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The Performance Management Cycle

Performance management is the process by which the performance of employees is identified, measured, and developed to ensure the achievement of organizational goals. The performance management cycle refers to the different stages through which planning, monitoring, reviewing, and rewarding the performance of employees is done. The cycle is essential as it plays a role in aligning employees’ goals with those of the organization. It consists of the following 4 stages:

  1. Setting Performance Targets

At this stage, the manager meets with the employee to set personal goals and targets which should align with the overall organizational strategy and objectives. Using a collaborative approach to setting individual employee goals will ensure that everyone is on the same page, making it easier to achieve the set goals. It is at this stage that the employee training needs can be identified and a personal development plan made to address the needs. The goals that are set need to be SMART (specific, measurable, attainable, realistic, and time-bound).

  1. Monitoring

This is the stage where the set goals are tracked to ensure that employees are on the right path to achieving the goals set in the planning stage. The best way to monitor performance is to schedule regular one-on-one meetings with employees to discuss the employee’s performance against the set targets and to address any challenges hindering their performance. This will help to get optimal performance from the employees.

  1. Performance Review

At the end of the performance management period (quarterly, half-year, or annually) the employee and the manager meet to review the performance to determine whether the set goals for the period were met. This stage also calls for collaboration where both the manager and the employee share feedback on the degree to which set objectives were met. It is at this stage that the management can also evaluate the effectiveness of the process and make changes where necessary.

  1. Rewarding

This is the stage during which employees are rewarded for their success in achieving set goals and objectives. Rewarding is an essential tool for motivating employees and encouraging even better performance in subsequent performance management periods.  Some of the ways through which employees can be rewarded for their performance include recognition, promotions, salary reviews, and bonuses.  After this stage, the cycle starts all over again.

  1. Performance Improvement Plan (PIP)

In cases where employees fail to achieve their performance goals, the company can consider placing them on a Performance Improvement Plan (PIP). A PIP is a performance tool that is aimed at giving employees with poor performance the chance to improve on their performance. It is recommended that a PIP letter be issued to a poorly performing employee and should outline the areas of improvement, actions to take in order to improve, a timeline within which the necessary improvements need to be made and the possible courses of action to be taken at the end of the PIP period.

Interested in getting optimal performance from your employees as a result of effective performance management? Reach out to our talent management experts at Virtual Human Resources Services Limited and let them transform the performance of your team.


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