Managing staff, I've always kept a tally of each person and how they fit into categories of "meet the minimum criteria to be employed", "exceeds at their job", "excels and/or is ready for advancement". The first level is just a checklist of making sure they are doing all they are chartered to do, the second is usually a set of differentiators I lookout for when comparing staff, the third is for folks operating above and beyond their duties. Criteria are dependent on the job and managers expectation, but differentiators for higher ranking make for great coaching tools for helping staff visualize improvement and potentially advancement opportunities.

@Dave Denniston I use Gusto for payroll and HR. For an extra $3/month/person their "performance" add on is decent. I like the idea of a platform like this for tracking and documentation. It's better than keeping a spreadsheet or google doc, and offers something more robust in the event lawyers need to get involved in an employment dispute. Knock on wood, I haven't had to deal with this as an entrepreneur, but back in the day when I ran teams using Taleo, the time-stamped output from Taleo was a key component of showing a track record of performance or lack thereof when lawyers get involved...