Performance management cycle: a guide to the important stages

Development is an ongoing process. It’s the continued mechanism of growth of knowledge, understanding, and expertise. Despite this rolling evolution, repeated assessment intervals are necessary to course correct – to get a handle on how an employee’s skills and abilities are advancing, and steer performance where necessary.

In order to achieve this with efficiency, employers should look to use a standardized model. One which allows for a personal evaluation that focuses efforts on achieving goals and growing as an employee. The model that has been proven to deliver the most significant results, is the performance management cycle.

Whether seeking to improve overall performance, or to recover from a fallow period, the structure of the performance management cycle model sets out a route to success: analyzing pain points and pressures, outlining methods to improve, and setting goals to be met.

Unlike other appraisal models, the performance management cycle enables both the employer and employee to track progress over time. This is achieved thanks to the four principal stages of the cycle:

• Setting goals
• Monitoring progress
• Developing performance
• Rating and rewarding improvement

And with several performance management cycle tools available, the benefits can be easily realized, and the process leveraged to help employees, teams, and the business, as a whole.

What are the stages of the performance management cycle?

Setting goals

The performance management cycle always starts with the initial planning stage. It’s the clean slate foundation that allows for clear direction going forward. This actually starts before even consulting the employee. Because in order to best utilize the time and efforts of your workers, having a good grasp on the company’s goals and objectives for the next year, is vital.

With this established, it’s time to factor in exactly how each member of staff fits into that wider ambition. And this is the point you bring the employee in. Doing so, creates a sense of investment. This is because the employee will know, understand, and appreciate what the organization is trying to achieve, and how their involvement is pivotal to that success.

Setting out individual goals for the employee, however, is more than simply a tick box exercise. Each goal in the performance management cycle should be specifically outlined, measurable, achievable, and relevant to their role. Without these performance expectations, it would be too easy to assign tasks that are destined to fail.

Monitoring progress

Actively tracking the goals which have been set is vital. Not only at the end of the process, but continually, along the way. Without this supportive monitoring, employees could feel overwhelmed, lost, confused, or disillusioned. And without any semblance of check-up over the established twelve month period, how can you expect that individual to produce the desired results?

There are also macro-level influences that can come into play. No matter how well an organization plans, all manner of unforeseeable circumstances in the wider industry can arise and scupper even the most robust laid plans.

But it’s important to note, we’re not talking about micromanagement. This stage is less about how the goals are being achieved, and more if the employee has the necessary skillset, tools and understanding to achieve them in the first place. This isn’t necessarily a failing of the goal setting stage, it’s the honest assessment of realistic expectations. And the ability to actively support and change up if needed.

Developing performance

As a direct result of the monitoring phase, managers will already have a clear picture of how their worker is progressing. But rather than simply watching them struggle or exceed and grow bored, this aspect of the performance management cycle allows managers to make necessary adjustments to ensure greater success.

For those who are underperforming or repeatedly unable to hit milestones and targets, training and development can be investigated and offered. Alternatively, their assignments can be adjusted to focus on their strengths. Doing this serves to reinforce confidence, while nurturing their required capabilities in a way which keeps them on course.

Similarly, there will be employees whose performance excels and will need additional fuel to drive them further. However, there is a fine line between deeper exploration of a specific aspect or task and becoming distracted to the detriment of the already established goals. This careful balancing act is one of the defining properties of good management and crucial to keeping employees’ attention and focus in the right areas.

Rating and rewarding improvement

No worker, at any level, wants to hit a goal just to see it ticked off a list. There has to be a feeling of pride, accomplishment, and most importantly, motivation. But we cannot assume individuals will be motivated to succeed on motivation alone or furthering of the status quo. That logic leads to archaic unhelpful thinking like, “They’re being paid, that’s their motivation to succeed.” So what does constructive motivation look like?

Ultimately, people are motivated by things they genuinely want. Subsequently, any merit-based incentive or reward offered, should be tangible outside of the personal growth that the employee will have experienced. This can take the form of a one-time bonus, additional compensation, increased vacation time, or the awarding of a special project or assignment. As well as a positive written review and company-wide acknowledgement.

Conversely, not hitting these goals, should not feel like a forfeiture of reward. That may sound counterintuitive but let’s think it through. Scolding an employee for not hitting their goals, despite best efforts, will not motivate them to try harder. If anything, it will confirm their dejection and their performance will spiral further. Reassessing and reorientating, rather than punishing, is the key. That way, the employee in question will be able to identify what went wrong, and can strive to rectify these foibles.

What is the importance of a performance management cycle?

Having the necessary tools to support and boost your workers’ productivity, alignment, and communication is essential to any good business. And the performance management cycle is one the strongest tools you can invest in to achieve this. Because doing so allows for the creation of clear, aligned goals. And by making the process of setting and tracking these goals easier, the path to accomplishing them becomes natural and second nature.

Conducting this process, also offers transparent feedback for the upper echelons of management. Instead of waiting for an annual review, managers are able to gauge how effectively the wider company goals are being met. And this goes beyond a standard graph, flat figures, or uninspired updates; it’s the demonstrable evidence of how resources are being utilized.

