What is a Performance Management Cycle?

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.

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.