Performance Management

What Is Performance Management? Definition, Process & Cycle

Corporate 8th September, 2023 5 Mins Read

Businesses and employees are nowadays very much concerned and focused on the performances of their employees. If the employees can understand their roles, improve their skills, and perform their tasks accordingly, they will perform at their best. Performance management frameworks can help ensure the improvement of performance. 

It is a forward-looking solution for employers and employees to stay on top of their performances and productivity. It is a technology-driven process that builds an open communication channel between the managers and the employees.

It helps managers foresee any possible problems related to employee performance and provides a course correction to help them get back on track of performance. Suppose you are curious to know about what performance management is, then go through this article. Here, I have discussed all you need to read on this topic. 

What Is Performance Management?

What Is Performance Management

Performance management is a strategic process that aligns employee performance with the company’s objective through a technology-backed communication channel. 

Performance management aims to set up a process that helps employees build and develop their skills and competencies. In return, it allows them perform better at their respective occupational roles and helps employers leverage the best of their efforts.

In simple words, it means helping to boost employee performance while also achieving the company’s strategic goals in the process. Effective performance management involves the managers, employees, and the HR. 

The performance management system is a strategic and systematic way consisting of both written and verbal components. It takes place throughout the year. The performance management system culminates during the appraisal at the end of the year. So, it is a yearlong process consisting of a few techniques such as –

  • Setting up clear expectations. 
  • Establishing clear goals aligning with organizational objectives. ,
  • Providing ongoing feedback
  • Evaluating results.

The performance management plan is directly linked to bonuses, promotions, increments, and dismissals. So, it is important for an employee and an employer.

Why Is Performance Management Process Important?

Why Is Performance Management Process Important

A performance management system sets certain sets of goals for the employees that align with the employer’s goals. Eventually, it helps both the employers and the employees in the long term. Here are two important of employee performance management –

Boosting The Skills Of The Workforce

Performance management, through a constant communication and feedback process, helps solidify employees’ skills. It helps identify the skill gaps or certain knowledge and skills that need unlearning and course corrections. Then, the employees can work to close their skill gaps. In return, they provide the organization with a strong competitive advantage. 

Increased Level Of Employee Engagement

Through performance management, employers have a clear set of expectations from their employees. These expectations are written, verbal, and very clear to the employees. Based on these expectations, employees can also build their careers through learning and development. Employees feel valued through the constant communication of feedback and assessment. Performance management systems can help employees be more curious and engaging. 

Higher Workforce Retention

Performance management systems can help employees see their skill gaps, help them fill up those gaps, and be more engaged with the organization. All of this paves a pathway for them to go upward in their career. They understand their goals and their place in the organization and start to work towards their promotion. When employees are more focused on their goals, they will stay with the organization, leading to high employee retention

A Better Work Culture

A performance management system builds a transparent culture through regular communications and feedback. This trust is built through leadership initiatives taken by the HRs, and it is followed through with the employees within the organization. Managers can give honest and constructive feedback to the employees and also encourage them to be honest and open about their input. This helps build mutual trust and harbors a healthy work culture within the organization. 

What Are The Stages Of Performance Management?

What Are The Stages Of Performance Management

The performance management system or cycle consists of five different steps. Here are the steps that you need to remember 


The first step of implementing performance management at any organization includes the planning stage. This stage is about setting clear goals for the employees and communicating to them about these goals. The goals need to be described in the job description during the hiring process. However, the goals also need to be discussed with a candidate before they are hired in the organization. Usually, a certain percentage of each of the goals is shared with the employees. 


The monitoring phase for performance management includes constant monitoring of the employees’ performance. Employers at this phase, track the team’s performance in real-time and give them continuous feedback. Through performance management software, employees can track, record, and correct employee’s performance regularly.


The development phase of performance management is when the employees use the data obtained during the monitoring phase. The employers understand and use the data to improve the employee’s performance. Usually, employers provide their employees with an assignment to help improve their knowledge and on-the-job performance. It also helps them enhance their performance or sustain their excellent inputs. 


According to the performance management system, the skills of each of the employees are rated during each of the periods. It is also done during the appraisal period. It is important to have a rating to identify the current state of the employees’ performance. These ratings can be provided by both the managers and the peers of the employees. 360-degree feedback for an employee’s performance always provides effective and non-biased evaluations


The end result of the performance management system is recognizing and rewarding good performances. It is an essential part of the performance management process. It is when the employee’s engagement in the whole process culminates with the employer recognizing and rewarding the employee. Such rewards can be through simple verbal thanks, social recognition, and a full-scale reward program for the employees within the organization. 

Final Words

The performance management cycle works both ways. It helps the employees improve their skills while also helping the employers with improved levels of output from their workforce. Most employers with performance management have seen a great benefit of having one in their workforce. Once you have gone through this article, you must have a clear idea about its benefits and its stages.

Read Also:


Continuous Improvement HR Management Performance Coaching Performance Reviews

Shahnawaz is a passionate and professional Content writer. He loves to read, write, draw and share his knowledge in different niches like Technology, Cryptocurrency, Travel,Social Media, Social Media Marketing, and Healthcare.

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