The performance management cycle is an annually recurring phenomenon in which employees of an organization are evaluated throughout the year. It is essentially a model that allows management and employees to achieve their organizational goals in a better way through a structured process of employee development.
Performance management cycle acts as an important component in achieving organizational success and gain a competitive advantage.
The goal of a performance management cycle is to develop and execute employee performance plans effectively. Using a performance management cycle adds a definite structure and process to a manager’s efforts to help employees reach their potential.
There are several versions of the performance management cycle, each essentially following a common management process of:
- Reviewing carefully what has been done
- Proper planning about what needs to be done
- Putting those plans into action
A typical performance management cycle can be divided into four strategic stages –
- Stage 1: Planning
Planning essentially means setting clear performance expectations and goals for individuals and teams to focus their efforts toward achieving organizational objectives.
- Stage 2: Monitoring
Monitoring means measuring performance consistently and providing ongoing feedback to employees toward reaching their goals.
- Stage 3: Reviewing
Reviewing means assessing employee achievements in the direction of accomplishing their set goals.
- Stage 4: Rewarding
Rewarding means recognizing and compensating the deserving employees for good performance.