Agree in writing on goals and rewards

The first step in establishing a positive and productive relationship with an employee is to agree up front on what you expect from the worker, and what he or she can expect from you. Put it in writing. Your agreement should includes these three points:

1. A clear definition of your goals and the company's objectives
2. Your goals for the employee, with clear standards for performance
3. A summary of the rewards for achieving those goals (and consequences for missing them)

Source: The Motivational Manager; adapted from the Leadership Management International Website