Nonprofits are in the business of making a difference. But that impact depends on the people behind the program and how well they’re supported to learn, grow, and succeed in their roles.

Most people think of performance reviews as solely tools for evaluation—something to check off, document, or file away for HR purposes. But in high-performing organizations, performance reviews do more than that. They help define what strong performance looks like. They create regular space for reflection and feedback. And they normalize growth as part of every role in every job, not just a thing that’s triggered when something’s gone wrong.

According to McKinsey & Company research, when companies focus on their people's performance they are "4.2 times more likely to outperform their peers." That’s not just correlation. When done well, a formal review process (FRP) helps staff clarify expectations, measure progress, and identify development needs, so individuals can thrive and leaders can build the talent pipeline they need for the future.

Yet for time- and resource-constrained organizations, the idea of building or sustaining an FRP can feel like a stretch. When designed with intention, however, it becomes a powerful tool—for accountability, learning, clarity, and long-term staff development. And all that ladders up to stronger teams and greater impact.

For nonprofit leaders who want performance reviews to be more than bureaucratic rituals, Sarah Chostner, founder and principal at Aprium Advisors, offers a compelling alternative. Drawing on her experience as a former chief people officer at Envision Education and her work as a nonprofit strategy consultant to mission-driven organizations at The Bridgespan Group, Chostner shares practical steps for nonprofits that seek to build performance review processes that center clarity, learning, and growth.

What a Formal Review Process Offers

An FRP provides structured opportunities for managers and their direct reports to reflect, align, and plan.

The goals of an FRP are to:

1. Recognize achievements and meaningful contributions

2. Identify learning and development needs

3. Support individual goal setting for the future

4. Enable upward feedback and manager growth

While professional development conversations and regular check-ins are important throughout the year (particularly to ensure work performance feedback isn’t a surprise when it comes time to conduct the review), the FRP adds a layer of clarity and coherence.

Done well, the FRP will result in:

• Offering a summative picture of a person’s performance
• Highlighting trends across time and projects
• Making expectations explicit, especially if someone is not meeting the requirements of their role

“The most important thing for managers to do in a formal review is to BE CLEAR,” says Chostner. “Too often managers—especially in a nonprofit setting where everyone is trying to do work that helps the world—try to couch their feedback too much. They either nestle the constructive feedback in a positive feedback ‘sandwich,’ or they think writing more will make it ‘feel’ better. But the result is that direct reports can walk away with a lack of clarity on what they’re great at and what they need to do better.”

That’s why both clarity and candor are important. Clarity tells people, “This is what we expect of you,” while candor lets them know, “This is how you did.” Both should be at the heart of the review process to ensure transparency about successes, setbacks, and areas for growth.

How to Approach a Formal Review Process

Based on her work with nonprofits and insights from throughout her career, Chostner shares that organizations find the following steps valuable when building or strengthening an FRP.

1. Start with a self-assessment, then complement with a manager assessment

Self-reflection is a powerful tool for growth that encourages direct reports to take ownership of their development. It helps people evaluate their performance against goals and expectations, and can surface important insights.

For example, a staff member might reflect: “One of my goals this year was to strengthen my facilitation skills. I made progress by leading three workshops and asking for feedback after each one. I’d like to continue growing here by shadowing a colleague who excels in this area.” This kind of reflection signals ownership and gives managers concrete insight into where to affirm progress or explore further development. “Ultimately, people tend to be more invested in growth areas that they’ve identified themselves,” advises Chostner.

Self-assessments are most effective when there are clear expectations to reflect on, ideally goals and competencies that were defined earlier in the year. If those aren’t in place, it’s still a good time to begin documenting them to support ongoing development. Self-assessments can also highlight gaps between how staff and managers perceive performance, and those gaps can be valuable sources of learning and alignment.

While self-assessment is critically important, the FRP cannot be anchored solely in a self-assessment. The manager needs to document their own evaluation and consider how it matches (or doesn’t) their direct report’s self-assessment. “The process needs both: self-assessment and manager assessment,” Chostner notes. “It does no one any favors for a manager to be indirect about their evaluation of their direct report’s performance.”

2. Incorporate peer and direct-report feedback

Performance doesn’t happen in a vacuum, and neither should performance reviews. Gathering input from peers and direct reports before the formal review provides a more complete picture of how someone shows up in their work and their relationships. “Getting a holistic view of someone’s performance—acknowledging that managers don’t have the full picture—is critically important and valuable for employee growth,” Chostner says.

