How to Set Up a Performance Management Cycle That Employees Love

What is a performance management cycle?

A performance management cycle is a set of practices honed into maintaining and improving employee performance in collaboration with organizational objectives. Contemporary performance management theory has transitioned from traditional performance management to continuous performance management. A traditional performance management cycle would incorporate a top down style, static process which establishes goals whether they be organizational, departmental or individual at the start of a term/quarter with the expectation that they will be completed within a given timeframe. Management then monitors the performance of individuals against the objectives and shares evaluations periodically. It has been argued that this traditional form of performance management cycle is outdated and archaic.

On the flip side, implementing a continuous performance management cycle allows management to roll out practices throughout the year/term which include regular one-on-one meetings with managers, direct reports, to discuss performance and development as well as offering the ability to give and receive 360°-degree feedback.

Phases of a contemporary performance management cycle:

As an ongoing process of developmental performance discussions and feedback, the continuous performance management cycle enables managers and employees to treat performance management as a process that links an individual’s performance and contribution with an organization's culture, business goals and strategy. It can be broken down into 5 stages.

1. Planning:

The first stage of the cycle is to plan, it is when a manager and an employee get together in order to first evaluate the employee’s current role and performance, identify areas for improvement, and then establish clear and specific performance expectations and set achievable targets. By involving the employees in the planning process, they are able to understand the goals of the organization, what needs to be done, why it needs to be done, and how well it should be done. During this stage, a useful tool to use would be SMART goals meaning goals that are Specific, Measurable, Achievable, Relevant, And Time-Bound. By Implementing smart goals, employees are able to structure and monitor their goals and work towards a certain objective with clear milestones with an estimation of the goal’s attainability.

2. Developing:

The second stage of the performance management cycle is to improve an employee’s current expertise, and also to develop new skills and knowledge, as well as abilities and potential. This is mainly achieved through training, giving assignments that introduce new skills, or a high level of responsibility, improving work processes, or other methods. Development efforts can encourage and strengthen performance, and help employees keep up with changes in the workplace. This stage is also about providing support to an employee at all times and ensuring the appropriate systems and tools are available to maximize performance expectations.

3. Monitoring and performing:

The third stage of the cycle surrounds the notions of consistently monitoring the performance of employees and providing ongoing feedback and relevant tools to employees to enable and support them in achieving their goals. Ongoing monitoring provides the opportunity to check how employees are doing, and deal with potential problems or obstacles early on.

4. Reviewing:

The reviewing stage within the performance management cycle is all about evaluating employee or group performance against the goals criteria and standards that had been agreed during the planning stage. This can be done by using a number of tools such as 360°-degree feedback, self-assessments, competence-based assessment etc. A review will examine the results both tangible and non-tangible and determine where to concentrate efforts as the cycle returns to the planning stage.

5. Rewarding:

If all the objectives have been met, the final stage of the cycle is to reward employees, by rewarding employees, managers acknowledge the employee’s contribution to the organization and provide incentives to further motivate and engage them. There are many ways to acknowledge good performance, from informal recognition to formal reward and recognition programs.

Top tips on how to run the best performance management cycle:

Tailor it to your organizational needs:

The An ineffective performance management system is usually the result of undefined processes, misplaced priorities, unclear goals and failing to give routine feedback to employees. Therefore you must be realistic with your approach and tailor it to your organizational needs, such as set feedback with realistic time-lines.

Make it integral:

Do not let your performance management system fall into the realms of protocol, instead highlight its values, the potential growth it can open up for individuals, and develop it into an integral part of your organization’s value chain. Make it empower your employees.

Use the right system:

There are multiple systems out there to maximize the effectiveness of your performance management process, make sure you spend time researching which will suit your organization best. You need to assure that whichever system you end up using, it optimizes your cycles effectiveness, functionality and enhances your employee’s morale.

Give specifics:

It’s all well and good having a performance management cycle in place. However, if you do not fully utilize it to its capacity, then you will reap very little rewards. Make sure you are prepared for any organized one to ones with evidence and actionable suggestions to employees , and understand how to give constructive criticism in the most beneficial manner.

If you manage to implement a performance management cycle successfully, you are likely to reap rewards such as improved organizational performance, improved employee productivity, more efficient communication, clearer accountabilities, improved employee retention and loyalty. So why not give it a go or give it an update!