Key stages of the performance management cycle

If feedback is the part of performance management cycle, then what are all other stages? We divide it in a few steps, as follows:

1. Goal setting

To have clear results, begin by establishing clear, measurable, and achievable goals that align with the organization's overall strategy. In HR, this could involve defining performance expectations for employees, but for employees it will create a clear picture of their future activities and productivity.

2. Performance planning

In order to accomplish the set goals action plans and strategy are a must. This step may involve identifying training and development opportunities for employees, and potential red flags within the teams.

3. Continuous monitoring

Regularly assess and monitor employee performance against the established goals. This stage could include tracking key performance indicators (KPIs) and evaluating skill development, as well as analyzing employee’s behavior.

4. Feedback and evaluation

This step includes providing constructive feedback on individual and team performance, recognizing achievements and addressing areas for improvement.HR managers could conduct performance reviews and offer career development guidance, while it is also significant for evaluating the effectiveness of strategies and adjusting tactics accordingly.

5. Recognition and rewards

Acknowledge and reward high-performing employees to motivate and encourage a culture of excellence. This might involve promotions, bonuses, or other recognition programs, whatever suits your organization culture the best.

6. Development and training

Identify opportunities for continuous learning and improvement. This could involve offering skill-building workshops and training programs, but incorporating new tools and technologies, as well.

As now you can see - in order to conduct a performance evaluation, you need to conduct feedback sessions.

How does performance management affect employees?

What will performance management lead your organization to?

Performance management significantly impacts employees in various ways, influencing their motivation, engagement, career development, and overall job satisfaction. Happy employees = better performance.

Here are several ways in which performance management affects employees:

1. Motivation and morale

Regular feedback and recognition for a job well done contribute to increased motivation and higher morale among employees. Feeling acknowledged and valued for their contributions fosters a positive work environment.

2. Career development

Performance management often involves discussions about career development and growth opportunities. Employees who receive constructive feedback and are aware of development/career paths are more likely to invest in their own professional growth and feel a sense of purpose in their roles.

3. Skill enhancement

The identification of strengths and areas for improvement during performance assessments can lead to targeted skill development initiatives. Employees benefit from training and development opportunities that enhance their capabilities and make them more versatile contributors to the organization.

4. Increased productivity

Regular performance evaluations and goal-setting contribute to increased productivity. Employees are more likely to stay focused and committed to achieving objectives when they understand how their efforts contribute to organizational success.

5. Employee engagement

An effective performance management process fosters a sense of engagement by involving employees in their own development. When employees have a voice in goal-setting and receive feedback, they are more likely to feel a sense of ownership and commitment to their work.

6. Job satisfaction

Clear communication about performance expectations, regular feedback, and opportunities for growth contribute to higher job satisfaction. When employees feel supported in their roles and see a path for career advancement, they are more likely to be satisfied with their jobs.

7. Retention and loyalty

Employees who feel valued and recognized for their contributions are more likely to stay with an organization. A well-executed performance management process can contribute to employee loyalty and reduce turnover rates.

Traditional vs. modern approach

The traditional way of performance management is a structured and formalized approach to assessing and appraising employee performance within an organization once a year. This approach is often characterized by specific processes and practices that have been widely used for many years. Before things changed.

Goals were typically set at the beginning of the performance cycle, and employees worked toward achieving these goals until the next review period. They were often assigned numerical ratings or rankings based on their performance. This could involve comparing employees against each other, resulting in a ranked order within the team or department. One-way communication was usual, with managers providing assessments and guidance to their subordinates, and the whole process was usually rigid and followed a fixed timeline and a formalized structure for documentation and discussions.

Have you ever heard real employee opinions about a performance management system? It's usually negative, and the reason is all of the above.

While the traditional approach has been widely used, organizations are increasingly recognizing its limitations, such as the infrequency of feedback, the potential for bias in ratings, and the challenges in accurately capturing an employee's contributions. Many companies are moving toward more modern and flexible approaches that emphasize continuous feedback, employee development, and a more collaborative and forward-looking assessment of performance.

Here is the visual presentation of the difference between traditional and modern approaches.

Nikola Gorjanac

Performance management & 360-degree feedback