Annual appraisals are part of performance management and are designed to motivate, develop and support employees in performing their roles to the highest possible standard. They provide an opportunity for constructive discussion of performance, identification of areas for development and agreement of approaches by which employees needs could be met. Part 1 of this article was concerned with preparation of the employee and manager for annual staff appraisal. This article provides advice for managers who perform annual appraisal interviews. Guidance is offered on how to ensure the strategic objectives of the team and healthcare organisation are met, a balanced understanding of nurse performance is achieved, and future objectives are identified and agreed.