It should come as no surprise that an engaged employee is typically a more productive employee. Performance management is an essential process for training, developing, and providing direction for your greatest assets. The problem is that successful performance management can take more than just an annual review or other traditional methods.
The performance management cycle is a strategic plan to encourage and sustain employee success. Keep reading to learn more about how a performance management cycle works and how it can benefit your company.
What Is A Performance Management Cycle?
A performance management cycle is a continuous process designed to evaluate employees and steer workers’ performance. The exact length of this cycle can vary. Some businesses opt for an annual cycle that culminates with yearly reviews, while others adapt the cycle to operate on a quarterly basis.
Regardless of the time periods, the performance management cycle is meant to be a never-ending process that repeats upon completion. A typical cycle involves four specific steps:
- Planning
- Monitoring
- Reviewing
- Rewarding
Planning
The performance management cycle starts with an opportunity to set organizational goals. These goals can be objectives for the whole year or particular targets for the upcoming cycle. Either way, this first stage is the time to determine an overall strategy for your business.
The planning stage should start with the management team setting goals for the organization and then tying individual and team targets to those goals. Managers can then communicate this information to employees and work on setting goals, tasks, targets, and other guidelines to help achieve personal and organizational success.
While organizational targets should be determined at the management level, planning out employee goals should be a collaborative process. By working with employees, individuals can better understand why these goals are important and become more invested in their success. This stage is also an excellent opportunity to showcase how achieving these goals can help employees grow their own skills and value.
Monitoring
Once planning is complete, the next step is to monitor employee and team progress. Regular check-ins play a pivotal role in helping employees and teams achieve their goals and address any roadblocks that may derail these efforts.
Check-in intervals can vary but tend to be more effective when done more frequently. For yearly cycles, it’s best to meet with employees on a monthly or quarterly basis. Some businesses can even benefit from weekly check-ins, as 85% of workers who have weekly check-ins with their managers are more engaged than those without regular communication. No matter the timing, try and cover the following topics during check-ins:
- Overall progress
- Accomplishments
- Roadblocks and other issues
- Needed support
- Potential changes
Continuous monitoring allows businesses to keep employees on track as well as be flexible when needed. If employees struggle to stay motivated for far-off goals, check-ins can help managers to create short-term subgoals and provide assistance when needed. This level of collaboration helps employees stay aligned with company performance goals while providing them the support necessary to tackle proper, actionable steps.
Reviewing
Once the cycle comes to an end, it’s time to conduct official performance reviews. Managers should take this time to meet with each employee to determine if their goals were met and decide next steps.
The monitoring process gives managers perspective on how well the employees have done throughout the cycle. After that, an official review provides employers and employees a definitive chance to evaluate if goals were met and how well the process went. Participants should try and answer the following questions during this review:
- Was the goal completed and how well did the employee perform on these tasks?
- Is the goal still in line with the organization’s goals?
- If the goal isn’t complete, was it realistic or were there reasons why it couldn’t be met?
- Did the employee have the support needed to achieve their goals?
- Did the employee grow from the experience and gain useful skills or experience?
- How can we learn from these goals to improve the overall process and ensure success for future cycles?
As with the planning and monitoring stages, reviews are a great opportunity to collaborate with employees and keep them engaged. It’s important to let employees know that their feedback is important. Let them share their perspective on how they did, whether they achieved their goals or not. If they fell short of their goals, discuss these performance issues, and provide meaningful advice on how to improve and lay out solutions to address these concerns.
Rewarding
Each cycle ends with the reward phase, which is an essential tool for employee motivation. After putting in hard work and dedication, it’s critical to show employees that their efforts are appreciated. If not, it can be easy for workers to feel like their contributions in the performance management cycle doesn’t matter. The lack of appreciation directly affects engagement, and can even lead to employees seeking other opportunities.
