A manager’s guide to employee performance reviews

Employee performance reviews tend to evoke strong feelings. Some people view them as a powerful growth tool, while others dread that calendar invite from their manager. Whether your company runs annual performance reviews or checks in with employees monthly, getting these conversations right matters. Done well, performance reviews clarify expectations, recognize contributions, and help employees understand how they’re doing and where they can grow.

But let’s be honest: Writing a fair, meaningful review isn’t easy. Gathering the right data, balancing different perspectives, and removing bias takes both time and skill. And when the process falls short, it wastes employees’ time and effort, and can even cause lasting damage to trust. Culture Amp’s The science of sustainable high performance report found that 27% of employees don’t believe performance reviews are fair, and 58% of HR leaders say the process doesn’t drive meaningful outcomes.

The good news? It doesn’t have to be that way. In this guide, we’ll show you how to design a sustainable performance review process that actually makes a difference. We’ll cover what employee performance reviews are and why they matter, the key elements of effective appraisals, how AI tools can support better reviews, and practical examples to help you lead more confident, impactful performance conversations.

Key insights

1. Employee performance reviews are a formal evaluation of an individual’s work over a specific time period.
2. The key components of a performance review are a self-reflection, peer feedback, a manager assessment, and an employee rating.
3. AI tools can help managers run better performance reviews by turning employee data into clear insights, strengthening feedback, and helping them prepare for difficult conversations.

What is a performance review?

An employee performance review is a formal evaluation of an individual’s work over a specific time period. Typically led by a manager, performance reviews are designed to create shared clarity around ongoing performance and future growth.

A crucial part of performance management, reviews are commonly used to:

• Assess individual performance against expectations and goals
• Align managers and direct reports on performance standards and priorities
• Share feedback around what’s working well and where there’s room to improve
• Support future development conversations that guide employee growth
• Inform decisions about compensation, promotions, or rewards
• Shape clear, future-focused goals

When approached thoughtfully, performance reviews help employees understand what success looks like, see how they’re tracking against it, and feel recognized for their past effort and contributions. For businesses, they drive alignment, accountability, and sustained performance. In fact, organizations that prioritize performance management are 4.2x more likely to outperform competitors.

What are the key elements of a performance review?

At Culture Amp, we believe a great performance review includes certain key inputs: a manager review, self-reflection, and peer feedback. Some organizations also choose to give each employee an overall rating. Together, these elements contribute to fair and well-rounded reviews, but you can start with manager reviews alone and expand your approach over time.

Here’s how to use these four elements as the foundation of your employee performance review template:

1. Manager reviews

Manager reviews are the first thing most people think of when they hear the words “performance review,” and they’re also one of the most important elements of the review process. Managers play a central role in determining the outcome of an employee’s performance review, which can directly influence compensation, growth opportunities, and career progression. Because of this impact, manager reviews shouldn’t be rushed. Encourage managers to take the time to review each direct report’s goals, key contributions, peer feedback, and self-reflections to build a holistic picture of performance throughout the review period.

Managers must also look out for unconscious bias – particularly recency bias – by making a deliberate effort to evaluate performance using peer feedback and evidence from across the full cycle, not just the most recent wins or challenges.

Our people scientists recommend asking managers performance review questions like:

• How has this person progressed over [time frame]?
• What blockers or challenges did this person experience over [time frame] that impacted their ability to achieve goals or meet expectations?
• How well did this person deliver on their objectives or goals?

2. Employee self-reflections

Self-reflections, also known as self-assessments or appraisals, give employees the opportunity to share their perspective on their performance and contributions over the review cycle. They encourage employees to pause and reflect on what’s going well, what’s been challenging, and how they want to grow. Self-reflections also give employees space to add important context, like how shifting priorities or unexpected blockers affected their ability to achieve their goals.

When employee self-reflections differ widely from their manager’s assessment, this can surface differences in perception and highlight a need for greater alignment. This insight helps managers prepare for more productive performance conversations and address gaps before they become bigger issues.

Have employees answer these performance review questions in their self-reflections:

• What progress have you made on your goals over [time frame]? Describe the impact on the success of your team, department, and organization.
• What blockers or challenges did you experience over [time frame] that made it harder to achieve your goals?
• What are 2-3 skills you'd like to acquire, define, or develop over the next review period?

3. Peer feedback

Next, you’ll want to gather feedback from the people who work closely with the employee and have firsthand insight into their day-to-day performance: their peers and colleagues. Peer feedback provides valuable perspectives into how an individual shows up in their work, highlighting both their strengths and areas for improvement. Encouraging peer reviewers to share specific examples from their direct experiences can help make reviews more balanced, actionable, and fair.

Our people scientists recommend asking peer feedback questions like:

• How did this person impact your individual, team, or department's performance?
• Where has this employee been most effective or impactful in their role?
• Over [time frame until the next cycle], what’s one thing this person could improve upon or get additional coaching on?
• Which company value(s) does this individual consistently demonstrate in their work?

