A new report proposes measures for the sustainability of owners’ management companies and lays the foundation for a more structured approach to managing apartment complexes or managed estates. By David Rouse In a professional audit or reporting capacity, Chartered Accountants may encounter owners’ management companies (OMC). Readers living in an apartment complex or managed estate may even have been asked to serve as an OMC director. OMCs, while in form incorporated typically as companies limited by guarantee (CLG), are in substance hybrid entities. They sit at a corporate crossroads between not-for-profit companies, property management businesses and residents’ associations (see Figure 1). Many readers will be familiar with the legacy construction and financial issues facing these companies. High-profile cases such as Priory Hall and Longboat Quay, as well as other less prominent estates, have featured in the press in recent years while corporate governance failings in OMCs receive periodic attention in court reporting. The country’s largest OMCs have multi-million euro annual service charge budgets. And yet, the stewardship of these companies is entrusted to unpaid, untrained directors (the term “volunteer director” is deliberately avoided, as in law, there is no such thing – a director is a director). There is as yet no firm handle on the number of OMCs in the country. However, it is estimated that the upper limit is likely to be about 8,000 companies. New report A recent independent report titled Owners’ Management Companies – Sustainable Apartment Living for Ireland considers issues that will be familiar to those with even a passing knowledge of managed estates and OMCs. The report was jointly commissioned by the Housing Agency and Clúid Housing. The Housing Agency works with the Department of Housing, Planning and Local Government, local authorities, and approved housing bodies (AHB) in the delivery of housing and housing services. Clúid is the State’s largest AHB, managing  just over 7,000 homes across the country. The inadequacy of annual service charges, failure to provide for building maintenance (sinking) funds, and the persistent problem of mounting debtors are just some of the topics assessed. International best practice is examined, and Ontario and New South Wales are among the comparator jurisdictions featured. The future demand for high-density housing is signalled in the context of new Government policy, such as the National Planning Framework and the Climate Action Plan. To audit or not to audit? Recommendations for reform across a range of relevant regulatory systems are proposed. Of interest to the accountancy profession will be the recommendation for the removal of the audit exemption currently available to OMCs, most of which, as noted earlier, are incorporated as CLGs. Companies Act 2014 provides the audit exemption for CLGs. In this way, small not-for-profit companies without shareholders may benefit from a reduced financial and administrative burden. (It should be noted that under sections 334 and 1218 of the Companies Act, any one member of the CLG may in effect demand an audit.) However, while OMCs are not-for-profit, they are responsible for multi-million euro property assets in the form of estate common areas. Considering the centrality of OMCs to property values, good title, and quality of living spaces, the value of an audit to members in terms of assurance, transparency, and governance cannot be overstated. Finance and governance The creditworthiness of OMCs in the context of current under-funding is also considered. Regulation over and above corporate compliance enforced by the ODCE is recommended. Dispute resolution outside of the courts is advocated, as are more cost-effective avenues for service charge debt recovery. Personal insolvency practitioners will be aware that OMC service charge debt is an “excludable debt” under the Personal Insolvency Act 2012. Only with the consent of the creditor (i.e. the OMC) may management fee balances be reduced or written off in a Personal Insolvency Arrangement. The report’s other recommendations include mandatory training for OMC directors, the standardisation of accounts to a format prescribed for OMCs, and enhanced insurance obligations. Reform may be some way off. In the meantime, practitioners should be aware that the Institute’s practice toolkit, Owners’ Management Company PQAs, was updated in 2018. This replaces the 2011 version. As the Institute’s product catalogue notes, and as may be recognised from sectoral weaknesses highlighted in this commentary, although OMCs can be small in size, they may be higher-risk clients. Future regulation of the sector could mitigate a number of the risks identified.   David Rouse FCA is an advisor with the Housing Agency, a director of the Apartment Owners’ Network CLG, and a director of one of the country’s largest OMCs.

