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Meaning & Definition

Performance Management Cycle

Performance management cycle is a cyclical phenomenon in which employees are evaluated throughout the year. All employees go through this cycle, starting with goal-setting at the beginning of the year, followed by the monitoring of their progress, helping them develop to do better, and ending with a formal evaluation afterward.

The process is divided into four stages:

Planning: The planning phase revolves around setting performance expectations for the employee. These are often planned and are also included in the job descriptions. It is best practice to actively involve the employee in this planning process.

Monitoring: In the monitoring phase, the goals set in the planning phase are actively tracked. Monitoring involves the continuous measuring of performance and providing feedback on progress towards the goals.

Developing: Development plays a key role in improving performance. As a result of active monitoring, areas of improvement can be identified. This can be under-performance that should be corrected or areas of superior performance in which the employee wants to excel even further. This can be achieved in the form of training and development but also through challenging assignments and other opportunities for personal and professional growth.

Rating & Rewarding: Rating performance is an inevitability to determine the added value of employees to the organization. This is usually done during the employee’s annual performance appraisal. In case of superior performance, the employee should be recognized for their performance. This can be through giving them praise, a raise, time off, recognition items, a promotion, or all of the above.

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