It's a chance for managers to give praise for exceptional work and guidance for any shortcomings, and to have an open discussion about the future of the company and the potential for employee growth.

Performance reviews are valuable for both the employee and the employer. It's a chance for managers to give praise for exceptional work and guidance for any shortcomings, and to have an open discussion about the future of the company and the potential for employee growth.

However, giving a review is more complicated than just saying "nice job" or "needs improvement." If you want to inspire your employees to keep up with their work or do better, you'll need to dive deeper than the traditional review process.

"The ideal outcome for a performance appraisal is for managers and employees to have meaningful, reflective conversations together," said Julie Rieken, CEO of evaluation software company Trakstar. "It's a chance to document the year's accomplishments, understand expectations and celebrate progress."

So how can you provide better performance reviews and connect more efficiently with your employees? Business News Daily compiled a list of tips for writing an effective performance review.

Recap regular, informal feedback

Amy Casciotti, vice president of human resources at TechSmith, said review discussions should not be a surprise, but rather a summary of continuous feedback. Address issues as soon as an incident occurs to avoid introducing that tension into the evaluation.

If an employee's behavior (positive or negative) doesn't warrant immediate feedback, make a note of it and use it as a reference point during a formal or informal performance discussion, Rieken advised. Managers can then cite specific examples, avoiding general comments.

"Those details prevent critiques from sounding vague or giving the impression that the reviewer has not been paying attention to the employee's performance, both [of which] can cause employees to feel resentful," added Jacqueline Breslin, director of human resources center of expertise at TriNet.

To provide ongoing feedback from multiple sources, collect and share a "crowdsourced" review from other staff members, said Eric Mosley, CEO and co-founder of employee recognition and rewards solution Globoforce.

"It harnesses the wisdom of the crowds to give accurate and specific feedback on individual performance, and it will harness the power of data analysis to connect performance to profits," said Mosley. "More than anything, it continuously drives company behavior toward a deliberate, strategic culture."

Choose your words with care

You'll want to pay close attention to how you phrase your evaluations. Here are five words and expressions that will help you effectively highlight an employee's contributions, based on James E. Neal's book, "Effective Phrases for Performance Appraisals" (Neal Publications, 2009).

• Achievement – Incorporate this into a phrase such as "achieves optimal levels of performance with/for ... "

• Communication skills – Phrases like "effectively communicates expectations," or "excels in facilitating group discussions" will go a long way with an employee.

• Creativity – Appreciating employees' creative side can make for happier, more motivated staff. In a performance review, try "seeks creative alternatives," followed by specific examples and results.

• Improvement – Employees like hearing that they are improving, and that it's being noticed. "Continues to grow and improve," and "is continuously planning for improvement" are two constructive phrases to use in a performance review.

• Management ability – Having leadership skills and the ability to manage others is key for employee success. Incorporating phrases such as "provides support during periods of organizational change" will carry a lot of weight with your employee.

Additionally, Richard Grote, author of "How to Be Good at Performance Appraisals "(Harvard Business Review Press, 2011), said that instead of using terms such as "good" or "excellent" in a review, employers should opt for more measurement-oriented language. In an interview with Hcareers.com, Grote noted that action words – such as "excels," "exhibits," "demonstrates," "grasps," "generates," "manages," "possesses," "communicates," "monitors," "directs" and "achieves" – are more meaningful.

Encourage discussion about the review

The written review should be a brief but direct overview of discussion points, making for a more nuanced face-to-face conversation, and this requires employee feedback.

Push employees to comment on the issues you raised. After outlining any shortcomings or mistakes, take the time to discuss resolutions to those problems.

"Fully explain what the issue is, and then expand on options for improvement," Bill Peppler, managing partner of staffing firm Kavaliro, suggested. "If you see a problem in an employee's work, then [that employee] should have a solution to how it can be fixed."

If the conversation gets heated and you want to avoid saying something you might regret, put the conversation on hold, to be continued later via email or in another meeting, after the employee has had a chance to cool down.

End on a positive note

Always end performance reviews on a positive note. Encouraging your employees and letting them know you appreciate what they do for the company gives an added boost to a primarily good review, or lifts your employee's spirits after a somewhat negative evaluation. Positive reinforcement can go a long way in giving workers the confidence and drive they need to perform their jobs even better.

Performance review samples and templates

Examples and templates of performance evaluations can be found on the following websites:

•           Businessballs

•           Drexel University

•           Entrepreneur.com