It’s that time of year again. The time in the business world where managers and employees face, often with anxiety, year-end performance appraisals. The managerial challenge? How to make these evaluations a candid and constructive but not demotivating event.

I well recall an appraisal I had at one point in my career. I walked into the room, sat down, and my manager presented me with a long list of job-related items, none of which I was aware I was being evaluated on. She proceeded to fairly rapidly go down the list, with minimal explanation, placing next to each item either a check (good) or a cross (bad). There were more checks than crosses on the list, but a reasonable number of crosses too. And that was about it. Minimal context and conversation. I remember walking out of the office literally and figuratively scratching my head. Did I do well? Not so well? And what were the implications for my career? I hadn’t the slightest idea.

Over time I came to realize this was a classic example of how not to do a year-end evaluation. I had little idea what I was being evaluated on, the assessments were capricious not fact-based, and the overall takeaway was unclear.

With that background, let’s consider a more thoughtful and constructive approach. While there are many ways to handle such year-end appraisals, and different organizations have different formats, whatever your company’s format, following are five suggestions that can help make the event a constructive experience.

Significant preparation – Year-end evaluations aren’t just a one-time, one-hour meeting, but something to substantively prepare for. Significant thought should go into it, not just about top-line results… but what are the key messages you want to convey, what’s the overall feeling you’d like the employee to leave the meeting with? It’s a good idea to talk to other employees and others in management to get multiple perspectives on an individual’s performance. In an ideal world, as I discussed in a post in October, 4 Steps To Painless (And Effective) Performance Evaluations, if you’ve been communicating regularly and candidly with an employee all year, the final evaluation should contain no surprises and be almost an afterthought. However, since our world is real and not ideal, there frequently are surprises and sensitive issues to address.

Clarity about objectives – Differing opinions about objectives are often the shoals on which appraisals founder. If manager and employee disagree on what expectations are, how can one hope to end up with a constructive meeting of the minds? Thus, it’s critical there be clarity about the overall objectives. Ideally, they are measurable (truly objective, not subjective), though depending on the function, that’s not always possible. Ideally, the employee has been involved in their creation earlier in the year and fully “buys into them.” If for some reason none of this has occurred (reorgs, management changes, function changes and so on), which of course does happen in the real world, a pre-evaluation conversation about the objectives may well be helpful to set the stage before for the more formal appraisal takes place.

Be candid about problems and generous when praise is due – When I say “constructive, not demotivating” in the post’s title, that of course doesn’t mean the conversation should simply be positive. (Management without control is not management at all; make no mistake – at the end of the day this is your evaluation of your employee.) An effective appraisal should be a candid, evenhanded accounting of results against objectives. As such, it’s an excellent opportunity for praise when results exceed expectations. For an employee who’s given an outstanding year-long effort (as many in my experience did), there’s no point being emotionally stingy. Let the employee know how much he or she is valued. Most importantly (unlike the random, confusing appraisal described at the outset) an employee should understand where comments are coming from. They should all make good logical sense.

A dialogue, not a monologue – Again, unlike the example earlier, in which I basically sat quietly and was presented with a recitation of checks and crosses, the year-end appraisal is a good time for dialogue. It’s a chance for an employee to give her own perspective on many things: the job, the company, you as a manager, her own feelings on performance, ways to improve operations, and so on. It’s a chance to step back and review the year from a high level: what worked and what didn’t, and how things work can better in the future. Without exception, the best managers I’ve known were good listeners. They were genuinely interested in what their employees had to say. The very act of being thoughtfully listened to is a positive experience – potentially turning what can be perceived as one-sided criticism into a respectful exchange of ideas.

Make time for a (future) development conversation – A final aspect that I personally felt was a valuable element of the process was to make it clear that you were also going to set up in short order a separate development conversation. This would be a chance to discuss the employee’s short and long-term career goals, skills to acquire, opportunities of interest, mentoring possibilities, and so forth. It shows your sincere interest in the employee’s future (which in itself, if perceived as genuine, goes a long way toward building loyalty). And it’s another way to give the meeting a forward-looking, constructive orientation.

Evaluating employee performance is a complex process central to management. There’s currently thoughtful dialogue in fine publications like Harvard Business Review and Psychology Today that traditional performance appraisals may be overly focused on criticism, harmful to performance, and becoming obsolete. Personally, I’m not convinced there are better alternatives, and do believe that, if done well, year-end appraisals are a valuable management tool. But by all means feel free to comment – I’m always interested to hear readers’ thoughts and experiences on this important management topic.

As Seen on Forbes.com