It also bolsters recognition and appreciation – both of which are essential to ensuring staff retention. This is in line with BambooHR’s findings that 75% of employees who receive regular (at least monthly) recognition for their efforts, are more satisfied with their job. Similarly, 69% of staff work harder when they feel their efforts are appreciated and valued.

How can performance management systems fail?

No matter how effective a model can be, it is still a tool, and when used incorrectly, the results will be dissatisfying. Understanding the causes and reasons for the system to break down, is just as important to success as harnessing what works.

Poor communication

Authentic communication through the performance management cycle is of the utmost importance. It creates an environment conducive to development by encouraging open conversation. This transparency, from both manager and employee, ensures each stage can be explored comfortably in a way which doesn’t feel like a probing attack or a waste of time.

Setting unrealistic goals

There’s nothing wrong with ambition, but that shouldn’t come at the expense of realistic expectation. Of course, strive for the best but never demand the unreasonable. Doing so is a sure-fire way to miss goals and demoralize.

Engage with the process

Investing in the system is not only support for it, but a generation of authority and trust in the process. From an employee perspective, if a manager is apathetic or indifferent to the method, the employee will mirror this attitude and downplay its importance and potential impact. As such, managers need to show genuine enthusiasm and highlight the merits and rewards for its implementation.

Tracking the wrong data

We’ve outlined how monitoring progress is fundamental to the performance management cycle working, but knowing what to monitor is equally necessary. Performance rating can take many forms, focusing on different elements of a worker’s responsibilities, so managers must ascertain what markers are most identifiable and reflective of their staff’s output.

Tips for developing a successful performance management cycle

When it comes to performance management cycle tips, sometimes following the stages listed above is more than enough. That said, there are additional ways to maximize the mechanism’s potential, which we’ve detailed below.

Collaborative goal planning

Instead of solely dictating what the company needs an employee to do, involving your staff in their future development can be infinitely rewarding and empowering. By making the goal planning a collaborative process, and inviting the employee to help guide the strategy, the seriousness and usefulness are established, which helps drive motivation.

Frequent feedback

This doesn’t have to be entirely formalized, and with open communication, can feel like a casual, unintrusive check-in. But by sourcing continued feedback, both parties will have a clearer appreciate of how the process is unfolding and will be able to take action where needed.

Supportive resources

Needing assistance to achieve your goals is nothing to be ashamed of. By acknowledging your aims are too intense at present, or wanting to improve, indicates a desire to succeed, in spite of the lack of ability to do so. As such, providing the requisite resources to ease an undertaking should be pursued whenever the opportunity arises.

Move the goal posts

Now, we’re not saying employers should move the target just to drive up successful numbers; especially not when merit-based incentives are involved. But as your organization and the industry you operate in fluctuate, it is possible that the goals which have been set, can become redundant or counteractive. Knowing where to focus an employee’s efforts and adjust goals where needed is incredibly useful to guarantee the entire performance management cycle feels worthwhile and effective.

Focus on the positive

The outcome of this performance model is to inspire, motivate, encourage, and nurture employee productivity. And if it ends up feeling like a chore or an excuse to be chastised, the full benefits will never truly manifest. So when dealing with issues, lapses, or missteps, treat them all as learning opportunities, rather than failures.

Performance management cycle tools and software

With such a wide array of benefits, there are understandably several performance management cycle technology options available; all offering their own unique spin on how to address the cycle’s four stages. Picking the right one should be reflective of how your management team operate, the scope of relevant features on offer, and how much of your staff are on-site or working remotely.

Granted, it’s entirely possible to track these stages manually. But without performance management cycle software, you lose the standardized process, which ensures company-wide parity. It also encourages managers to forge their own methods, ones that are possibly untested and out of synch with the rest of the company. What’s more the time and effort it takes for managers to manually track this data can be exhaustive, especially when considering a fairly large team made up of employees with unique responsibilities.

Continuous performance management

But are there alternatives to the process? A way to condense the performance management cycle stages, to maximize the benefits on a regular basis? If you incorporate agile movement, yes there is.

Agile movement is a term from the software development world. It’s all about seeking out methods to improve the software building process, and creating a culture whereby programs flourish more often than not, due to the practices in place.

So what does agile movement look like when applied to the performance management cycle? Well, rather than holding annual meetups to discuss goals, progress, development, and then assess the outcome, continuous performance management encourages an increase in frequency. We’ve already established that a good, frequent line of communication can be beneficial, but opting for monthly check ins rather than annual or bi-annual, can yield superior results.

This is because – to go back to the software world – rather than sending a program out there, waiting for the bugs to surface, and then run a diagnostic on everything that caused grief, you are able to get a perpetual cycle of trial and feedback going. Which presents clearer, more immediate understanding of sticking points, and allows for swifter coaching of employees.

It should be noted, however, that this is an increase in frequency not intensity. The last thing employees or employers want is to be tied down with mandatory scheduled meetings and unnecessary invasive scrutiny. And with the modern workforce changing, workers hopping from job-to-job, and staff working remotely, the idea of a yearly meeting could feel inadequate or ill-suited to their specific needs.

Whether utilizing the performance management cycle or continuous performance management, ascertaining the balance that works best for your workers is imperative. And once it has been successfully incorporated into your regular processes, with the anxiety of tick box reviews stripped away, you’ll quickly wonder how you went so long without them.

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