What is the Performance Management Cycle?

According to Gallup, only two in 10 employees say they are motivated by current performance management methods. If performance reviews are the first thing that pops into your head when you think of performance management, your process might need a little TLC — there’s a lot more to performance than reviews. Reviews are just one part of the performance management cycle, which includes planning, monitoring, evaluating, and rewarding.

This cycle creates a cadence of setting goals, tracking progress as they’re completed, assessing the work done to achieve their goals, and giving praise. A consistent performance management cycle can help improve performance, increase productivity, and even positively affect employee engagement and motivation. 

The Stages of a Performance Management Cycle

Performance management processes are different depending on the industry, company size, role, and other factors. But no matter your processes, a performance management cycle is a tried and tested method for meeting individual, team, and organizational goals. 

The four stages of the performance cycle are planning, monitoring, evaluating, and rewarding. Originally called “management by objectives,” this concept was made popular in Peter Drucker’s 1954 book The Practice of Management. Let’s take a closer look at this cycle of setting employee goals that were aligned with company goals, tracking them, and reviewing and rewarding performance.

Planning

During the planning stage, managers and employees set goals that are aligned with team and business objectives. They determine what success will look like — how employees will know they’ve accomplished the goal.

Monitoring

As employees work toward their objectives, they need to know how they’re doing so they can keep working confidently or make adjustments. During this stage of the cycle, employees and managers should be tracking goal progress to make sure things are going as planned.  Managers should also ensure employees have the resources they need and answers to their questions so they don’t get stuck. They can do this by setting up regular check-ins with their reports — 43% of highly engaged employees receive feedback once a week.

Reviewing

The review cycle phase takes place after goal completion. This is when formal performance appraisals typically take place and managers and employees discuss the results of their goals.

Rewarding

The final stage of the cycle is when your company demonstrates to employees that meeting their goals does lead to rewards. That may be in the form of public recognition, a bonus or promotion, or additional perks like extra PTO. This stage is an incentive for employees to do their best, and for employees that met or exceeded their goals, it serves to motivate continued great work.

Traditional vs. Employee-First Performance Management Cycles

Drucker’s performance cycles are focused on achieving goals, but they need some modernization to meet the needs of employees today. Performance management trends have gone from “competitive evaluation” to “coaching and learning” — in other words, from a rigid ranking and rating system to an employee-first, growth-focused strategy. Performance management statistics support that that’s a popular approach: today, 94% of employees say they’d stay with a company longer if it invested in their growth.

HR analyst and industry expert Josh Bersin’s Continuous Performance Improvement Model is an updated version of Drucker’s original performance management cycle. His model includes employee development and managerial coaching as essential components of performance management. It also bakes recognition and rewards into other parts of the cycle.

The steps in Bersin’s model are Plan, Do, Check, and Act. But how do they compare to Drucker’s four phases?

Plan

Bersin’s initial planning phase is similar to that of the original performance management cycle. Employees should understand how their goals further team and company goals. During this stage, managers and employees can collaborate to set strengths-based goals, which can improve retention, productivity, and engagement. 

Do

In the Do stage, employees execute their goals and identify amplifiers and obstacles. Managers act as collaborative coaches, building trust with their teams by giving — and asking for — feedback frequently, helping employees work through issues, and providing motivation. During this stage, managers should remember to motivate their employees by recognizing their effort and results as they progress.

Check

The Check stage of Bersin’s performance model is also similar to Drucker’s review step.  But, formal reviews aren’t just an opportunity to evaluate past performance— they’re a chance to focus on how employees will grow in the future. During this stage, managers can work with their employees to identify areas they need to improve, new skills they want to acquire, and discuss new training and development goals.

Act

This is where Bersin’s model differs from Drucker’s. The Act stage is where you and your employees apply what you’ve learned in order to define, refine or redirect efforts going forward. It’s also where managers can encourage employees to take on new challenges that inspire continued growth.

Bersin’s model helps answer these three questions: 

• What does the employee need in order to do their job well right now?
• What does the employee need in order to grow in their current role?
• What does the employee need in order to grow their career over time?

With a strong performance management cycle, you put employees first and let them take charge of their goals and growth in order to foster engagement and motivate great work.

Break the Performance Management Mold

You can break the mold of traditional performance cycles with performance management technology. The right solution can power more effective performance reviews, regular review cycles, goal setting and tracking, and more — without creating more work for busy HR teams and managers.

With performance management software, you can get access to the tools you need to support employee-first, growth-focused performance cycles:

• Expert-built performance review templates for different types of employees
• A variety of review types, including 360-degree, semi-annual, and new hire reviews
• Automatic review reminders to keep cycles on track
• Tools for goal setting, tracking, and updates
• Employee surveys, which you can launch from a template or customize to fit your organization’s needs
• Reports that give you performance insight to help constantly improve your strategy

Get all the tools you need to build a performance management framework that puts employees first and empowers their growth with ClearCompany’s Performance Management System. 

Need to get started now? You can kick off your own performance management cycle right away with our 1-on-1 manager feedback tools, out-of-the-box employee reviews, goal-setting and tracking features, and more. Get a customized demo of ClearCompany’s award-winning software and see how quickly you can put our tools into action.