, then add any extras and edit it as you see fit.

What should be included in an annual review?

An annual review is a great time for you to discuss your employee's goals and priorities for the year ahead. It's also a good time to reflect on the core competencies of the role, which might have changed over the year. You can also use this time to reflect on their strengths and weaknesses, and how they see their career progressing over the year.You know your business and your team better than anyone. If there are extra things that you want to include in your annual review, feel free to get creative!

Key goals and expectations

You can use this time to talk about personal goals and company goals. Think about how they can align their career goals with the company goals so that they can feel a part of the big picture and can see how they are contributing to the business.To make sure that you and your employee can measure the success of their goals, you can use the S.M.A.R.T goals framework. S.M.A.R.T goals are:
    SpecificMeasurable
    AchievableRealisticTimely
Ask your colleagues lots of questions to help them clarify their goal, and make sure that they have a deadline to achieve the goal.

Core competencies

How is your direct report measuring up against their job requirements? Write down the key requirements of their role and how well they are doing for each one. Your direct report can also give their own perspective on this. Do they think they are doing well in areas you feel they could improve? Now is the time to tackle this.

Strengths and weaknesses

Again, this is something both you and your employee can offer a perspective on. Offer lots of praise for their strengths, and remember to keep it specific.On their weaknesses, give plenty of evidence and never let it get personal. Now is the time to act like a coach, and show them how they can improve.This meeting is a chance to deliver some vital constructive criticism. One good way to start the conversation is "Can I give you some feedback?" That way, the other person is mentally prepared to hear it. Above all, be specific when offering criticism. For example, instead of saying "You're always late" or "You always interrupt me in meetings" give specific instances and dates. Then, offer support to help them improve. This shows you care about them and want to see their best work.Be clear on the behaviour you want to see from them going forward. Give them every chance to succeed by being clear on the next steps. Some managers struggle with delivering harsh criticism and are tempted to focus only on the positives. It's fine to tell your employee what they're doing well, but if you need to offer criticism as well, get to the point. As long as you're being clear and focusing on the behaviour, and not the person, then you're being fair.

Career development

As well as reflecting on the past, you can use this time to focus on the future. How do they want their career to progress? Is there a promotion that they have their eye on? Discuss how they can achieve that and the next steps that they should take.They may also want to learn something new or gain new qualifications, so don't focus on just the promotions aspect.As well as long term goals for career development, don't forget to talk about short term goals, and how these can help them meet their aspirations and career development ambitions.

Example questions to ask in your next annual review

    How are you enjoying your current role?What are you most excited about in the upcoming year?What accomplishments are you most proud of?How can I help you achieve your goals?Are there any blockers that stop you from achieving your goals?What is your top strength, and how does it help you in your role?

Summary

A performance review provides great value to you and your employees. Lead an annual review that is engaging and helpful by preparing in advance and using our template to make sure that you have a structured meeting planned with plenty to discuss.

Annual Review Template

Conducting an employee's annual review soon? Download our free annual review template to get yourself set for a productive catch-up.