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HRLeadership

Performance Management Cycle in HRM

By 

 — April 28th, 2022

Performance Management Cycle in HRM

A performance management cycle is a model that allows employees and management to work together to achieve shared company goals through continuous employee development.

The cycle combines ongoing support, feedback, and reviews to facilitate employee growth and aid the organization in reaching its overall goals.

In the past, a performance management cycle would last one year but this has changed in recent times. In a job market that prioritizes employee feedback, engagement, and expertise, businesses are speeding up their performance appraisal cycle.

There are different steps involved in the performance management cycle and it lies with HR leaders to ensure that each one gets the attention it requires.

Tips to support a smoothly functioning cycle include setting practical goals, providing feedback with care, monitoring carefully, and using performance management software.

The Ultimate Guide to Employee Retention — It's all About the Communications Experience

What are the benefits of a performance management cycle?

There are several key benefits to the performance management cycle. These include:

  • Highlighting training needs
  • Boosting morale
  • Providing clear and aligned goals
  • Identifying the right employees for promotion
  • Helping define career paths
  • Supporting workforce planning
  • Increasing employee retention
  • Delivering greater employee autonomy
  • Improving accountability
  • Delivering insightful talent reviews

 

What are the four stages of performance management?

There are four key steps in an effective performance management cycle. Each of the steps tie together to create a realistic path to employee and business success. These steps are:

Planning

The planning stage of performance management is all about goal setting. Before talking to their employees, management should hold a meeting to clearly define the organization's goals and objectives for the year. This involves the overall strategy for the business and the personal objectives for all employees and teams.

When management knows what they want each employee to achieve, it is time to meet with them to make a strategic plan. Employees are more likely to succeed in their goals if the goals are clearly explained to them. One study found that only 50% of employees would ‘strongly agree’ they know what is expected of them at work. It is useful to outline goals using the S.M.A.R.T. method.

SMART goals are:

  • Specific (simple, sensible, significant)
  • Measurable (meaningful, motivating)
  • Achievable (agreed, attainable)
  • Relevant (reasonable, realistic, and resourced, results-based).
  • Time-bound (time-based, time-limited, time/cost limited, timely, time-sensitive)

Monitoring

Stage two of the performance management cycle is monitoring. This is a key stage as it helps management ensure that their employees are on track.


When a business sets out to implement a performance management model, it should decide how regularly it is going to monitor progress within the company. Whether it’s weekly or monthly, consistent check-ins keep employees and managers working together and on the same page.


These regular meetings give managers the opportunity to check in with their employees and to offer any assistance and guidance that may be needed. After managers check in with their workers, goals can be adjusted and discussed in further detail if required.

Reviewing

Towards the end of the cycle, an employee review takes place. After closely monitoring their progress, management will already have a good idea of how well the employee did during the year.

The review is a chance for management and employees to evaluate both the result and the process itself. The evaluation should include questions such as:

  • Did the employee have the required skill set to perform their duty?
  • How much had they learned from their experience?
  • Was the training assigned at the beginning of the cycle of use in completing the task?
  • What other skills should they look to learn?

Rewarding

The final stage of the performance management cycle plan is rewarding employees for their hard work. This is a stage that cannot be overlooked - busi­ness­es that have effec­tive reward struc­tures enjoy an almost 50% rise in employ­ee engage­ment.

Rewarding and recognizing workers also leads to greater employee retention, productivity, and motivation. All these elements create a more positive overall workplace.

Rewards and recognition can come in various forms. Some ideas include:

  • Express gratitude with a public thank you
  • Give a hand-written note
  • Offer time off
  • Give small gifts
  • Cover commuting costs
  • Feature top employees on your company blog or newsletter
  • Schedule an all-company activity
  • Donate to the employee’s favorite charity
  • Pay for their favorite music/streaming service
  • Give a gift membership
  • Host a virtual game night
The Ultimate Guide to Employee Retention — It's all About the Communications Experience

Seven tips for developing a performance management cycle

  • Make goal planning a collaborative process - Collaborate with employees to help them understand the importance of their contributions and why their goals matter.
  • Leverage continuous communication and give frequent feedback - Regularly check in on employees’ performance management and provide constructive feedback when needed.
  • Provide resources and support - Pay close attention to employees to ensure they are equipped with everything they need to accomplish their goals
  • Assess and adjust goals - Monitoring employee progress could reveal that adjustments are needed to make goals attainable.
  • Focus on whether the goal is achieved, not how it is achieved - Allow employees space to reach their goals in their own way. Focus on outcomes rather than output.
  • If applicable, adapt your processes to a remote environment - Make your performance management cycle work remotely by creating channels to support feedback, communication, collaboration etc.
  • Give rewards based on merit - Make sure employees are rewarded based on merit. Top performers should always get the best rewards.

Key Takeaway

So, what is the performance management cycle? Put simply, a performance management cycle focuses on improving an organization's results by helping its employees reach their full potential.

These are the four stages of the performance management cycle: planning, monitoring, reviewing, and rewarding. It is important to remember that performance management is a shared responsibility between the manager and the employee.

Attributes of an effective performance management cycle include close collaboration between employee and manager, plenty of feedback, opportunities for growth and development, and recognition and rewards for a job well done. Remember, the main goal of a performance management system is to ensure that employees are working at their full potential in a way that maximizes benefits for the business.

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