GIVE HONEST FEEDBACK
Avoid the common mistake many managers make of giving problem employees "above average" reviews because of fear of confrontation.
Employees often won't volunteer information you need to know. Ask them questions like "Do you have problems and stresses?" and "Do you understand your current job responsibilities and how they are evolving?"
FOCUS ON THE FUTURE
Most performance reviews concentrate on what the employee did the past year. Instead, focus on upcoming goals and see what training or other help the employee needs to meet them.
COMMUNICATE COMPANY GOALS
Use the performance review to keep employees informed of shifts in company's priorities because of a tough business climate.