An excellent way to close the gap between an employee’s self-perception and yours is to ask for a self-evaluation. This is something that can be integrated in your annual performance appraisal process.
I recommend that you include qualitative and quantitative questions in the self-appraisal. Think about asking 8-10 questions and ask for specific answers.
For example, a qualitative question for a manager might be, “How have you contributed to the leadership of the department during this past year?” The quantitative question could be, “How did your team meet this year’s business development goals?”
When you read the employee’s responses, you’ll be able to tell immediately if there are big gaps between that person’s perceptions and yours.
Generally speaking, the bigger the gap, the bigger your challenge. Gaps reflect a disparity in communication. An employee who thinks she’s doing superior work vs. your perception of much lower quality is a gap that needs to be closed.
You shouldn’t have big surprises during performance reviews, so a perception gap may mean that you haven’t been providing effective feedback on a regular basis.
The flip side also happens occasionally when when a self-demanding employee gives lower scores on the self-evaluation than you would give.
The advice for you is the same as how you handle the under-performer: provide regular feedback, so they have a clearer idea of how they are meeting expectations.