It's probably one of my least favorite times of the year because of the stress, but the annual review process at work can be a great opportunity to reassess your job and your work goals. Everyone's process differs, but most include a self-evaluation and some sort of review meeting with your manager.
Whether your reviews are done at the same time each year (all employees in July, for example) or on your particular start-date anniversary, it can be daunting to go through a whole year of work. Keep track of projects and results throughout the year to make it easier during this already-stressful time. Some folks like a notebook, but I keep running Word docs listing program (our nonprofit had many), project, specific tasks I performed, and results. I also list any trainings or conference I've been to, awards I've won, and trainings or other service type things I've done for the organization (that aren't in my job description). I print out a few copies of each year's list for my own records, my boss's records and HR's annual review files.
If you're not already in the practice of honestly evaluating yourself, this can be hard. This is not the time to be humble, but it's also not the time to blow yourself up without supporting evidence. Most evaluations include some kind of sliding scale (usually ranging 1-5 or weak to strong) and space for comments. I recommend adding comments in every category to support your rating. If you run out of space, make notes on another sheet of paper. It helps to grab your job description and use that as a measuring tool. If you find that you're doing a lot outside of your description, write that down, too; you can address that at your meeting.
For your face-to-face meeting, prepare your list of accomplishments (from the Prep stage above) and any revisions or changes you've seen to your job description. I also make a list of project ideas for the coming year and any issues I want to discuss with my supervisor (suggestions for better communication, better work processes, and any areas I could use more support in from her or the team). If there's anything that's been weighing on your chest, this is the time to get it out, although I would refrain from straight out venting—I subscribe to the school of every-complaint-should-come-with-a-helpful-suggestion.
The meeting will often include you and your supervisor going over the evaluation together. Pay attention, and if you have any questions as to why you received a rating you did, ask then and there. Your supervisor should be able to list reasons, and you may have a chance to present information to support your self-evaluation, or you may gain understanding and self-awareness of your work that you weren't able to see before.
The Money Talk
Annual reviews are also common times to evaluate your position and salary. Some companies have salary talks every year (formal or informal); others are on a more sporadic or inconsistent schedule. If it is something you want or something that is an option, do some research on what changes you would like seen made to your job description and what type of compensation you would like to negotiate (websites like payscale.com are a good place to start for a target salary, but you can also consider asking for schedule flexibility, more vacation, etc.). Be clear and present tangible reasons from the employer's perspective for why you deserve the raise ("Because I've been here two years" and "Because I'd like to afford a nicer apartment" are not good reasons; "Because I've added value to this organization beyond my paygrade and would like to continue doing so" or "Because I'd like to take on more responsibility in an area that the organization needs help with" are good reasons). If your supervisor hints that the timing just isn't right or that you're just short of being ready, suggest a mid-term review in three or six months to reassess and reconsider.
You should come away from your review with goals for the next year (agreed on by you and your supervisor) and an understanding of where you can improve (yes, every one of us has something). If you go back to your set ways without adjusting, you'll just be back in the same place next year (slightly worse, since you should know better). Take any constructive criticism or suggestions and apply them; if there are areas of specific concern, don't be afraid to ask for extra training or referral to resources that might help.
Some additional resources in prepping for your review: Forbe's article "How to Ace Your Performance Review" and the Grindstone's From Review to Raise series.
How are performance reviews structured at your workplace? How do you prepare for them?