4. Employee rating

Finally, managers bring together all of the above elements – self-reflections, peer feedback, and manager reviews – to determine an employee’s overall performance rating. Not every organization uses formal ratings, but for those that do, we recommend a four-point performance review scale. Unlike three- or five-point scales, which include a neutral middle option, a four-point scale removes the “average” choice. This encourages managers to conduct more thoughtful evaluations, can help reduce central tendency bias, and avoids labeling employees as “average.”

While this scale uses numeric mapping behind the scenes, we recommend only sharing the behavior-based labels with employees. This helps keep feedback constructive and growth-focused.

Our research shows that on this scale, roughly half of all employees are rated “consistently meets expectations,” with a small number scoring above or below that benchmark. Although some employees may be disappointed by this distribution, it’s important to remind them that a “good” rating represents strong, reliable performance – not a lack of impact or potential.

Lastly, calibration plays a critical role in making this system fair and effective. If you do use ratings, take the time to calibrate them. Calibration brings managers together to review ratings, align on performance standards, and discuss evidence across teams. This helps reduce bias, improve consistency, and ensure ratings are applied equitably. Greater consistency also builds employee trust in the process.

7 steps for effective performance reviews

Writing and leading effective performance reviews takes preparation, structure, and intention. The steps below can help managers deliver fair, meaningful reviews that support both performance and growth.

1. Set clear goals and performance expectations

At the start of the performance cycle period, ask managers and employees to work together to set goals, objectives, and targets. Working together ensures everyone understands what success looks like for the entire review period.

When setting goals, follow proven frameworks such as OKRs (objectives and key results) or SMART goals to ensure they’re specific, measurable, and aligned to both team and business priorities. Clear goals not only strengthen accountability but also make performance easier to evaluate, so managers can provide more objective feedback.

2. Have employees complete a self-reflection

Employee self-assessments give individuals the opportunity to reflect on their performance, share wins and challenges, and add context that managers may not see day to day. Reviewing self-reflections before completing the manager assessment can help identify gaps in alignment or perception, informing and preparing managers before annual performance conversations.

3. Gather peer feedback

Peer feedback provides valuable insight from colleagues who work closely with the employee. Ask each direct report to suggest two to four peers who can speak to their collaboration, impact, and day-to-day performance.

4. Review supporting data

Along with employee self-reflections and peer feedback, review notes from past 1-on-1s, goal progress, shoutouts from employee recognition software, and key projects from across the review period to gain context into your direct report’s performance. Because unconscious biases, specifically recency bias, can easily surface during reviews, grounding feedback in data and multiple perspectives helps create more holistic and fair assessments.

5. Write your performance review

Now it’s time to write the performance review. A strong review strikes a balance between recognizing an employee’s strengths and identifying areas for improvement, while keeping the focus on future growth. Being too positive or overly negative can cause employees to disengage, so aim for a thoughtful mix of recognition and constructive feedback that’s clear, specific, and actionable.

When it comes to delivering effective and constructive feedback, avoid vague statements or hearsay and instead base your feedback on observable behaviors, outcomes, and concrete next steps the employee can take. One helpful approach is the Situation-Behavior-Impact (SBI) feedback model:

• Situation: Describe when and where the behavior occurred
• Behavior: Describe the observable behavior without judgment
• Impact: Explain the effect of the behavior on others or outcomes

This structure keeps feedback grounded in facts and makes it easier for employees to understand and act on.

6. Lead a two-way performance review conversation

Performance reviews shouldn’t feel like managers are reading from a script. They work best as open, two-way conversations with employees as an active participant. This way, every employee leaves the conversation knowing what they’re doing well, where they can improve, and how to move forward. Both managers and employees should leave with clear action items – whether that’s setting new goals, building specific skills, exploring development opportunities, or adjusting priorities moving forward – to maintain momentum after the conversation ends.

7. Follow up

Performance management doesn’t end with the review conversation. Regular, ongoing check-ins throughout the year help track progress, share feedback, remove blockers, and adapt to changing business needs. This helps every employee get the support they need when they need it, setting them up to meet (or exceed) expectations for the next review cycle.

Looking for advice on how to bring your performance conversations to the next level? Explore our performance review tips for help approaching these conversations and delivering clearer feedback.

