Performance Management Cycle in 2020

The Performance Management Cycle in 2020

28 Feb, 2021

There’s something called the Performance Management Cycle that’s been around for a while. It’s a certain kind of performance management system. Here you’ll learn all about the performance management cycle, its origins, and the four stages of the performance management cycle. 


While the Performance Management Cycle is not a new system, there are modern ways it can be used today for organizations looking toward the future in 2022-2023. 

What is the Performance Management Cycle? 


In a traditional sense, the Performance Management Cycle is a recurring series of events that happen within the span of a year. All members of an organization are meant to go through the cycle, which begins with setting goals at the beginning of the year, monitoring progress along the way, and completing the year with a final review of performance.


The primary purpose of the performance management cycle is to get members of the organization to set goals and improve overall performance year after year. It gives both teams and individuals a structured process that helps them to be more efficient at achieving organizational goals.

Classic approach/stages


While there tend to be varying labels put on each phase, there are four phases of the Performance Management Cycle:


  • Planning
  • Monitoring
  • Reviewing & developing
  • Rating & rewarding


Each phase plays a distinct role in the Performance Management Cycle. We’ll get into each of these phases more in-depth:

1. Planning


This is the phase when goals and expectations are decided upon for individuals and teams. Traditionally, this part is carried out just once per year to set the tone for the rest of the year. These efforts should be focused on helping achieve organizational goals. Specific measurements will be put in place to determine progress and whether or not goals are being met so the organization can track progress. 


Employees and managers also may talk about specific knowledge or skills needed to accomplish certain goals and define a professional development plan from there.

2. Monitoring


The ‘Monitoring’ phase of the Performance Management Cycle is when performance is consistently measured and continuous feedback is given. In this phase, employees and managers can routinely check to see if annual goals are on track to be met or if something needs to be changed in order to achieve goals. The purpose of this phase it to help teams keep their goals at the forefront and resolve any problems early.

3. Developing & reviewing


“Development” refers to the training and improvements needed to help a team or employee reach a new skill level, or take on more responsibility. Development focuses on improving both the current set of skills an employee has as well as taking on brand new skills for a challenge.


Toward the end of the cycle, a review is conducted of what was accomplished, how much growth took place, and whether goals were met. It’s an opportunity to talk about what went wrong and why (and how to improve going forward) and what went right and how that success came to be.


If the previous steps were executed well, employees and managers should already have a good idea of how well they performed going into the review phase.

4. Rating & rewarding


Once a review is conducted, employees are rated based on an overall summary of their annual performance. 


For low performance, a conversation will need to be had about the reasons for why an individual (or entire team) had problems reaching their goals so appropriate changes can be made going into the next year.


For high performance, employees should be recognized for their efficient work and rewarded at the end of the cycle for a job well done. Rewards can look like any of the following:


  • An annual bonus
  • A salary increase
  • More vacation time
  • A job promotion
  • Being given autonomy over special projects
  • Public acknowledgment;
  • and more


If you’re looking for ways to show employees appreciation, we have a more in-depth post on the topic here.


The modern version of Performance Management Cycle


In recent years, many organizations have found a once-a-year review of performance to be too overwhelming and stressful. The old model of the Performance Management Cycle attempts to achieve a long laundry list of items in just one meeting, which can result in inadequacies. It can force managers and employees to run through the list just to tick items off rather than take the time to have a meaningful conversation. 


Because of these issues, more organizations have worked in a more “agile” approach to the Performance Management Cycle. Agile performance management includes more regular and continuous feedback, and checking in (as well as delivering) on a more frequent basis, for example, once every couple of weeks instead of once every six months. If you’d like to learn more about these concepts and how they work, these articles may be helpful for your organization:



Performance Management Cycle


Project Management Trends


In 2022-2023, the biggest trend transforming the Performance Management Cycle is continuous performance management. Instead of one straightforward Performance Management Cycle, continuous performance management gives more flexibility to the structure and motivates employees to give and receive more frequent feedback.


Many organizations large and small have begun to adopt more collaborative, agile performance management structures and chances are this trend will only become more popular in 2022-2023 since its results have been favorable in many organizations.


From Annual Review to Ongoing Checkings


Under a new more agile approach, goals can shift and transform throughout the year instead of remaining stagnant. Also, with more check-ins and reviews happening, problems can be identified and taken care of much sooner. Here are some more advantages to this shift in the Performance Management Cycle:


  • Employee development takes a higher priority
  • Goals are much more flexible and work better in the short-term (and can be achieved more quickly)
  • Rewards can come earlier
  • Promotes better collaboration between team members
  • Good performance is recognized on a more frequent basis instead of just once a year, which helps with employee engagement.


How Performance Management Software can simplify these processes


Performance Management Software can streamline the Performance Management Cycle within your organization. With an effective performance management tool, performance management is made easier and more automated. That way, managers and employees can focus more on giving feedback and working toward goals instead of managing the process itself. Learn more about our performance management software and what it can offer your organization.


We also offer free performance appraisal templates, so sign up to get yours today!



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