Three years after its commencement, Construction Contracts Act, 2013 continues to provide a pathway to cash flow in the construction sector. By Pat Breen TD This innovative and important legislation for the construction sector, which was commenced in 2016, regulates payments and particularly the timing of payments under construction contracts. While many businesses in the construction sector are aware of this legislation, some businesses may not be fully aware of the detailed statutory protections and obligations set out in the Construction Contracts Act, 2013. One of the key objectives of the legislation is to provide payment certainty for subcontractors, who were considered vulnerable in the payment cycle in the construction sector. As the construction sector continues to expand, cash flow is critical and it is cash flow that is at the core of the Construction Contracts Act, 2013. Therefore, construction businesses should ensure that their payment practices comply with the terms of this legislation. I consider that members of the accountancy profession are uniquely placed to encourage construction businesses across the country to review their payment practices to ensure that they comply with this legislation. I welcome the opportunity provided by Accountancy Ireland to highlight this legislation, and a brief summary of the main provisions of the Act is set out below. Further information on the Act is available on the website of my Department at www.dbei.gov.ie. Applicability of the Construction Contracts Act, 2013 to construction contracts The Construction Contracts Act, 2013 applies to certain construction contracts entered into after 25 July 2016, but not to all such contracts. For example, it excludes: Contracts of a value of not more than €10,000; or Contracts that relate only to a dwelling of not greater than 200 square metres where a party to such a contract occupies, or intends to occupy, the dwelling as his/her residence; or Contracts between a State authority and its partner in a public private partnership arrangement. All other construction contracts must comply with the provisions of the Act and the parties may not seek to exclude a contract from the legislation under any circumstances, whether the contract is an oral contract or a written contract. Construction contracts to which the Act applies must provide for the following contractual terms: The amount of each interim and final payment, or an adequate mechanism for determining those amounts; The payment claim date for each amount due, or an adequate mechanism for determining it; and The period between the payment claim date and the date on which the amount is due. Main contracts and subcontracts Main contractors are at liberty to agree their contractual terms with their clients, subject to adhering to the mandatory provisions required by the Act as outlined above. However, if a main contract fails to fully incorporate the mandatory provisions, then the Act imposes the applicable contractual term or terms set out in the Schedule to the Act, terms which are also applicable to subcontracts. The Act stipulates that all subcontracts must at least provide the following payment claim dates: 30 days after the commencement date of the construction contract; 30 days after the payment claim date referred to above and every 30 days thereafter up to the date of substantial completion; and 30 days after the date of final completion. The date on which payment is due in relation to an amount claimed under a subcontract shall be no later than 30 days after the payment claim date. The Act permits the parties to a subcontract to make more favourable provision for a subcontractor than the above contractual terms. Payment claims An executing party – the party which carries out the work under a construction contract – is required to submit a payment claim notice to the other party no later than five days after the relevant payment claim date. If the other party disputes the amount claimed by the executing party, that party is required to respond to the executing party in writing no later than 21 days after the payment claim date setting out the reason(s) why the amount claimed is disputed and the amount, if any, that it proposes to pay to the executing party. It may be possible for the parties to reach an agreement on the amount to be paid to the executing party. However, if no such agreement is reached by the payment due date, the other party is legally required to pay the executing party the amount, if any, which the other party proposed to pay in its response to the contested payment claim notice from the executing party. This payment shall be made no later than the payment due date in accordance with Section 4(3)(b) of the Construction Contracts Act, 2013. Statutory adjudication of payment disputes The Construction Contracts Act, 2013 also introduced, for the first time in Ireland, a statutory right to refer a payment dispute for adjudication. A ‘notice of intention’ to refer a payment dispute for adjudication must be served by one of the parties to the payment dispute. The parties may then jointly agree to appoint an adjudicator of their own choice, within a five-day period. However, if the parties cannot reach agreement on who to appoint, an application may be made after the five-day period to the Chair of the Construction Contracts Adjudication Panel, Dr Nael Bunni, to request the appointment of an adjudicator to the dispute. The appointed adjudicator, whether appointed by agreement of the parties or by the Chair, is required to reach a decision on the dispute within 28 days. This period may be extended in certain circumstances.   Pat Breen TD is Minister of State at the Department of Business, Enterprise and Innovation.

