Performance Management Cycle

We explore how to set clear goals for your employees. Benefitting them, and your business

It is in the best interests of an employee, their manager and the organisation they are a part of to lay out clear goals. Goals can include contributing to team efforts or personal targets. Establishing these goals and reviewing progress can make a huge difference.

Establishing these goals can make the difference between a member of the team struggling and thriving. Performance management cycles are how managers help employees set goals. PMCs also track any progress with them, though there are different variations to consider.

What is the Performance Management Cycle?

So, what is a performance management cycle ? It is a model or framework where employees and management can work together to achieve company goals through continuous employee development.

It is important to know that there is not only one performance management cycle, but several.

The difference between performance management cycles can be confusing. BrightHR are often asked to explain the performance management cycle.

Let’s explain the performance management cycle.

The Performance Management Cycle Model

Performance management cycles originate in Peter Drucker's 1954 book ‘The Practice of Management’. Drucker’s original performance management cycle was ‘Management by Objects’. Or, ‘MBO’ for short. MBO outlined a method in which the goals of a company or business could trickle down from department to department.

In theory, this would allow team leaders and managers to understand what goals they would need to achieve. This applied to themselves, their teams, and individual employees.

The most common performance management cycle model is the traditional four-point cycle:

  • Plan: Setting goals for an employee to develop their skills. Improve the team or contribute to the company or business.
  • Act: Work towards completing the established goals. Asking for help from members of the team or management. All while adhering to any personal development plans.
  • Track: Make notes of any progress with goals. Keep track of a timeline of this progress with a deadline in mind for completion.
  • Review: Discuss progress of goals. Whether they’re complete and have room to improve or they’re incomplete and examine how to achieve them.

Regardless of the type of performance management cycle diagram, the aim is to set goals in place for an employee. These goals are ‘SMART goals’, which are usually established by an employee’s manager.

What are SMART Goals?

In a traditional cycle, SMART goals are set during the review stages of a performance management cycle. But, discussions can occur at almost any point during a modern performance management cycle. SMART goals outline employee expectations between performance management cycles.

SMART is an acronym for the following:

  • Specific: The goal is clear to both the employee and the manager. Included is information such as the quality of work expected. As well as why the goal is being targeted in the first place.

  • Measurable: The goal must have a clear measurement method. This can be detailing the progress of the goal or how to show that the goal is complete.

  • Achievable: The goal should be challenging to the employee, yet not impossible. This is to improve the employee while not being too difficult to complete.

  • Relevant: The goal is both a good fit for the employee’s role as well as the company or business at large.

  • Time-bound: The goal should have a set deadline as well as a timeline, from its start to its completion.

The Modern Performance Management Cycle; Continuous Performance Management

Many companies and businesses have recently adopted a different approach. Traditional performance management cycle models outline a certain cycle. This includes planning, acting, tracking, and reviewing. Usually performed annually, more recent performance management cycle diagrams encourage more frequent conversations. By doing so, they aim to reduce stress and increase productivity.

This new approach is ‘continuous performance management’. Recent iterations of performance management cycles have forgone the annual appraisal style process. This is in favour of a more consistent cycle, which can take place monthly or even weekly.

Consistent, real-time feedback to employees helps address their employee’s progress. It can do so with much more accuracy and handle any issues that impede goal progress. Real-time feedback often helps sooner rather than later.

Traditional performance management cycle meetings are often unproductive and stressful. In some cases, they are ultimately pointless. Designating effort into one review process rarely provides enough time to review goals. This often results in no stages of a performance management cycle getting proper attention. And so, it rarely yields good results.

Many large organisations have reported that they prefer the continuous performance management cycle. Some of these include titans of their industries, including Microsoft and General Electric. Many others have been following in their footsteps since 2015.

The continuous performance management cycle ensures that there are regular discussions. This means that they can focus on either short-term or long-term goals. Traditional performance management cycles only grant limited time to explore goal progress.

Continuous performance management cycles grant employees an extensive cycle such as:

  • Employee Engagement: This entails the time spent by an employee working their performance. Engagement can include improving their skills or working towards their goals. The consistent nature of the next stages makes goals clearer. It also presents opportunities to act on feedback quicker.
  • Discussing Goals: Consistent conversations makes it easier to pinpoint stages of progression. This grants opportunities to overcome challenges or request help. These are clearly beneficial for both parties. Managers will be much more aware of an employee’s progress. Employees can feel confident that they have management available should they need it.
  • Opportunities for Coaching: Ideal in the event that progression is being halted. Frequent dialogue between employee and management invites the potential to overcome any issues. Persistent training and help will be much more beneficial to an employee.
  • Real-Time Feedback: Receiving real-time feedback allows management to handle issues quicker. Help arrives at a much smoother pace. This reliable source of feedback also benefits the employee. They can feel confident that any issues or impediment to progress get dealt with swiftly.

Help with Performance Management Cycles & HR

Performance management cycles can be helpful for both management and employees. But, they can present difficulties. BrightHR can help clear the confusion , book your free demo of BrightHR today and make the most of our employment law and health & safety advice. Or, get in touch directly by calling 0800 470 2432.


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