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Update that position's description. Identify expectations based on job roles/functions. Review last year's performance appraisal. Document the employee's performance. Get feedback from the employee and their co-workers. Give your employee regular feedback between performance reviews.
Before you begin reviewing an employee's performance, you should double-check that employee's description in your employment files. If the position's requirements or functions have changed at all in the last few years, that description will need to be updated.  It would be unfair to the employee to evaluate them based on outdated position descriptions. Recognize the work that employee has done and the work they're expected to do this year, not in years past. Update the description to include any special skills or knowledge required to do the work and/or any specific tools or equipment needed. In addition to reviewing the position description, you should also review the essential performance functions of that position. These functions will help you identify your own expectations for that employee. Performance functions vary by job, but they generally include:  Accountability: This covers whether the employee is reliable and consistent. Accountability may include punctuality, ability to meet deadlines, respect for the organization and its employees, and ability to meet or exceed performance expectations. Production standards: These should be objective, measurable accomplishments performed within specific time frames. For example, a person picking stock in a distribution center might be expected to pick 100 pieces an hour. Job knowledge: This may include the employee's professional skills, ability to assist coworkers, and willingness to continue developing their knowledge and abilities. Required knowledge might also include operating, maintaining, and instructing others with special tools and equipment. Communication: This may include communication skills, or it may cover an employee's ability to work collaboratively and seek feedback from other employees. Interpersonal relations: This generally deals with how the employee treats their colleagues, and whether the employee is tactful and respectful of others. Customer service: If the employee's position involves customer service, you may want to include evaluations on patience, approachability, reliability, and the employee's commitment to following up with customers as needed. As you prepare to assess an employee's performance over the past year, it's important to review what you (or perhaps another manager) said about that employee last year. There may be significant improvements made, or the employee's performance may have gotten worse; either way, you should know in advance where things stand. Look into performance reviews for the past three years, especially noting whether such reviews have been performed by other people. Note any employee comments about past reviews. The best way to begin a performance appraisal is to document the work that a given employee has done. Take note of both what the employee has done in their position and how they did it, whether the things you document are good or bad. Reviews should be as objective as possible based upon viewable, measurable results. If subjectivity is required, note justifications in the review.  In order to complete a performance appraisal, you will need to decide on some type of measurable, quantitative method of documenting and evaluating performance.  Any time an employee commits an infraction, it needs to be documented in that employee's personnel file. These infractions should be reviewed and compiled during that employee's performance appraisal.  Tie any performance praise or infraction reprimand with specific rules and policies at work. Make sure all rules and policies are enforced equally for all employees. An important part of the appraisal process for many employers is seeking feedback from each employee's coworkers and from the employee himself or herself. This allows managers to get a better feel for how an individual views their job and how that employee's coworkers view their performance.  Ask an employee's coworkers how that individual performs at work, both independently and in collaboration with others. You should specifically ask about both the accomplishments of that employee and any areas that their colleagues believe need improvement. Remember that co-workers' comments are always subjective and often based upon their relationship with employee. Rather than relying upon single interviews, indicate the use of 360-degree appraisals. Your employees should not go into their performance reviews feeling blindsided. If there are elements of an employee's performance that need improvement, let that employee know in a casual (yet professional) way. Likewise, if an employee is doing a good job, give that person praise when you see them at work. The employer should have written history of any reviews and feedback, with evidence that the employee understands the reason for a negative comment and the expectations for improvement.