A Complete Guide to Performance Management Cycle

Unlike the modern organizational culture, we consider performance management to be a forward-looking solution that is based on retrospection. With an evolving work culture, the need for continuous feedback is now felt across offices and technology has brought forward such tools which are highly advanced and need based. Now managers can anticipate problems based on the performance cycle, and initiate course corrections to bring the action plan back on track.

A performance management cycle is a round the year phenomenon and includes planning, monitoring and evaluating employee’s performance. It works in such a way that meets the overall goal of an organization. Here, the success of an employee is aligned with the success of an organization.   

The performance management cycle helps employees improve skills and achieve goals. An effective cycle focuses on employee performance and tries to make necessary changes for his growth in a workplace.

The performance management cycle encompasses four stages:

The management expert, Peter Drucker, designed one of the earliest performance management models. As per his sayings, whatever you can measure, can be managed and whatever you can manage, can be accomplished. Individual and organizational goals should be aligned together. The continuous process includes the following parameters to achieve the targets smoothly.  

1. Planning

Planning is the first step of the performance management cycle and includes three elements:

Defining stage 

Here, the management and HR team have to define jobs, include description and determine targets. Besides, it needs to list objectives, and have clear metrics on how to access and achieve the goals. The point is to make sure goals are lucid and are followed by clear performance standards. 

Giving feedbacks 

Once management completes the defining stage, employees should get the opportunity to give input for the materials. As they are the ones to perform the job, they should have in-depth insight of skills, goals and competencies to help the company achieve milestones easily.  

Approval stage 

In this, both management and employees should agree on roles, goals, and achieving objectives. This is how it is possible to make the first step in the process of collaboration, making the employees understand their engagement in goal setting.

Also read: A Guide to Choosing the Best OKR Software for Your Business

2. Monitoring

Plan meetings 

Try to plan for it in a timely and regular manner, wherein the next step for the management cycle would start. Monitoring and training are important and here, routine meetings can help employees assess their position. 

Provide training and coaching 

Meetings should focus on training and give solutions through mentoring, rather than measures that result in uninspiring performance.

Accountability should be positive and engage employees to be honest to speak on what they are struggling with and what changes can be beneficial. This is where management training plans can help employees effectively.    

Revisit objectives

As the process continues, management needs to revisit objectives to check on improvement and adjustments required. Management should focus on opportunities for employees.

The step reviews overall performance, and how the employees are rewarded in a meaningful manner.  

3. Reviewing

Performance review 

At the end of the annual performance cycle, this review is an integral part which is known as appraisal. Typically, these are once a year thing where an employee’s performance is evaluated over a span of a year.

Management checks records to evaluate the progress of an individual from the previous performance year. However, the monthly check-ins will help employees with problem solving, adjust goals and focus on future tasks. This step is included in the cycle that looks back to assess one’s behavior and potency for coming years.

Review management process

Here, both employees and management should look at how the management cycle is working and identify the areas of improvement. Asking some questions constructs an effective review mechanism:

  •       Try to know whether organizational objectives are met
  •       Challenges employees face and need for training
  •       Help from management feedback and how to work on the process

Review goal completion 

Of course, one important question to ask is whether employees can reach their goals. How well did the team perform to achieve the targets throughout the year? Consider all types of achievements as it helps identify areas where improvement is required.

Give effective feedback 

A key part of reviewing is to provide effective feedback and receive the same. Management should focus on actionable feedback so that employees know where to improve their performance in future.

Employees should be encouraged to give feedback on the process and how it can be better. 

4. Action

Plan rewards and recognition

It is a key step to keep employees motivated. This doesn’t have to be monetary, although this is a better incentive in most cases. Other rewards could be company recognition, responsibility for new projects, time off, and assigning leadership opportunities.    

Set stage for upcoming performance management cycle

The last step gives one last chance to employees and management to review the feedback on the entire year’s process. As feedback is the key to the organization to plan for the next year’s cycle and make it effective.

So, with this, you can have a clear conception on what is performance management process and how it impacts business’s success.

How to Improve the Management cycle?

Do you wish to improve the management cycle of your workplace? Here are some vital questions to bring things back on track.

