Performance Management Cycle

Achieving organizational harmony through a continuous performance management cycle will benefit both employees and managers. Almost any high-performing team will be following an effective performance management process. With a clear performance plan, individuals and teams will have the strongest understanding of how they can give their best and HR can determine when employees are fulfilling their potential.

Planning and tracking the performance of your team will significantly improve their overall productivity. With a clear structure, employees can better understand what to expect from their work. At the same time, it enables HR and leaders to more easily monitor the performance of these employees.

The performance management process was essential for the expansion of industries in the 1920s. Harnessing the full potential of your employees and maximizing productivity has since been a key focus for companies all over the planet. Over the past century, the performance management process has developed into a more continuous cycle that facilitates performance but also much more.

What is a Performance Management Cycle?

The performance management cycle includes the stages of planning, measuring and evaluating employee performance. The three main pillars of performance management are performance behavior, skills development and career growth.

Performance Management Cycle definition

Broken down into its simplest form, a performance management cycle will ensure that an employee has:

  1. Set their goals
  2. Determine how these goals will be met
  3. Assist them in making these goals reality
  4. Review their performance against their goals
  5. Reassess their performance and begin planning for the next cycle

What are the steps in a Performance Management Cycle?

Each of the stages of the performance management cycle is outlined above. In a nutshell, an effective performance management process will allow individuals and teams to plan and ensure that their efforts are achieving organizational objectives.


Key to the success of any continuous performance management process is the planning phase. In the planning stage, employees and managers will review where they currently stand in terms of fulfilling their long-term company objectives. Establishing a performance plan with clear goals set along with a routine for check-ins and performance reviews will enable employees to recognize the expectations for their performance.

Improved performance can be sustained when individuals and teams can truly understand how achievable the goals set are. Within the planning phase, it is crucial that employees and managers understand what they intend to accomplish as they build their performance plan. The goals set will determine the focus for the next period of time and so they must be well-informed in order to facilitate the organization as a whole in reaching their long-term goals.

Once the performance plan has been confirmed and the resultant goals set, employees and managers can begin to work on completing these objectives. This takes us onto the monitoring stage.


With all of the goals set, team members can get started on their SMART goals or OKRs. As they are working on their goals through various weekly tasks, it is important to monitor their progress with regular check-ins.

Through the use of performance managing software, employees can provide real-time updates as they complete different aspects of their performance goals. In addition, this software will enable managers to track how well individuals are performing. Effective performance management is realized when there is consistent communication around performance between employees and managers.

With more routine updates on the performance towards goals, individuals can receive the necessary assistance to help them more efficiently complete their objectives. Good management is proactive management. Without micromanaging the employee, look to offer them advice where required.

Stages of the Performance Management Cycle


A continuous performance management cycle must be precisely that - continuous. Establishing a consistent pattern of reviewing and tracking the progress made towards the goals set for an employee will facilitate an improved performance. When an individual is more regularly reminded of their overall goals, it will shape how they approach their immediate tasks.

Promoting a high-performing company culture is realized through an effective performance management cycle. Taking time to conduct regular performance reviews will present both employees and managers with more opportunities to address problems preventing top performance.

Whilst long-term goals should not be redefined, the process of developing an employee's performance plan will enable them to more efficiently fulfill their own objectives.

It is important to reassess an employee's SMART goals or OKRs. This is especially true if in monitoring an employee's progress they are not ambitious enough. If an employee is completing their quarterly goals within a month, then it is important to redefine their objectives. In this way, they can remain productive and won't drop off in terms of productivity for the remainder of the quarter.


As the period for the goals set draws to a close, the performance management cycle must restart. Employees that have met or exceeded their goals should be rewarded, meanwhile, it is important to support those that have fallen short. Use this moment of 'recycling' to encourage employee learning and development, building on previous experience will stand all of your employees in much better stead for their career growth.

Recognition is crucial for employee engagement. By demonstrating that you value the efforts of individuals and teams they will be better motivated to continue their good performance. Bring this into consideration when you initiate the next planning phase.

Each performance plan should be informed from the previous period(s). As your company grows the employees and managers experience will develop and consequently manifest into an ever improved performance management process.

Why is the Performance Management Cycle important?

The impact of a performance management cycle is self-evident. More often than not, high-performing teams will follow an effective performance management process. Improved performance can only be sustained by learning and building on what has been achieved before.

Implementing a performance management cycle allows organizations to:

  • Improve the productivity of the business
  • Strengthen employee relations
  • Increase retention rates
  • Promote better employee engagement
  • Develop more innovative and creative solutions

Why is the Performance management cycle important

How to make the Performance Management Cycle a success

At each stage of the performance management cycle, HR and leaders must be consistent in tracking and assisting their employees and managers. This consistency will facilitate a smooth continuous performance management process. With a clear structure set out, employees can complete their SMART goals and conduct performance reviews with confidence.

The actions taken to facilitate a smoother performance management process will contribute to improved performance across the entire organization. Regardless of the performance managing software you decide to use, as long as you follow these basic steps in your performance management cycle, you are certain to achieve any of your ambitious, long-term objectives.


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