Decide upon a philosophical approach to fit your teaching style and the goals of the course. The following two approaches are taken from John Bean's Engaging Ideas (Jossey-Bass, 1996):
A. Response-Centered - In this method, readers concentrate on describing their reactions to a text instead of giving advice about how to improve it. This is based on the belief that writers need to learn how readers will respond to their work, and as they learn, they will make choices about how to write so that they will meet their own needs as well as the needs of their readers.
This method can be a bit messy and sometimes initially frustrating for the student who wants immediate instructions as to exactly how s/he should write the paper. If used consistently, however, the response-centered approach produces sophisticated discussions of authorial intent as well as reader response and students may even find themselves discussing course content at length as well.
B. Advice-Centered - In this method, the reader provides constructive advice for the writer. This method is more product-oriented and seems to work best when students have been given criteria for the critique in advance so they have concrete items to identify and examine.
While advice-centered review tends to be more directive and thus more economical than response-centered review, it can also be messy and frustrating at first. Young writers may not always give the best advice and may even misdirect their peers, which can frustrate the person receiving the advice. If you choose an advice-centered method of peer critique, it is most beneficial if you also have a set of guidelines for critique so this frustration doesn't happen.