The 4 Stages Of The Performance Management Cycle

September 30, 2022

the 4 stages of the performance management cycle

What is performance management?

Performance management is the consistent communication between an employee and their employer. Many companies believe the most efficient way to have this communication is to follow the performance management cycle.

The performance management cycle ensures a structured process that contains four steps: goal setting, monitoring, evaluating, and rating and rewards.

Goal setting happens at the start of the cycle where individual goals are set so that it is clear what must be achieved.

Monitoring is the ongoing stage where the work is observed, and if there are any misunderstandings, they get addressed.

Evaluating is the penultimate step, where the work is evaluated to see if the goal has been achieved, and why it has or hasn’t.

Rating and rewards is the final step, where the employee is offered a rating or a reward for their work when the goal is complete.

All four steps are vital for the cycle and this article will look at each step in more detail.

Why is it important?

the 4 stages of the performance management cycle

Communication between employees and employers is crucial for a successful workplace. By using the performance management cycle, HR departments can increase the support, motivation and productivity within the company.

Having clear goals at the start of the cycle ensures clarity for the workers.

Constant monitoring ensures work is being completed to the best ability, and if there are any misconceptions, they can be addressed.

Evaluations make sure that the employees are understanding their strengths and weaknesses as well as offering the company a chance to reflect.

Finally, rewards and ratings are a good incentive for workers when they complete their goals.

This cycle ensures there is no confusion or misunderstanding on what the company is asking for from their employees and offers a higher level of support as well as constant communication throughout the year.

Stage 1: Goal setting

The first stage of the cycle is goal setting. It is important to start with identifying what is going to be completed in the time frame, and how it will be completed.

These goals should be decided in a meeting between the employer and employees, where they can collaboratively create some specific goals.

Having the employee involved in creating their goals makes it clear why they are important and will increase the productivity of the worker as they feel they have been included in the decision.

When setting goals, they should be SMART goals. SMART goals are: Specific, Measurable, Achievable, Relevant, Time-bound goals.

It should be clear and specific what the end goal is and how it will be achieved. The goal must be objective and possible to measure. It should be achievable by the employee, relevant to their job and support their professional development within the company. Finally, there should be a time limit on the goal to understand when it will be assessed.

Stage 2: Monitoring

Monitoring is an important part of the performance management cycle. It is most effective when it happens on a regular basis such as monthly or quarterly.

During monitoring, the employer should be identifying what is going well as well as what needs support to achieve the end goals. This option to assist and solve any problems that may be occurring ensures that the employee is on track and still progressing sufficiently.

Within this monitoring, companies may choose to set mini goals within the cycle. This can be a way to identify the steps needed to achieve the final goal and understand what is needed in a more manageable approach.

Monitoring may be done by a variety of people to offer a wider range of support and reduce any chance of favoritism. This also creates a stronger community within the workforce as more professional relationships can be developed.

Stage 3: Evaluating

the performance management cycle

At the end of the cycle, the goal must be evaluated to see if it has been achieved. During this process, the monitoring throughout the year should be reviewed as well as the work that has been completed.

If the goal has been achieved, the evaluation process should focus on questions such as:

“How beneficial was it for both the company and the employee?”

”To take the individual to the next level, what can be the next goal?”

If the goal has not been achieved, the evaluation process should focus on monitoring where the employee began to go off task, whether efficient support has been offered, and how can the employee move forward from here with either the same or a different goal.

Whether the goal has been met or not, this is the stage where feedback can be shared. It is also a chance for the employee to share their views on the experience and express where they would like to progress with their next goals.

Stage 4: Rating and Rewarding

The final stage of the cycle is rating and rewarding. This is an essential part as it is often the initiative for the employees to complete their goals to the best standard. It is also important for the work culture to understand that good work is recognized and rewarded.

Rewards and ratings should be merit-based, connecting to how they completed their task and how much work they dedicated to it.

Common rewards include a promotion, a bonus, a special project or a company-wide acknowledgment.

Even though not necessary, many companies discuss what rewards would be the best incentive for their employees to improve their work culture and make their employees feel heard.

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