How AI helps with performance review​s

Like many areas of HR, performance reviews can be streamlined with artificial intelligence (AI). That said, performance data is sensitive and isn’t something you want your managers pasting into public tools like ChatGPT. Instead, we recommend using secure, purpose-built AI solutions designed to help managers write clearer feedback, reduce bias, and run more consistent and efficient reviews while protecting employee data. Here’s a closer look at how Culture Amp’s AI Coach is reshaping performance reviews:

• Summarizes key insights
  With Culture Amp, managers can quickly pull together insights from past reviews, upward and peer feedback, shoutouts, and self-reflections to create a clear snapshot of an employee’s contributions across the entire review period. This saves managers time, reduces unconscious bias, and supports more balanced, objective evaluations.
• Strengthens constructive feedback
  AI Coach can support managers in drafting clear, balanced, and actionable reviews. It can review language for clarity and tone, highlight any gaps, and ensure all feedback is grounded in data. Platforms like Culture Amp, which centralize people data, give AI the context it needs to suggest relevant insights that managers can decide to add to their reviews.
• Roleplay difficult conversations
  AI coaches give managers a safe space to practice annual performance review conversations, check for bias, and refine how they communicate feedback and expectations. Whether preparing for their first review or a challenging discussion, managers can enter conversations more confidently knowing their feedback will land effectively with employees.

Create a culture of sustained high performance

Learn more about Culture Amp’s AI Coach and how it accelerates high performance through instant insights, expert coaching, and targeted action plans.

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3 performance review examples

Below are three performance review examples featuring effective feedback that demonstrate how managers can balance recognition, development, and forward-looking expectations to create clear and actionable reviews.

1. Highlighting employee strengths

Performance review example:

In the past six months, you’ve consistently demonstrated strong ownership of your work. You take initiative, follow through on commitments, and deliver high-quality results – often ahead of schedule. Your ability to collaborate across teams has also been a standout strength, particularly during the [project/team initiative], where your clear communication and willingness to support others helped the team stay aligned, move quickly, and close a large new business deal.

Why this works:

This example calls out specific employee strengths and connects them to real business outcomes. Effective strength-based feedback goes beyond praise by explaining what the employee is doing well, why it matters, and how it supports their team or company.

2. Identifying areas for improvement

Performance review example:

One area where you have an opportunity to grow is proactive communication with stakeholders. While your work is consistently strong, there have been times when updates came later than expected, which made it harder for others to plan or move forward with their responsibilities. This was particularly true during [project/team initiative], when you failed to inform the team we had to swap speakers and account for a smaller-than-anticipated budget.

In the future, I’d like to see you share updates and highlight potential risks earlier in the process to help improve alignment, drive stronger collaboration, and reduce any last-minute surprises.

Why this works:
This feedback is constructive, specific, and focused on past behaviors. It clearly explains the impact of the behavior and, without being overly negative, provides guidance on what to do differently next time.

3. Aligning on next steps and future expectations

Performance review example:

Looking ahead, we’ll focus on building your confidence in leading larger projects. Over the next review period, we’ll aim for you to take ownership of at least one cross-functional initiative, with regular check-ins to support planning and prioritization. We’ll also continue to develop your communication skills by setting clear expectations around and an ongoing cadence for stakeholder updates and feedback loops.

Why this works:
This example shifts the conversation from past performance to future growth. By listing out clear next steps, sharing expectations, and outlining how the manager will support them, this future-focused feedback helps the employee understand what success looks like and how they can achieve it moving forward.

The secret to effective reviews and productive performance conversations

Performance management takes time and effort to do well, but the right tools can make the process far more manageable. Culture Amp streamlines annual performance reviews by storing all your people data in one place, so managers can spend less time chasing down information and more time having meaningful conversations.

Instead of juggling Google Docs, spreadsheets, and paper notes, managers can quickly access 1-on-1 notes, past reviews and feedback, recognition and shoutouts, goal progress, and AI-powered summaries that surface key insights in seconds. This makes it easier to write thoughtful, comprehensive reviews and deliver feedback employees can actually learn from and act on.

Elevate your approach to performance management

Request a demo today to learn how Culture Amp can help you write better performance reviews and lead more impactful conversations.

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FAQ

What are the key steps in performance appraisals?

The key steps to writing effective performance reviews are setting clear expectations, gathering input from multiple sources, writing balanced and evidence-based feedback, leading a two-way conversation focused on growth, defining clear next steps, and reinforcing progress through ongoing check-ins.

What are the benefits of employee performance reviews?

When done well, performance reviews improve alignment between employees and managers, increase clarity around expectations, recognize and reward individuals’ contributions, strengthen engagement and motivation, and support ongoing growth.

What are the objectives of performance reviews?

Annual performance reviews aim to evaluate an individual’s contributions, clarify performance standards and priorities, provide structured feedback on strengths and areas for improvement, support development planning, and inform decisions related to compensation, promotions, and career progression.

How often should employee performance reviews be conducted?

Culture Amp data finds that performance discussions ideally happen quarterly, as regular feedback boosts engagement and gives employees time to act on what they’ve learned. Formal performance review cycles, which inform raises and promotions, are typically conducted once or twice a year, depending on how your organization aligns them with budgeting and compensation decisions.