Performance-based workplace assessments are increasingly important in clinical training. Given the inaccuracy of self-assessment, the provision of external feedback to residents about their clinical skills is necessary for the development of expertise. However, little is known about the processes used by faculty members in giving feedback to residents after observing them with patients. This study explores the factors that underpin faculty members' decisions regarding the feedback they give to residents after directly observing them with patients and the factors that influence how feedback is delivered.In 2009, 44 general internal medicine faculty staff responsible for out-patient resident teaching from 16 internal medicine residency programmes watched four videotaped scenarios and two live scenarios of standardised residents (SRs) with standardised patients and rated the SRs using the mini-clinical evaluation exercise (mini-CEX) format. Faculty staff also provided feedback to the SRs after the live encounters. After each encounter, faculty staff were individually interviewed using a semi-structured interview. Interviews were videotaped, transcribed and analysed using grounded theory methods.Two broad themes were identified in faculty members' descriptions of the feedback process: variability in feedback techniques, and the factors that influence how faculty staff think and feel about delivering feedback. Multiple approaches to feedback delivery were observed. Faculty members' tensions in balancing positive and negative feedback, their own perceived self-efficacy, their perceptions of the resident's insight, receptivity, skill and potential, the faculty member-resident relationship and contextual factors impacted the feedback process.The provision of feedback by faculty staff to residents after observing resident-patient interactions is a complex and dynamic process and is influenced by many factors. Understanding these cognitive and affective factors may provide insight into potential new approaches to faculty development to improve faculty staff's feedback skills and the effectiveness of their feedback.? Blackwell Publishing Ltd 2012.