To start, lets differentiate between good, and bad critique. To get a second opinion on the topic, I conducted an interview with one of my good friends Destiny (check out her blog here) about her thoughts on this.
Me: What is bad critique?
Destiny: Bad critique, in writing, is when someone says only bad things about someone's book section or whatever it may be. They just criticize, and don't give any tips, or say anything good.
I couldn't agree with her more. In laymen's terms, bad critique doesn't help the writer. In my experience, bad critique is made up of either a) derogatory comments, and complaints (This scene is awful! Your characters are paper thin. ect.) or b) sugar sweet (This is great! Absolutely nothing wrong with this!). It's pretty obvious why mean critique is bad critique (it tears the writer's confidence to pieces, and certainly doesn't improve their writing), but surprisingly enough sugar sweet critique is just as bad as mean critique. When the critic sugar coats things that need improvement, for whatever reason, they may make the writer feel good, but they don't help improve the work.
Now, onto what makes good critique!
Me: What makes good critique?
Destiny: Good critique is basically the opposite of what I said bad critique is. It's just when people tell you good things, and bad things, and they don't try to be entirely negative.
Good critique, as Destiny said, is made up of both good and bad things, and ultimately helps the writer. Look for good things in the piece that you enjoyed, and make sure you tell them that you are vocal about parts you liked. However, don't stop with the good things. Point out the things, in good taste, that need improvement, and let them know how to make the problem areas better. Always put yourselves in their shoes. Ask yourself, "How would I feel hearing this? Would it help, or hurt me?" before you give your critique. A good system is to make sure that your good and bad comments balance each other out. Now, you might be saying "But Sunny, what if the whole piece is awful?!" Here's what I say to that: you aren't looking hard enough. There is always a diamond in the rough. Even if you have to shine up that diamond and put it on a gold chain, it's important to always tell the writer that there is something good, no matter how bad you think their work is.
The last few thoughts on critiquing I have are these.
Don't be above telling someone you can't critique their work. If you know that you'll rip them to shreds, and it won't end well for either critic or writer, then politely decline, and refer them to another critic. I have this system going with the friend I partially interviewed in this post, and it puts a lot less stress on our relationship. A good move on both our parts.
Don't critique someone's work without them asking first. It's hard not to sometimes, but nobody wants to hear unsolicited advice.
So, in closing (I can just hear you cheering now), always put yourself in their shoes, and remember that balance is key to good critique. Being asked for critique is a great honor, so value it highly, and give the writer 110% of your critiquing effort!