Blockchain might be the trend du jour, but it is just one part of the distributed ledger  technology revolution. I am going to be completely honest: I am not a blockchain expert. But I do have a strong interest in how blockchain technology is going to change our profession. In 2017, I joined a MeetUp group – Blockchain for Finance – to learn more about blockchain. This group hosts regular networking events throughout the year with speakers from various companies using distributed ledger technology (DLT) to create solutions for the problems and inefficiencies facing businesses today. As part of my research for this article, I spoke with two blockchain company founders to find out more about their respective companies and better understand DLT’s practical applications for businesses. QPQ QPQ is a company creating a 21st century digital financial network which, according to founder Greg Chew, promises to reduce transactional costs by automating and digitalising the transaction processes with proprietary smart legal contracts. Greg, a barrister by profession, explained that for true automation of a transaction, one must be able to govern what it does and how it does it. The ability to govern a transaction is central to what QPQ aspires to create and the company has developed its own operating governing code engine (OGCE), which will enable it to create reg-tech smart legal contracts (SLC). The OGCE will convert a contractual document into operating code (i.e. the SLC). It will also include any other items that impact on an entity’s dealings such as regulations, tax, logistics and customs, for example. Having these additional items embedded in the operating code ensures compliance throughout the transaction. Greg outlined the following example to illustrate how logistics could work using QPQ’s financial network (logistics being only part of the contractual document informing the SLC). Logistics example Imagine your company orders 100 barrels of mango concentrate from India, to be shipped to the UK. While the ship is at sea, a storm destroys 20 barrels. Using Internet of Things (IoT) technology, a signal will be broadcast to QPQ’s OGCE to inform the SLC in real-time of the accident. Before the ship arrives in the UK, at which point the accident would ordinarily be discovered, the SLC will already have determined that the following actions be taken: Contact the supplier to inform them of the accident and re-order 20 more barrels; and Instruct the shipping company to return the 20 destroyed barrels before entering the UK, thereby avoiding paying unnecessary customs duty. In this example, the additional transactional administration was removed and unnecessary costs were avoided. QPQ is conducting extensive research with accountants to ensure that its development process considers the specific requirements of different industries, sectors, geographies and regulations. To read more, visit www.qpq.io Piprate Piprate is an Irish insurtech start-up using blockchain to solve the insurance industry’s fundamental data-sharing problems. I met with Stanislav Nazarenko, co-founder and CEO, to find out more about Piprate’s plans to revolutionise the insurance industry. Stanislav, who worked in the insurance industry for several years, explained that the industry has a lack of trust between parties due to the manner in which data is shared. As a result, a significant number of processes are inefficient. For example, roughly half of a loss adjuster’s time is spent confirming the facts of an insurance claim. Piprate uses DLT to create a platform for the insurance industry, which allows all parties involved to share data in a more efficient, transparent and trustworthy way. Stanislav added that creating such a platform comes with many challenges, which DLT helps them overcome. Data will be spread around a single network (in data wallets), so no one party will have access to the entire system. In fact, parties will only have access to the data they need to perform their function (your home insurance broker doesn’t need to know if you have penalty points, for example).By having one definitive and reliable source of truth, Stanislav explained, you will enable efficiencies and as a result, insurance could become value-add for businesses and individuals alike. Consider the following examples: Insurance renewal: instead of businesses filling in various renewal forms, which are labour intensive and inefficient, Piprate’s platform will share data with multiple parties simultaneously to provide a quote much quicker; and Preventative measures: if you have a cybersecurity insurance policy and install various software programmes to mitigate the threat, this data could be shared to reduce your premium. I asked Stanislav if Piprate’s platform could lead to cheaper insurance premiums in the future. He informed me that the platform will create efficiencies and reduce operating costs – whether these savings will be passed on to customers remains to be seen. Conclusion Blockchain, or DLT, promises to make Chartered Accountants more efficient by removing the significant amount of time currently spent verifying the information provided to us. As a result, we will be able to reinvest this time to work on value-add activities for the clients and organisations we serve. Five things you need to know about blockchain It is not a cryptocurrency, it is a type of DLT The common misconception is that blockchain is a cryptocurrency. Blockchain is distributed ledger technology – the underlying technology that enables cryptocurrency to exist. There are various types of distributed ledger technology and blockchain is just one example. It gives you control of your data and has enhanced security The average consumer isn’t aware that GDPR has made them the owner of their personal data. DLT will give consumers even more control of their information and allow them to manage who has access to it. Your data will be more secure as information is stored across a network of computers instead of on one single server, making it very difficult for hackers to compromise the transaction data. In any industry where protecting sensitive data is crucial, DLT can change how critical information is shared by helping to prevent fraud and unauthorised activity. It increases efficiency and reduces costs DLT data is more reliable because the record-keeping is completed using a single digital ledger that is shared among participants. You don’t have to reconcile multiple ledgers, which enables transactions to be completed faster and more efficiently. It is more transparent and trustworthy DLT provides a verifiable and auditable history of all information stored on a dataset. All network participants share the same documentation as opposed to individual copies. That shared version can only be updated through consensus. In addition, DLT removes the need to trust third parties because now, you can trust the data. Accounting for crypto-assets Blockchain and DLT have enabled the creation of new crypto-assets (such as cryptocurrency, tokens, coins and so on), which is a constantly evolving and fast-growing area. As such, there are no specific accounting standards in place to deal with crypto-assets. This will provide a challenge for anyone preparing accounts for entities that hold crypto-assets. Michael J Walls is the Founder and CEO of Dappr and the 2018 Young Chartered Star.

