performance cycle

What Is a Performance Management Cycle?

Table of Contents

“Only what gets measured gets managed,” said famous management theorist Peter Drucker. So you wouldn’t want to leave something as important as performance to chance. 

Performance management is the process of monitoring and managing employee performance against goals. A performance management cycle is a time it takes to get through four key steps: planning, monitoring, reviewing, and rewarding. The idea is to get through the steps, then start again. 

“Performance management cycles are important for two reasons. First, they help leaders and teams track progress and ensure that everyone is on the same page,” according to Andrew Spence, Head of Operations at Brandconvert. “Second, they help leaders and teams identify areas of improvement and make necessary changes. By being aware of performance management cycles, leaders and teams can work together to achieve their goals and improve their overall performance.” 

The problem is, just because you implement a performance management cycle doesn’t mean it’s going to be effective. A 2022 report by Betterworks revealed that in order to be impactful, performance-related feedback and check-ins with employees must include a connection to both goals and employee growth plans. In other words, it has to be about your people just as much as it is about meeting organizational targets. 

In this day and age, you also have to revisit your goals often – don’t think you can just set them once and forget about them. “Overall, we found when companies provide a model of performance management inclusive of regular check-ins, continuous feedback, and agile goal setting, they are best positioned to support employees in the ways that matter most to them,” according to Betterworks. 

The steps of a performance management cycle 

Here are the essentials when it comes to setting a performance cycle to manage team and/or individual performance. 


According to the OPM,  “planning means setting performance expectations and goals for groups and individuals to channel their efforts toward achieving organizational objectives.” The more intentional you are about your planning phase, the better the rest of the process will go. It’s important to define the right goals and metrics, and it’s equally important to involve your team in the process of setting them. 


Monitoring is about consistently measuring performance and assessing progress. Communication is key in this phase as well: You want to provide team members with regular updates on their progress towards reaching their goals, as well as feedback and coaching. If challenges arise, the monitoring phase gives you the chance to address them. 


Reviewing is all about debriefing – and it’s where a performance review would come in if you are building a performance cycle around individual performance. “If leaders have utilized the monitoring stage effectively, they should already have a grasp on how well an employee performed to achieve their goals. But reviewing helps managers evaluate end results and the process leveraged to achieve them,” according to Quantum Workplace

Thanks to the work you did in the planning phase, you can evaluate the results of a cycle against the benchmarks that you set in the beginning. Remember, this should be a constructive two-way discussion, not a formality. It’s an opportunity for team members to give feedback on their performance, share their insights about their goals, and so on. Leaders can use this step to support team members in reaching goals long-term. “This is a great opportunity for management to understand the employees’ perspectives, provide feedback for improvement, discuss future development opportunities, and create a roadmap for the future,” according to Quantum Workplace. 


Rewarding is probably the most enjoyable phase of any performance cycle, but it’s also one of the most crucial. From peer recognition to public shoutouts, it consists of recognizing and acknowledging great performance. And it can be a huge factor in employee engagement and retention, so much so that A TINYpulse survey revealed that 21.5% of employees that don’t feel recognized when they do great work have interviewed for a job in the last three months. 

Tips for implementing a performance management cycle 

Now that you understand the basics of setting a performance management cycle, keep in mind the following tips. 

Set the right goals  

Measuring the wrong things won’t get you far. Tie team and individual goals to the bigger picture and the activities that move the needle for the entire organization. Set S.M.A.R.T goals that are simple to keep in mind, work towards and track. 

Involve your team

Driving performance shouldn’t be a top-down process. Involve your team in the performance management cycle process, from setting goals to being proactive about monitoring them and having conversations about progress. 

Don’t reinvent the wheel but stay adaptable  

There is no need to reinvent the wheel. The four steps above will work if you stay consistent and focus on continuously checking in and supporting team members in their career development and the achievement of organizational goals. That being said, it’s important to understand that in our fast-paced business world, you can go through the four steps quite fast, and they sometimes overlap – you may move back and forth between planning and monitoring as you realize you need to adjust your goals, for example. 

Be mindful about the tools you use 

Using a tool to manage performance cycles can be helpful as far as staying organized and accountable. Just make sure you shop around. “Dedicated software tools are more effective — but having underperforming tools can be worse than having no tools at all,” according to Betterworks. Hive offers several integrations to help you set goals and track your team’s progress with a custom dashboard. 

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