Main Stages of the Performance Management Cycle

The performance management software solution

Employee management effectiveness is one of the most important factors in achieving company success and its competitive advantage. Therefore, performance management is the continuous process of the planning, monitoring and reviewing employees’ work objectives and their overall contribution to the company.

5 Main stages of performance management:

1. Planning

The planning stage of the performance management cycle involves both the employees and managers. At this stage, the manager and employee agree on what the employee must accomplish, to what standard (for example, the sales goals), and identify how results will be measured. They also negotiate about the competencies (such as product knowledge and customer focus) that are necessary for effectively accomplishing the company's performance and define the development and studying the employee needs to eliminate gaps in his/her competence.

So, the first stage of the performance management cycle is dedicated to identifying the employee’s job description and work plan and the company's goals and objectives, and strategic plan.

2. Monitoring

Employee performance and progress should be continuously monitored. "Continuous monitoring" doesn't mean watching every aspect of how the employee fulfills assigned tasks and activities. Managers should focus their attention on the achieved results, individual and team dynamics affecting the work environment.

So, in the second stage of the performance management cycle, the employee and manager track the employee’s development and performance. If it is necessary, the employee’s performance plan is corrected to meet the changed circumstances.

3. Reviewing

In the third stage of the performance management cycle, the employee’s accomplishments and standards that have been agreed at the first stage are analyzed by the manager and employee. They also consider what new the employee has studied and how his/her knowledge can be effectively used within the employee’s current position and in the future company's jobs. They come to terms about how well the employee performed during the last period and what he/she needs to consider for achieving the future work standards and goals. The manager conducts the evaluation of the employee’s performance, especially if decisions about the employee’s employment, compensation, or rewards must be made.

Stages of the employees Performance Meagurement

4. Improving

The next step of performance management is improving employee performance, and to do that effectively is possible only through understanding reasons why employees are not performing at the optimal level. It could be valid reasons, removal of which is a key for fixing the issue without employee replacements. Managers should keep an open mind to discuss concerns without jumping to conclusions. Clear direction about the responsibilities, job priorities, and expectations of employee achievement as well as keeping clear accountabilities in every activity are necessary.

Performance  Reviewing

Some ways to improve employees efficiency:
  • Communicate employees' clear expectations about their work assignments. 
  • Determining the goals of every project and daily tasks. 
  • Regular conducting performance appraisals. 
  • Consistent appraisals. 
  • Matching tasks to employee skills. 
  • The priority of employee development. 
  • Improving morale: work environment, salary level, benefits, mission, role in the company. 
  • Authority to make decisions. 
  • Utilizing the right technologies.
  • Regular meetings and discussions.

5. Measurement

Performance measurement is a process of collecting data necessary for the performance measures. All companies (from small businesses to huge corporations) measure performance to some extent. Even though many organizations are primarily focusing on financial measures, there is a large difference among companies in terms of which performance measures they use. The revolution in performance measurement has changed the priority in features of performance measurement systems. Today, one of the main challenges for organizations is matching and aligning performance measures with the company's business strategy, structure, and corporate culture. The next important tasks are choosing the right types and number of measures, the balance between dignities and costs of introducing chosen measures, and deploying those measures, so results are used and acted.
Nowadays, effective performance measurement includes a number of new important challenges such as:
  • measuring non-financial performance;
  • choosing the right measures;
  • using performance measurement results;
  • responsibilities for using the results;
  • communicating results to the right staff, and others.
effective performance measurement

The result of using an effective performance management system is a high performing company.

New computer technologies help companies to track, collect, analyze, evaluate, and, as a result, better understand their employees’ productivity. The resulting data of performance management can inform compensation, employee career trajectory, hiring decisions, company goals, performance reviews, and anything else that relates to human capital management.

Want to use fast, easy, and productive performance management software, choose one that best meets your company’s needs and requirements.

Some features of performance management software that could be helpful:

  • easily-navigable dashboards – to bring key data into a single organized location; 
  • performance review – to coordinate, organize, schedule, and store review information;
  • reminders – to send leaders a list of their permissions in the case of leadership changes, a provided structure of the overall process, and the employees' role; 
  • feedback – to provide structured and (maybe) anonymous assessments;
  • goals and performance tracking – to see the progress of jobs and projects.
 types of goals

Individual employees' performance goals should ideally align with organizational goals.

4 Common types of goals:

  1. job description goals - to be accomplished continuously until the job description changes; 
  2. project goals - to be accomplished until the project is completed;
  3. behavioral goals - to be accomplished continuously to help understand "how" things need to be fulfilled;
  4. stretch goals - to expand the knowledge, skills, and abilities of employees.
During a single year or established period, it should be focusing on a few major goals which are:
  • clear and understandable; 
  • specific and results-oriented; 
  • measurable and verifiable; 
  • sufficiently challenging, but attainable; 
  • relevant to the company or department mission; 
  • time-limited.

Using a performance management software solution helps improving business and its results.

Employee management effectiveness