Not every employer and employee has to think of performance reviews with the same dread as an appointment with the dentist.

It doesn't have to be confrontational. It doesn't have to be unpleasant. It doesn't have to be viewed as merely a way to avoid any potential litigation from dissatisfied or dismissed employees.

There are actually business benefits to be gained from instituting a program of evaluating employees on a regular basis.

The performance review process is an opportunity for supervisors and staff members to take time out from the daily business grind to discuss longer-range issues and plans. This is beneficial for the business because it allows leaders to spell out their expectations from employees, establish goals, and hear feedback from the rank and file.

This opens up communication between employees and managers. At the same time, managers can use performance reviews to help further business goals -- for example, by motivating employees to try to increase productivity or sales.

Traditionally, many companies have employed employee reviews to reinforce good work performance while, at the same time, seeking to better the work of under performers.

The underlying basis also provides a foundation for documenting measures on which to base pay increases, promotions, or punitive actions -- such as documenting grounds for dismissal.

In order to realize benefits, it's important for employers to get in the right mindset and understand their goals for the employee review process.

The most common use of the performance review process is to document past performance. However, an emerging trend is an employee development review. The employee development review looks to the future. These reviews typically include information about past performance but have a heavier emphasis on career development, specific job and personal goals, and areas of personal growth.

"Some HR administrators view the process as a way to make sure we have ourselves covered in the case of litigation," Helmlinger says. "My objective when I do a review is to state what a person has accomplished against a set of objectives and then make it a forward-looking process. What is it that we need to accomplish from a company standpoint? What are your own personal objectives? And incorporate a career-development component -- what do you want to do next?"

Business leaders also need to determine what type of review process to implement.

There are different types of employee reviews

Top-down review.

This performance review is conducted by someone above the employee in rank at the company -- this could mean a direct supervisor, manager of a business unit, executive, or all of the above.

Putting a direct supervisor in charge is often the most effective way to assess an employee's performance and provide valuable feedback as to how they can improve. In larger organizations, these reviews are sometimes filled out by line supervisors and then conducted by human resources personnel.

Either way, the review often culminates in a discussion regarding achievement of pre-determined goals.

Peer review.

In this case, employees are evaluated by co-workers.

The benefit of this type of review is that peers at the same level as the employee understand the challenges better than someone judging performance from the top down. The risk is that rivalries can alter performance reviews, if jealous co-workers review each other more critically, particularly if they are in competition for promotion or pay raises.

360-degree review.

Literally, in a 360-degree review, employees are evaluated from all angles -- above, below, and sideways.

That means supervisors, peers, subordinates, and even sometimes customers put in their two cents about the employee. These types of reviews are often spear-headed by the human resources department and those giving input are usually allowed to remain anonymous. Critics of 360-degree reviews say that anonymity can pave the way for excessive -- and sometimes vindictive -- criticism and ultimately leave the employee who is the subject of the review feeling under attack.

Self assessment.

The employee self-assessment can be used in conjunction with any of the other review processes listed above.

Some companies have found this very useful in that it can help cue managers as to areas in which an employee can improve and may benefit from training. It can also allow the employee to undertake some constructive criticism and be more willing to receive feedback from a manager.

Employees, in fact, can sometimes be harder on themselves than their managers are. But the downside is that an employee's view of their performance sometimes might diverge greatly from a manager's view, which presents challenges in the review process