Rewards come in many forms and should be awarded on merit. By fairly handing out rewards, you not only recognize the workers who did their part, but also showcase what can happen if they achieve their goals in future cycles. Potential rewards include:
- Company-wide recognition
- Official written reviews with positive feedback
- A one-time bonus or gift
- A raise
- Extra days off or work flexibility
- Special projects or perks
Once the rewards and recognitions are handed out, it’s also time to reconvene at the management level to assess the cycle and adjust for the future. Discuss any issues or other findings that would affect the future goals and get ready to start the cycle over again.
What Are The Benefits Of Using The Performance Management Cycle?
A defined performance management cycle gives employers a framework to boost productivity and engage management and employees. In turn, businesses can enjoy a few key benefits from a streamlined performance management process.
Goal alignment and flexibility
Performance management should benefit both employers and employees. The planning phase allows management to identify what goals are most important for the overall growth of the business and tie employees’ performance targets and education around those needs.
The cycle also offers room for management and employees to adjust these goals if necessary. Over time, certain targets may become less important than new training needs or performance criteria. This flexibility gives both managers and employees the freedom to modify certain targets or tasks to accommodate these changes.
Improved engagement
The performance management cycle gives employees regular opportunities to be open about their goals, and allows time for managers to listen to them. This collaborative conversation not only allows employers to gather feedback, but also keep employees engaged. Employees who feel heard are 4.6 times more likely to feel empowered to do their best work. That level of engagement is a major plus for all parties.
Retention
The performance management cycle allows employees to receive regular feedback from managers, which makes a notable impact on retaining talent. According to Gallup, businesses that provided continuous feedback reduced turnover by nearly 15% compared to organizations that offered little to no feedback.
A continuous cycle also gives managers more chances to discuss an employees’ growth and highlight successes. Roughly, a quarter of workers leave a job due to lack of recognition, which can be given during regular check-ins and the reward stage. These continuous opportunities give managers opportunities to value an employee’s work while still providing guidance on ways to get better.
How To Maximize Your Performance Management Cycle
While the performance management cycle gives employers a good framework for enabling growth and keeping employees engaged, there are ways to maximize the effectiveness of the process.
Focus on the positive, even when dealing with the negative
While it can be easy to concentrate on whether a goal is met or not, it’s important to give specific, detailed feedback during check-ins and reviews. Vague, generic criticism is only going to frustrate employees, so be specific and use language that makes employees think in positive terms, even if the feedback is negative. For example, position a performance improvement plan as a way to help the employee correct issues and succeed in the future instead of as a punitive measure.
Don’t hold back on recognition
Another way to maximize the performance management cycle is to provide recognition along the way. Proper recognition doesn’t need to wait until the review stage. If an employee does something well, let them know. Even something as simple as verbal praise can make an impact on an employee’s morale, and notable efforts may be worth additional rewards along the way.
Utilize SMART goals
Not all goals are created equal. Try to outline your goals using the S.M.A.R.T. method to give your employees and organization the best path for success. S.M.A.R.T. goals are:
- Specific – Make sure the goal includes clear details about what should be achieved and why it is important.
- Measurable – Make sure the goal can be measured or have a definitive way to indicate if it has been achieved.
- Achievable – It should be realistic to complete a goal within the given timeframe for the cycle.
- Relevant – The goal should tie into the organization’s overall goals and make sense for the employee to complete based on their responsibilities or needs for growth.
- Time-bound – The goal should have a definite timeline for completion, along with potential milestones that can be used to track success along the way.
Maximize Your Employees’ Potential
Performance management plays a critical part in making personnel decisions ranging from training and compensation to transfers and termination. The performance management cycle gives employers a streamlined, repeatable process that gives management more insight and actively engages employees.
Of course, a dedicated performance management process takes time and dedication to run properly. GMS partners with businesses to take on administrative burdens like performance management and other essential HR functions. Our team of experts and cutting-edge human resources information system (HRIS) allows you to spend your time on running your business while GMS makes your business simpler, safer, and stronger.
Ready to invest in your greatest assets while saving yourself time? Contact us now to learn about our performance management services and more.