While anyone can present themselves as an expert on share valuations, integrity is the hallmark of the professional. A Picasso painting may be valued at €50 million; your house valued at €1 million. These valuations have no underlying measurement, save the willingness – through supply and demand – of interested parties to own the asset. The valuation of shares is different, however, in that there are underlying practice and measurement norms. Valuation permeates all aspects of business. It is the measure of capital value on stock markets across the world; the mainspring of wealth and its creation; and the store of value for the economic well-being of a nation. It’s your pension fund. In 2010, Chartered Accountants Ireland published The Valuation of Businesses and Shares by the author of this article. A second edition followed in 2016. Since publication, readers have enquired as to numerous aspects of valuation. This article is a stock-take of these enquiries. The hallmark of the professional valuer A major category of enquiry is share valuation related to legal wrangling of one kind or another. This includes shareholders disputes, marital separations, acquisitions or investments gone wrong, the interpretation of share rights and entitlements, and so on. Some are complicated or have poor paperwork. In my experience, the accepted practice in share valuations is poorly understood. In all circumstances – without exception – integrity (meaning objectivity, independence and impartiality) is the hallmark of the professional valuer. Regrettably, I have seen numerous instances of ‘hired gun’ valuations where the intention is to please the client by presenting an unjustifiably high or low valuation to suit the circumstances. Happily, in my experience the valuer in these circumstances has rarely been a Chartered Accountant. There are no statutory guidelines or restrictions as to presenting oneself as an expert on share valuations. Quite a few individuals and organisations present themselves as experts. Some are competent; many are not. The financial crash starkly illustrated how few investment advisers understood valuation. The nonsensical role of EBITDA Another category of enquiry relates to earnings before interest, tax, depreciation and amortisation (EBITDA). A consistent misnomer, commonly misunderstood or misdirected, is the use of EBITDA in valuations whereby valuations are based on a multiple of EBITDA. The use of EBITDA in valuations is often presented as some form of sophisticated expertise. It is, in fact, nonsensical. Please refer to my article on EBITDA in the August 2017 edition of Accountancy Ireland. For the sake of good order, should any reader feel aggrieved as to my dismissal of EBITDA, please write to me quoting even one textbook approval of EBITDA, any academic study supporting it, or indeed any evidence at all as to the validity of EBITDA as a method of valuation. I will publish it. Valuing different classes of shares A regular category of enquiry – probably the most common – relates to the valuation of different classes of shares. There are many disagreements as to which shares have what value in companies with several classes of shares. There may be different entitlements as to dividends, voting rights and/or assets on a winding up. There may be share options or loan conversion rights which, if exercised, would alter or diminish the rights of existing shareholders. Sometimes, because of restricted rights, a particular class of share is valueless or heavily discounted. The ensuing row is that this likely outcome was not understood by the investor at the outset; leading to allegations of misrepresentation. The allocation of a company’s value across different classes of shares is usually a difficult exercise. It would be better if this aspect was given proper consideration through simpler share structures in the first place. The ‘grievance’ valuation The final issue that regularly appears is the ‘grievance valuation’. An aggrieved shareholder demands that the valuation is set at an unjustifiably high level to including compensation or punishment for the alleged grievance. One or both parties in a dispute may be difficult personalities, with rational thought and reasonable behaviour proving remote in the circumstances. Familiar refrains, as expressed to the writer, include: “I have worked there for X years and you say my shares are only worth X euro”; “This was my father’s business and you are insulting him (or his memory) with this valuation”; and “John Doe is a crook and your valuation is letting him away with it.” One can only explain patiently that the valuation and the value of the grievance, if any, are separate matters. A willingness to listen and explain confirms the hallmark of the professional valuer – back to what was said about integrity at the outset of this article. Des Peelo is author of The Valuation of Businesses and Shares, 2nd edition, published by Chartered Accountants Ireland.

