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1. Failure to prepare for the interview. This is the number one reason why appraisal interviews fail. You and the employee should know what the job requirements are, and how the employee is meeting them, before you even schedule the interview.

2. Failure to establish good rapport. Any employee who is being appraised will be nervous. It's up to you to put him or her at ease. There's nothing wrong with a little small talk to make both of you comfortable. A firm handshake and a smile will usually do the trick.

3. Failure to listen. Establish yourself as a good listener. Employees trust someone who listens carefully and respects their contributions, even when they might be rejected.

4. Failure to withhold judgment until all the evidence is presented. Justified or not, some employees think they have legitimate reasons for substandard performance. Giving employees the idea that their complaints won't get a fair hearing destroys the whole concept of effective appraisal interviewing.

5. Failure to remain objective. It's not always easy to keep personal feelings, attitudes and opinions out of the appraisal interview. The employee may get emotional, but the manager must maintain control, so the interview stays objective and professional.

Preparing for the Interview

A good performance appraisal starts long before you actually conduct the interview. Before you can hold employees to certain goals and standards, you and the employee must agree on what standards should be set. In fact, one well-conducted performance interview begins the process of preparing for the next. After discussing the employee's past performance, you set objectives for the next appraisal period. That's the beginning of a multi-stage process which, in full, looks like this:

1. At the beginning of the appraisal period, establish the precise goals and standards you expect the employee to meet.

2. Communicate these standards in detail to the employee.

3. Monitor the employee's performance throughout the period. Let the employee know how well he or she is doing. Offer praise when it's due. Make necessary corrections as soon as you see the need.

4. Conduct a formal appraisal at the end of the period. Give the employee a full and honest picture of how well he or she has done. If outside factors kept the employee from doing better, make a note of them. Set goals for the next appraisal period. Arrange for training or any other resources the employee requires to succeed.

5. Provide a clear, honest assessment of the employee's future in the company.

Setting Goals

Commit goals and standards to writing before the appraisal interview and you leave less room for future misunderstandings. You will also have a historical record of the employee's successes and failures. These can also be valuable when you are considering the employee for a promotion, transfer or disciplinary action. Here's a suggested list of records:

1. A summary of the department's goals. Decide what goals your group should meet by the end of the appraisal period. Show the employee how individual goals fit into the department's overall objectives.

2. Specific goals and standards you expect the employee to meet. Go over this list with the employee and make sure you both have a good understanding.

3. An appraisal report, marking the results of the completed appraisal.

4. A progress report, a quick historical reference sheet to be checked before the next appraisal interview.

Employment is a mutual bargain, and its terms usually are familiar. If the employee helps the company achieve its goals, the company will help the employee reach some personal goals. This means that the goals you set are not just criteria for making judgments; they are also incentives for the employees to succeed.

Start with the job description. Your most elementary requirement is that the employee do the job. A good description breaks the job down into component tasks. From these, you can develop a list of goals to accomplish these tasks. You can then add any additional goals the employee should meet. The goals you set should meet these requirements:

1. They must be related to the job.
2. You must be able to observe the employee's behavior.
3. You should be able to measure success in some way.

Setting Standards

Standards should come from the same sources as goals ? the job description and the company's specific needs. A good job description gives you a starting point by listing the individual tasks and responsibilities that make up the job. You can adjust these standards to mesh with departmental goals.

The job description will tell you only what the employee should do, however. You must decide how well it should be done. This can be a difficult balancing act. On the one hand, you don't want to set lax standards that fail to motivate employees. But you don't want to insist, either, that they do the impossible. There are several ways to strike the right balance:

1. Examine the employee's present ability. Current levels of skills and experience usually indicate the standards you can legitimately expect.

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2. Examine the performance of co-workers. The group's performance level provides a useful index of what you can expect from each member.

3. Look at the employee's past performance. The last appraisal level the employee attained should set the minimum standard for the new period.

4. Look at the lob description. Make sure you both have a clear picture of what the job requires. Check the job description carefully. If it needs to be updated, correct it.

5. Determine the job's responsibilities. A good job description can be the springboard for a list of job responsibilities, and can even appear in the same document. The list of responsibilities, in turn, can be the basis of the goals and standards on which you rate the job holder.

Source of Reference:
Succesfull Interviewing for Every Management Situation, Alexander Hamilton Institute