Essentially, if you are doing your job right as a manager, these annual exercises are redundant, at best. Therefore, when you subject you and your employee to these exercises, there should never be any surprises in this formal sit-down.
Measuring performance is an on-going process. Your staff should know your expectations and if these expectations should change in the course of the year, as they will often do, you two have already met and created new goals and action steps. If an employee’s performance begins to tip downward, you both should realize it at the same time and talk now. Immediate dialogue about shared goals avoids the “blame game”, shows mutual respect, and builds a team.
Annual performance evaluations, on the other hand, can be intimidating. By design, these evaluations are not a meeting of equals and are potentially weirdly timed monologues covering issues that may have occurred 11 months ago.
If there is no way to avoid them, because they are mandated by your employer, annual performance evaluations, like reading and analyzing data from financial reports or marketing studies, should tell a story. This story incorporates objective data, an assessment of the situation(s), and goals/plans that reflect the desires of your company with the skills (actual and/or desired) of the employee. This process is less intimidating and more collaborative.
As managers we may not have a choice about performing annual performance evaluations, but we can choose to evaluate and lead our staff daily and not manage them annually.