If your company is considering expanding overseas, there are three critical issues to address. Expansion can be an attractive strategic option for businesses, whether mature or start-up, and there is significant motivation for both investors and businesses that are willing to accept the capital opportunities that exist. This willingness must include openness to the impact the investors can have on the business and the drive that investors may have to expand internationally, with all the change that can impose – both positive and negative. The opportunity for this strategic option is significant as, according to the Irish Venture Capital Association, over €600 million was invested by foreign venture capital firms in Irish start-ups in 2017 alone. With foreign equity capital, there is added pressure to expand into foreign markets. This can be driven by investors’ ambition to achieve economies of scale in production and sales by accessing foreign markets. It can also be driven, however, by the need and/or want of the management team to be physically closer to the new foreign investor. In selecting a start-up or business in which to deploy its capital, the foreign investor will go through the due diligence process. They will inspect the health of the business and determine the company’s projected growth, and compare it with their desired investment returns. The promises made at this point can determine whether the company should pursue international expansion to deliver the forecasted revenue growth. To deliver the anticipated capital investment returns and avoid being one of the seven-in-ten start-ups that fail due to premature scaling, according to Forbes, companies must focus on three key issues. They are: product-market fit, which is too often assumed; office expansion, which must be tied to key strategic initiatives; and cultural and operational considerations, which concern the environment and what people do in it. Product-market fit A primary consideration for a company is the identification of a market for its product or service. According to Business Leader, however, 42% of small businesses fail because there is no market for their product or service. For a business to thrive, it must first identify a problem it is uniquely positioned to solve. Product-market fit can be easy to define, but harder to physically identify. One can identify success in product-market fit when the product is delivering its value proposition to those first few customers; when the customers are promoting the product and encouraging further purchases through word-of-mouth; and when the product is selling faster than it can be distributed or shipped. As venture capitalist, Marc Andreesen, once said: “product-market fit is the only thing that matters”. Having completed the product-market fit phase, the next step is to explore, research and frame markets that appear similar to the existing customer profile. Identifying markets with similar behaviours to the existing market will contribute significantly to – or even determine – the success or failure of the expansion. It is obvious, but critical, that thorough due diligence and research into a similar market space is completed prior to any significant investment of time and capital in international expansion. Expanding teams and offices For any international expansion to be effective, there must be clarity in the strategic reasoning such as product-market fit or strategic fit, specifically in relation to human resources. The lure of acquiring new talent is very attractive and the prospect of gaining comparative advantage by leveraging skills in other markets through expansion is often a strong strategic objective. This is why Ireland remains an attractive destination for US companies seeking to expand and establish a European presence.  Indeed, Ireland is the European headquarters for some of the world’s largest technology companies including Hubspot, LogMeIn, Facebook and Google. The country’s educated and technologically perceptive labour force can facilitate growth – and that’s before you factor in the country’s effective tax laws and ready access to the single European market. Irish businesses, on the other hand, often look westward to drive increased revenue through access to the large US market, which is currently very attractive for enterprise and consumer software businesses. To facilitate the market fit, the fulfilment of factor and/or the resource needs, start-ups must focus on the people contribution. They must therefore obtain the right skills; establish a support team in the new country; and develop a centre of excellence in that area. Skills gaps in the areas of manufacturing and mass production are easier to satiate by outsourcing, in particular in non-high-tech or non-high-precision products. The aforementioned support-team approach suits companies that require a customer relationship presence without duplicating all services, and with a focus on local customer and marketing support. Customers generally prefer companies to establish a local presence as this provides the customer with clear access to the product or service provider. The third approach is to establish centres of excellence in cities with particularly strong labour forces, in order to drive the company’s research and development initiatives. Edinburgh, for example, is a burgeoning hub for artificial intelligence (AI) talent thanks in large part to the ongoing efforts of universities such as Heriot-Watt University. Scalable company culture  As a company expands its physical footprint, the day-to-day running of the organisation must evolve. The business structure will have various teams in different locations and different time zones, with potentially