What workforce looks forward to in the management cycle?

A performance management process can hinder or help the workforce. Before you include a new performance management software, try to analyze what’s working and what’s not. Besides, try to find what employees want from the performance management program. As you discuss with employees, be ready to be surprised when you discover how many were looking forward to an improved process. Subsequently, bring in changes in the organization and improvements as per researched based findings.

Do you follow contentious performance management?

Even when employers want employees to be happy, the latter may seek motivation and recognition of work. A management cycle should deliver value to your employees, and companies can flourish in an increasingly motivated workforce.

 However, to boost motivation, performance management should be frequent along with ongoing conversation on how to achieve goals, how it impacts progress, and how it affects employee’s personal development. Motivation is related to a future focused approach, creating developmental scopes. So, managers must engage with employees on career growth that should be the focus of the organization for its success.

Also read: 5 Powerful CEO Engagement Activities That Are Impactful

Are managers using tools to handle performance management cycles?

Managers are crucial in the management program with engagement, motivation, and development plans. This should ensure that they have proper training to motivate employees and get useful feedback. They should coach employees appropriately in the continuous process.

Before introducing talent management, managers should have adequate training so that employees are comfortable being part of one such program. Use correct technology to support the performance management. It should help managers and HR to introduce and get effective results from continuous processes.    

Why develop a performance management cycle in business?

The reasons behind an effective performance cycle are many, but more often, it focuses on employee productivity as its primary reason. A valuable cycle would include development, execution, and monitoring of effective performance plans. Focus on setting one’s goal and arrange for continuous coaching and it will help to improve employee’s performance automatically. It helps them reach goals easily that directly contribute to the company’s growth.  

Best performance management practices

To ensure success of the management process, and whether it is continuously evolving, try to include the best practices:

Well-planned performance strategy 

The strategy should include how frequently employee evaluation is required. Try to find the type of evaluation analysis trackers that suit the company best and how meetings and surveys can help. An effective approach for feedback conversation can help deploy the best evaluation system. Set the workflow right, include actionable inputs for steady improvements. 

Inculcate a culture of open communication

Continuous monitoring should have effective communication to help discuss employee issues. If communication is transparent, negative feedback or matters of poor performance can be addressed. A culture of communication is widely accepted among people of all hierarchies. Managers should develop a culture of openness, expect honest feedback, allowing employees to remain honest and managers can use the information for required changes.

Transparent communication strategy should include:

  •       Share with the employees what the company expects
  •       Train employees to reach their potential using actionable goals
  •       Give constructive feedbacks
  •       Reward and recognition for successful achievement 

Continuous monitoring process

Sounds like monitoring every move of an employee? Certainly not! It is real-time tracking of employee’s progress and outcomes. It necessitates keeping an eye on employee’s sentiment through open discussion and how managers can help employees deal with it better.    

How can performance management software help?

Having a robust performance management software is beneficial in over one way and employers should be well trained to help teams use it. You can try to use the latest streamlined tool that enhances alignment, engagement and communication with employees. Some other benefits go as below:

Have clear goals

For ease of goal setting and tracking progress, a performance management platform is of great use. The right software elevates the employees and helps them reach the business goals. It helps get real-time results and boost goal alignment and is accountable for overall growth of workforce.

Ease of engagement recognition 

As mentioned earlier, rewarding is an integral part of the performance management cycle and recognition motivates an individual. A beneficial platform helps in peer-to-peer recognition, making an employee feel valued. 

Use of feedback frameworks

No matter what feedback framework or frequency a business follows, it should be continuous to protect high performing and potential candidates. An effective feedback strategy can drive individual, group, and organizational growth correctly.   

Effective talent reviews

Even though reviewing outcomes is tough, try to make it insightful. With constant reviewing, it is easy to identify top performers in the workforce. Uncover the growth perceptions among employees and create performance strategies for the success of both employees and business.

Once leaders are aware of best performing management practices and tools, you should know how to leverage it for the good of employees and organizations. With this, employee productivity and business growth skyrockets. Support individuals and teams with performance strategies that help them reach their potential and to push the business outcomes. 

Performance Management System


Subscribe To The Engagedly Newsletter