A performance review is an important occasion that allows both employee and manager to establish realistic goals and expectations for the near future. Objective and healthy feedback will help your employee grow and contribute more to the company. Managers often tend to sugarcoat problems out of hesitation or wanting to avoid unpleasant situations. While it may be important to maintain good working relationships, you will harm both your business and the employee by not being candid and open. If you do not discuss problem areas and work out their solutions, the problems will only fester and become larger with time. During a review, focus on both the positive and the negative aspects of the employee's performance and bring out areas where improvement is required. You should also set goals and expectations for the future.