How does your company handle performance reviews?

The more often you provide feedback the less awkward it will be. Everyone gets accustomed to a culture of real-time, blunt feedback. Also, since you're always nipping potential issues in the bud, they tend not to develop into big awkward problems.

I don't like formal performance review processes and I especially don't like them in a start up.

Start ups must move fast. This requires minimizing bureaucracy and leveraging information as close to real time as possible. This is fundamental to the process of building your product and I believe it is also fundamental to the process of managing employee performance.

Praise good work when it happens. Tell people when you're underwhelmed by their work and discuss what needs to be done better next time. Constantly sync up on priorities and planning - both the company's and the employee's. The key is to do all this often, in small doses, and when the issues are fresh.

The more often you provide feedback the less awkward it will be. Everyone gets accustomed to a culture of real-time, blunt feedback. Also, since you're always nipping potential issues in the bud, they tend not to develop into big awkward problems.

It is true that you could do all that I suggest and still codify and reinforce it via a formal review, but I personally think it's only a "nice to have" in a start up where you generally don't have to roll up information through a multi-layered org or cope with prospect of losing the only manager in the company who has first-hand knowledge of her teams' performance.

The one time when I perform a review with an employee is when we're discussing a pay increase. It's generally a pretty simple and straight forward review of the little bits and pieces we've discussed over the preceding months. The timing of this isn't fixed, since I prefer to address raises on a when-appropriate basis and not on a fixed annual schedule (a whole other post).