Fact Checked

What is a Performance Management Cycle?

Angela Atkinson
Angela Atkinson

A performance management cycle (PMC) is a technique used by company managers and executives to encourage employee growth and job satisfaction. Within a PMC, the employer evaluates an employee’s skills and job performance. The employer typically will set goals, as well, to help careers develop in a manner consistent with company goals for the employee. If an employee is not able to meet the goals and expectations outlined by the company, a performance management cycle usually offers a built-in system for improvement, typically beginning with direct counseling for problem areas. Though initial goals may be set by the company when an employee is hired, the performance management cycle usually will not officially begin until the first performance review – typically after the first year of employment, but sooner in some cases.

While each company usually develops its own plan for performance management cycles, the basic cycle typically includes three phases: planning and goal setting, progress reporting, and review assessment. When it is time for the first performance review, the employer will assess the employee’s work as executed during the specified time frame. After providing the employee with a comprehensive evaluation of his job performance, the employer usually will advise him of the company goals for him over the next review period.

A performance management cycle is used by company managers to encourage employee growth and job satisfaction.
A performance management cycle is used by company managers to encourage employee growth and job satisfaction.

Depending on the employee’s abilities and status, this can include anything from improvement in problem areas to obtaining a desired promotion. Some employers may also use this phase of the performance management cycle to set ultimatums: if the negative aspects of an employee’s job performance do not improve, his job or position could be in jeopardy. Managers may also offer guidance, suggestions, or ideas on how the employee can meet his objectives during the following evaluation period.

Once goals have been set, there usually is a scheduled progress report at which the employer will touch base with the employee and discuss the development of his goals. If the employee is on track to achieve the objectives set by the company, no further action may be taken. Additional goals may be added if the employee is ahead of schedule. If there are causes for concern with the employee’s performance, however, additional guidance can be offered.

At the end of the PMC, it usually is time to review the employee’s performance for the entire evaluation period. The employee may receive a raise which reflects progress made if the employee meets his goals. If the goals were not met, the employer may choose to create more manageable objectives, continue with existing ones, or reevaluate its need for the employee’s services.

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Discussion Comments


@ZipLine-- If someone repeatedly fails at achieving the goals set by workforce performance management, that person is obviously not suitable for that job or organization. Most people don't fail however because goals are realistic. They are tangible, verifiable and measurable. Employees already have the training, skills and knowledge to achieve them.


@ZipLine-- Relax. If you fulfill your duties as you should, you will be fine. Even if you don't do well in the first round, you will have the opportunity to improve your performance for the next review as the article said. Your employers will give you feedback on your performance and help you find and improve issues that are affecting your performance negatively.

I personally think that the goal oriented performance management cycle is better than other individual evaluation methods. At least in this evaluation system, you know what to expect and you are given additional chances to improve your work. Also, an organization doesn't only aim to improve employee performance through this cycle. The organization also aims to find problems within the organization that are negatively influencing employees. So you are not solely scrutinized. Objective oriented performance management cycle, makes the organization a better place to work as well.


I've never been assessed through an objective performance cycle before. It's coming up soon however and I'm worried. What if I don't succeed? I feel like I'm back in school, getting ready for a difficult exam. I just don't know how to prepare for this exam.

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    • A performance management cycle is used by company managers to encourage employee growth and job satisfaction.
      By: adam121
      A performance management cycle is used by company managers to encourage employee growth and job satisfaction.