PERFORMANCE MANAGEMENT CYCLE EFFECT IN ORGANIZATIONAL GOALS

 

Performance Management Cycle

Figure 1. Performance Management Cycle 

Source: Journal of strategy and performance management 

Introduction

What is the performance management cycle?

 The performance management cycle is a model that allows management and employees to better achieve organizational goals through a structured process of employee development and employee motivation.

 The performance management cycle definition encompasses four main stages:

1. Planning

2. Monitoring

3. Reviewing

4. Rewarding

1. Planning

This involves the overall strategy for the business, but also the personal objectives for all employees and teams, including development goals, specific tasks, targets, actions and behaviors.

Once the management team knows the details of what they want the employee to achieve, it is time to meet with the employee and make a strategic plan for the year.

This should be a collaborative process, as an employee who understands why they are being set specific goals and tasks is more likely to be invested in succeeding at them.

In this meeting, the goals should be clearly outlined using the S.M.A.R.T. method.

SMART goals are:

Specific –Measurable – Achievable – Relevant – Time-bound

Each of the employee goals set should align with the organization’s goals, and contribute to achieving them. Making sure that those goals align will ensure a cohesive overall strategy.

2. Monitoring

In the performance management cycle model, monitoring is a key function in achieving the goals set out in the planning stage.

The monitoring will not be as effective, however, if it is only done once or twice during the year. It is advised that management meets with employees on a monthly or quarterly basis to check in on progress, offer help if needed, assist in solving any problems that might have arisen, and adjust goals, if necessary.

Breaking the goal down into monthly subgoals can smooth the process, giving the employee a more manageable task.

Organizational goals can also shift during the year, and more frequent meetings can allow for new goals to be introduced that align more properly with organizational objectives.

3. Reviewing

At the end of the year, the management and the employee meet to review the previous year and see if goals were met.

The employee can present their perspective on how well they did during the year and receive feedback from the management team on how well they met or exceeded their goals. If there have been performance issues during the year, this is where they can be brought up. It is recommended that if issues are being discussed, possible solutions are also presented.

 4. Rewarding

The final stage of the performance management cycle plan is the reward. This is a stage that cannot be overlooked, as it is the one that is the most important for employee motivation.

Employees who do not receive a proper reward after a year of striving to meet organizational goals, and succeeding in doing so, will lose motivation for the next year. They might lose faith in their organization, feel that their talents are not appreciated, and begin searching for another job.

When management fairly rewards employees and gives them recognition for their efforts, they are ensuring that those employees will continue to work hard to achieve organizational goals.

These rewards should be merit-based. Employees will recognize who amongst them has put in the effort, and if they see colleagues rewarded without cause, they could lose motivation. Conversely, when employees see a high-performer get a handsome reward, it demonstrates the value in putting in that extra effort.

 Some rewards that might be offered are:

An increase in compensation

A one-time bonus

Increased vacation time

Special projects

A promotion

After the reward this is a chance to bring up any issues that might have arisen, and begin talks about the next year’s goals.

Conclusion

 Why is the performance management cycle important in business?

By developing the performance management cycle plan example as described above, an organization can maximize the output of their employees, ensure that organizational goals are being driven forward and concretely track the performance of each employee.

Through collaboration with and support from their management team, they see that they are a valued member of a team. Their skills are being developed and used in meaningful ways, and there is a reward for hard work.

All of those are factors in job satisfaction and will improve employee retention.

References

1. Mettler T, Rohner P (2009). Performance management in health care: The past, the present, and the future (PDF). International Conference Business Informatics. Vienna. pp. 699–708.
2. Smith, Marisa; Bititci, Umit, S(2017-). "Interplay between performance measurement and management, employee engagement and performance". International Journal of Operations & Production Management. 37 (9): 1207–1228. doi:10.1108/ijopm-06-2015-0313. ISSN 0144-3577.
3.  Zaffron, Logan, Steve, David (2009). Performance Management: The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life (1st ed.)