different perspectives on the organisation. As growing a business involves a group of people coming together to achieve a shared vision of how a product or service will impact on a market, conflict may arise in terms of people, processes, systems and structures. While trying to achieve the best product-market fit, management must also create a culture that can evolve while maintaining the organisation’s core values and purpose. For people to effectively execute their function in a growing business, individuals must have complete clarity on the reporting structure. Keeping people in specific silos can often be counter-productive when it comes to solving the hardest problems, but management must ensure that individuals are not working on too many teams simultaneously or getting stretched too thin. Likewise, the inverse is also true. Management must be alive to the prospect of redundancy between teams, leading to unclear roles and despondent employees. Communication is the key to striking the right balance, and this involves more listening than talking. Even the virtual experience of presence – using live digital feeds, for example – can connect people different locations in a meaningful way. Technology offered by Slack, Skype and others have made it easier than ever before for colleagues in different countries and time zones to communicate effectively, and thereby enabling a company to scale. Invision, for example, has a completely remote workforce. This intangible work environment and culture is built around technology and transparency, which facilitates communication and collaboration. As good as these collaborative and communication tools are, there is no real replacement for being face-to-face with a colleague or – more importantly – a customer for building relationships. 70% of communication is said to be non-verbal and a lot can get lost in translation, as technology cannot give the feel of the environment and always creates a sense of distance unless the relationship is long-term and very well-established. Businesses must therefore balance the need to combine the capitalist fact of return on investment with feeling in satisfying the needs and wants of clients and customers. It is imperative that a company with teams in different time zones works to create an environment or culture that promotes collaboration, thereby avoiding a ‘them and us’ culture. Intercom provides a good example. In the early days of expansion, Intercom installed a camera in its San Francisco office and transmitted live footage to a screen in its Dublin office to help colleagues in both locations seem that bit closer. This approach has privacy and GDPR issues attached, of course, but it can create a perception of continuous presence and connection. Ensuring that project teams, or ideally the entire company, meet regularly is key to building strong relationships that endure. It is important to budget for these off-site gatherings and while they may appear in the financial statements as a cost, the positive impact may be seen in the retention of a key client or the improved delivery of a project, for example. Alternatively, colleagues may develop a joined-up approach to land a new account while working from different sides of the world. What would that say to a prospective client about the company’s cohesion and approach to integration? Conclusion International expansion requires a thoughtful and strategic approach, ensuring that expansion is commenced for the right reasons – be it to expand the sales efforts in a different market or to capture key talent in order to gain a competitive advantage. For any expansion to be successful, the company’s structures and processes must chime with the company’s overall culture. The key to solving most expansion-related issues is the company’s mission and vision – everything should stem from this. David Andreasson is Director of Finance and Operations at Voysis. Fearghal McHugh is a Lecturer in Business Leadership and Governance at Chartered Accountants Ireland and GMIT. 

Performance reviews are often thought of as an ordeal rather than opportunity. Dr Gerard McMahon outlines the actions to take before, during and after the review to ensure its success. For many people, the performance review process is a pain in the posterior. It is up there with a visit to the dentist in the popularity stakes. However, the wide-scale application of formal performance management or appraisal systems serves to underline an employee’s central role in the pursuit of a wide range of organisational objectives. Though performance management is ultimately an ongoing, every-day process, it normally comes to a head at the periodic review meeting. If approached with due consideration, it can prove to be an uplifting and invaluable experience for all.  Before the meeting Before you step into the meeting, reflect on its purpose. Most want to increase the employee’s motivation levels, to any extent, in the desired direction. Make sure that’s clear for yourself and your employee. It’s worth considering planning a provisional interview structure and strategy to ensure all relevant matters will be dealt with in an appropriate manner.  Set a mutually convenient time – a lot of it – and encourage the employee to prepare for the meeting. It is now common for employees to submit a self-assessment form to their manager prior to the meeting. This practice has considerable merit, as it encourages the employee to reflect on all of the important aspects of their performance and development.  