Performance Management Cycle

Using a performance management cycle adds a structure and process to a manager’s efforts to help others to reach their potential. Within this article, we review the advantages of continuous performance management rather than the more traditional annual review approach.


What is a Performance Management Cycle and how has it Evolved Over Time?

Many effective performance management systems and processes are built around the continuous and fluid stages of the performance management cycle, rather than the traditional 12-month review systems which can be extremely stressful for both employee and manager. It is widely accepted that annual reviews are ultimately unproductive as it is unfeasible to discuss, review and achieve so much in one meeting.  For managers with large teams, it frequently becomes a tick-the-box exercise with little meaningful conversation.

In recent years, mindsets have shifted towards a more intuitive and continuous approach to performance management. The pace of change is rapid within many modern organisations, so managers and employees need to be agile and able to adapt throughout the year. Therefore, rather than setting large numbers of 12-month objectives, managers meet employees regularly to discuss and agree on a manageable number of shorter-term objectives. This approach also allows managers to engage in more relevant, action-oriented discussions rather than trying to predict requirements 12 months in advance.

While there are many versions of the performance management cycle, one of the most popular is one developed by [1]Michael Armstrong in his ‘Handbook of Performance Management’. Below is a representation of this cycle:

performance management cycle diagram

Let’s take a look at each stage of the cycle:


Rather than the traditional and impractical annual planning meetings, modern companies including Adobe and Microsoft have introduced a series of consecutive and smaller cycles. The planning stage involves setting SMART objectives, targets and actions to be achieved before the next planning meeting and review.  The planning stage ensures that individual performance is aligned with the overall strategy of the organisation.

It is likely that you will also create a personal development plan that communicates the skills and knowledge developments needed to achieve these goals. The plan should be both challenging and motivating but needs to be achievable. It is a great way to combine existing expertise and knowledge with future potential but will require focus and commitment from all involved.

“Unless commitment is made, there are only promises

 and hope; but no plan.” Peter Drucker

Act and Track

The next two stages are ‘Act’ and ‘Track’. This is a positive and ongoing process conducted, formally and informally, throughout the year.

Each employee works hard to follow their personal development plan, achieve their objectives and carry out their role effectively. The manager’s role is to track progress and provide regular support and feedback.  While this continuous informal process is taking place, regular ‘formal’ check-in sessions are arranged.


Historically, companies have placed great emphasis on the final ‘review’ stage, often combining it with employee performance ratings linked to pay reviews. This created a lot of pressure on managers and often resulted in unrewarding meetings. With a continuous performance management approach, the review meetings are shorter, more frequent and therefore more relevant and easier to manage.  Previous objectives can be reviewed efficiently, and new short-term relevant goals set.


Advantages of Continuous Performance Management

There are many advantages to this continuous approach including:

  1. Short-term objectives build momentum and tend to be achieved more quickly which improves employee motivation.
  2. Short-term objectives remain relevant and support the shifting business priorities.
  3. Creating a large number of long-term objectives every year is both difficult and time-consuming for everyone involved. Can we really predict what will be needed in 12 months time? Setting few shorter-term objectives and reviewing them frequently is significantly easier and less time-consuming.
  4. Regular reviews and ‘check-in’ sessions allow managers and employees to discuss progress against objectives, priorities and personal development. Immediate action can be taken to overcome obstacles as they arise. They also provide an opportunity for managers to acknowledge and recognise outstanding effort or performance, which makes a huge difference to employee engagement.

If done correctly, this continuous performance management cycle is more time efficient, and far more productive.


What will the Performance Management Cycle Look Like in the Future?

If current trends for autonomy and flexible working are anything to go by, it is likely that performance management will be based on contribution and impact, rather than fixed job descriptions and hours spent in the office

With many companies such as Netflix successfully experimenting with concepts such as unlimited holidays for a while, organisations will need to trust their employees and allow more flexible working environments. To keep employees motivated and productive, managers will need to provide frequent feedback and hold regular performance discussions.


[1] Michael Armstrong in his Handbook of Performance Management. EAN: 9780749470296. Edition: 5 Published: 3rd November 2014

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