This doesn’t need to be complex or time-consuming. A simple, focused process can provide powerful context and make performance conversations more grounded. For example, you might ask each staff member to identify three colleagues they’ve worked with closely in the past six months and then send a brief feedback form with just two or three questions focused on strengths and areas for growth. Responses can be shared with the manager to inform the formal review. This approach keeps the process manageable while offering a more well-rounded view of performance.

3. Conduct a formal review meeting

With the self-assessment, manager assessment, and peer feedback completed and considered, managers and direct reports are ready to engage in the formal review meeting. During this meeting, Chostner recommends grounding feedback in both goals and behaviors: “Managers should share both strengths and successes and growth areas and challenges. They should be clear whether any growth areas are gaps relative to expectations for the job or simply the next area for their direct report to develop.”

It’s worth noting that some managers may hesitate to name growth areas if their direct reports are performing well overall. “I think this is misguided,” shares Chostner. “Every human has growth areas, and even strong performers want to know how they can improve!”

To ensure a productive and effective formal review meeting, Chostner shares the following two must-haves.

• A summary message
  The manager’s summary message clearly communicates how the direct report is doing overall. It should:
  • Highlight key strengths and accomplishments
  • Name any challenges and most importantly, growth areas
  • Distinguish between gaps in expectations and next steps in development
  • Be succinct so that the key points don’t get lost
    
    
• Objective measures of performance
  Ideally, measures of performance are co-created early in the year and then evaluated. They should be clear goals and/or competencies that are specific, observable, and aligned with the role. If they weren’t defined earlier, the formal review meeting is still a useful opportunity to clarify expectations and begin tracking them. Capturing them in the meeting can lay the groundwork for more meaningful reviews in the future.

4. Define areas for development

The final—and forward-looking—part of a strong formal review meeting is identifying clear development goals. These should go beyond generic aspirations. The most effective goals are specific, documented, and tied to observable behaviors and outcomes. As Chostner puts it: “If job responsibilities or goals are the ‘what’ of people’s performance, competencies are the ‘how.’ Goals can and should be anchored in both.”

To ground future development in clarity, managers and direct reports should work together to answer these questions:

• What does growth look like in this role over the next year?
• Which skills, competencies, and habits are key to that progress?
• How will we know if we’re making progress?

Think “Improve project planning by developing a detailed timeline and tracker for our fall program rollout and review the process with the team every two weeks” rather than “Get better at project management.” Observable and time-bound expectations are easier to achieve, clearer to track, and fairer to evaluate.

Document these expectations. Writing them down creates a shared reference point, reducing confusion and supporting follow-through. These are also the goals and expectations that managers and direct reports should check in on throughout the year.

Ideally, developing goals includes a mix of both job-related and competency-related areas. For example:

• A job-specific goal might be: “Launch and evaluate the new after-school tutoring program at two sites by December, with at least 80 percent student attendance.”
• A competency-related goal could be: “Improve project management by using a task tracker to manage team workflows and holding monthly check-ins to assess progress.”

Consider using core competencies such as communication, collaboration, or problem-solving to anchor the “how,” while aligning the “what” to staff members’ core responsibilities.

 * * *

A well-structured formal review process builds a strong path for staff to understand what they do well, where they can grow, and how they can move forward. It also offers managers a consistent structure for both accountability and support. Most importantly, it helps organizations nurture the talent they need to deliver on their missions.

“This work has been the most rewarding that I do with Aprium Advisors. Through this approach, nonprofit leaders have shared that the FRP equips them much better to give meaningful and action-oriented performance feedback to their direct reports,” Chostner shares.

So, whether you’re refining your current approach or building from the ground up, the goal is the same: create a process that values learning, centers meaningful feedback, and is clear about expectations and what strong performance looks like to help every person in your organization thrive.

Additional Resources

• Bridgespan Leadership Accelerator Program
• Nonprofit Leadership Development Toolkit
• How Nonprofit Leadership Development Sustains Organizations and Their Teams
• Aprium Advisors' Performance Review Systems for Nonprofit Leaders

***

Sarah Chostner, founder and principal of Aprium Advisors, enables mission-driven leaders to tackle their most urgent people operations needs. She does this by providing strategic redesigns of performance review systems, compensation systems, competency maps, employee handbooks, and engagement surveys, as well as on-call HR expertise and audits. Her work is people-centered, strategic, and technically savvy. Her specialty is designing processes for complex organizational redesigns, where the process itself results in a stronger culture. Her clients span the nonprofit sector (education, health & human services, employment & workforce development, legal, nonprofit consulting) and range in size from five to 1,000-plus employees. Prior to Aprium Advisors, Sarah spent a decade in K-12 charter schools, including as a chief people officer.