The decision as to what venue to use for such a sensitive meeting is also worth considering. Though the norm is to convene it in the manager’s office, it may be preferable to locate in the employee’s office (if they have one) or to avail of a neutral venue. It helps to ensure that there will be no interruptions, wherever you go. Having agreed the time and venue, the room’s setting or layout should also be prepared. The manner in which a room is laid out conveys certain messages. For example, the manager can choose to avoid placing themselves behind a desk due to its (physical and psychological) ‘barrier’ connotations. You should also avoid sitting at a confrontational angle.  Next, it is important to review the employee’s job description and consider what their job entails in practice. You should also be familiar with the review forms from previous meetings, including the objectives agreed. It will be useful to have concrete examples to support the feedback that you intend to give. When forming an assessment of the employee’s performance, other views may be relevant.  It can also help to check what training/development has or can be provided to the employee.  Finally, the manager should be aware of the objectives of the organisation, department or division objectives for the next period and the potential role of the job-holder. During the meeting Once the meeting commences, it’s important to establish rapport. This entails nothing more complex than breaking the ice with simple questions and quips. After the initial niceties, the review’s objective and proposed agenda can be outlined. The practice of inviting an agenda input gives the employee joint ownership of the process. Of course, the better prepared the manager is, the less likely it is that issues that had not been anticipated will be introduced.  It is advisable to clear the (discreet) note-taking with the employee and to invite them to take notes if they wish.  Start the review by giving appropriate, positive feedback. This is the most important part of the review meeting, so don’t rush it. It is also good to encourage the employee to talk about what positives they think they bring to the role. It is a good idea to get the employee to self-review as much as possible. A good manager should spend up to 85% of the review meeting actively listening, so take your time and don’t be afraid to use silence if and when appropriate. Clarifying and reflecting are also useful techniques for getting the employee to open up and elaborate. It is advisable to avoid arguments and judgement before you’ve heard all of the evidence.  In a similar vein, an effective manager will focus on facts relating to job performance, not personality. This entails reviewing past performance and SMART (i.e. specific, measurable, agreed, realistic and time-bound) objectives, before setting new ones for the coming period.  As with any important meeting, summarise the key points at the end. However, it may prove enlightening to ask the interviewee to summarise first and then to focus on any important omissions. If it hasn’t been done during the meeting, complete the self-assessment form – or make appropriate arrangements with the interviewee for form completion Before closing, the manager should look for feedback on him or herself. Performance management reviews should be a two-way street, and if one is big enough to give feedback, one should be big enough to take it. Conclude the meeting on a positive note. After the meeting The manager and employee should be satisfied that the completed self-assessment review form is a fair and accurate reflection of the meeting. The draft form should be forwarded to the employee for approval, signature or comment on any appropriate revisions. Afterwards, both parties should endeavour to do what they agreed in the meeting and on the form, and make sure to schedule follow-up reviews or agreed actions. Finally, ensure that the employee and other authorised parties secure copies of the signed form or that the designated online computerised facility is appropriately utilised. Dr Gerard McMahon is the Managing Director at Productive Personnel Ltd. Performance review checklist Before Reflect on the meeting’s purpose: to motivate. Agree a mutually convenient time and place. Ask the interviewee to submit the self-assessment form in advance.  Plan a provisional interview structure and strategy.  Check the meeting venue to ensure an appropriate setting and layout.  Ensure that there will be no interruptions. Review the job holder’s job description and consider what the job entails in practice.  Study forms from previous meetings, including the objectives agreed, and look for concrete examples to support your feedback. Others’ views may be relevant.  Check what training or development has and can be provided.  Revisit the department’s objectives and the potential role of the job-holder. During Establish rapport. Confirm the interview’s objective and agree the agenda. Enable note-taking.  Give appropriate, positive feedback and encourage the reviewee to talk about their strengths. Actively listen as you allow the interviewee to self-review and self-prescribe. Take your time and don’t be afraid to use silence when appropriate.  Clarify and reflect to explore key issues. Don’t engage in arguments. Focus on facts relating to job performance, review past performance and SMART (i.e. specific, measurable, agreed, realistic and time-bound) objectives. Set SMART objectives for the coming period.  Ask the interviewee to summarise the meeting and then focus on any important omissions.  Look for feedback on yourself.  After Forward the draft form to the employee for approval and signature. Follow through on what was agreed in the meeting and on the self-assessment review form.  Fill in the diary in regard to follow-up reviews and agreed actions.  Ensure that the interviewee and other authorised parties get copies of the form.