Most organisations have a performance management process in place but not all are effective. A performance management cycle should not just be good for your business but should also benefit your employees.


Aligning employee goals with your business strategy will not only help you further the knowledge of your workforce but will also help align their professional goals with your business strategy. Along with these benefits, implementing employee performance management will help to bring new ideas and developments to your business and help to further implement your business values. Additionally, there are many benefits of implementing a strong business performance strategy as outlined in our previous blog.


In order to achieve the best possible outcome, the process must be fair constructive, and valued by both employees and employers; you must assess your employees’ current knowledge, skills and abilities, and set goals that develop them and your business. Performance management does take time but is time well spent in an effective performance management system.


The Stages of the Performance Management Cycle

There are many versions of the performance management cycle but, in most cases, they include planning, action and review. For the purposes of this article, I will use the model presented by Michael Armstrong in his Handbook on Performance Management.



The ‘plan’ stage is where you set the initial SMART goals. Traditionally, this stage used to be carried out only once a year. To do this you and your employee must assess and understand their current knowledge, skills and abilities, and your organisation’s strategies and objectives so that goals can be set that develop employees and are linked to the business objectives. It includes the creation of a personal development plan which sets out the skills your employee should develop to achieve the goals they have been set.


This process should involve two-way dialogue which has the full commitment of the employee and the employer in order to be fully effective. Simon Sinek said, “When people are financially invested, they want a return. When people are emotionally invested, they want to contribute.”


Act and Track

The ‘act’ phase is self-explanatory; this is where your employees carry out their role and implement their personal development plan, to achieve the targets set at the planning stage.


Under the traditional approach, both the ‘act’ and ‘track’ stage take place throughout the year so the employees can prepare for the year-end review. This ‘track’ stage is not just a phase for the employee to be left alone to achieve the goals set while management monitors their success or failure but requires management involvement to ensure that the employee is given the time and resources to accomplish their goals. You should regularly check on them, so you are able to give frequent feedback, identify improvement in their performance and provide guidance for improvement.



Traditionally, this stage happens on an annual basis; a meeting is held with your employee to discuss progression towards their goals, performance issues, and identification of advancement opportunities. Actions are then agreed to work towards that advancement, and the cycle moves back to the ‘plan’ stage.


This approach places a great deal of pressure on employees and employers, making it difficult for the review to be meaningful, given the amount of ground that must be covered.


To overcome this, many organisations have adopted a more fluid performance management cycle whereby performance is reviewed more regularly throughout the year; a continuous cycle of feedback and discussion. Organisations that have implemented this approach have found it to be far more productive than just doing it annually. Although it is still referred to as a cycle, there is not just one continuous flow between the stages because the stages can be done throughout the year. Instead of setting a large objective for 12 months at the start of each year, you can set smaller short-term objectives that are more productive and practical for both you and your employee. It is both quicker and easier to have a few short-term goals than a yearlong goal that is difficult to achieve.


This approach has several advantages:

  • Short term goals mean that objectives are achieved more quickly, improving staff motivation and self-worth.
  • More time is available for discussion as reviews are more focussed.
  • There is improved communication between managers and employees.
  • Regular and timely feedback allows employees to adjust goals or access training, if required.
  • It provides an opportunity for good effort and performance to be recognised, helping employees to feel more valued. Steve Bronkhurst said, “Feeling appreciated is one of the most important needs that people have…. Appreciation will return to you many times.”
  • It can remove the direct link between performance and pay or career progression, which can be a demotivating element of annual reviews.



When the con­tin­u­ous employee per­for­mance man­age­ment cycle is undertaken correctly, it can be more time effi­cient, and productive than the traditional cycle, and be more engaging for employees. Taken together with overall corporate performance management, this can contribute greatly to business success.