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What Is The Performance Management Process?

By Darren Finkelstein
By Darren Finkelstein

The Accountability Guy®

What Is The Performance Management Process?

Perfomance Management Process - At a Glance

The Performance Management Process is continuous and constant communication between a manager and employee. This is a process that aims to communicate the organizational objectives and determine pathways to achieve them.

You might wonder what precisely the performance management process is.  You might be wondering what the steps are involved in this crucial process.

Fret not; we have got you covered. This article aims to enlighten you regarding the definition of the performance management process and what it involves.

Earlier performance management was merely a futuristic solution gleaner. However, nowadays, it’s a constant and continuous evaluation to course-correct quickly.

Read ahead to know more about this organisational tool.

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Let’s Define The Performance Management Process

The performance management process gets defined as a collaborative process based on communication between the employees and management. This process aims to amalgamate the efforts of the management and employee to monitor, plan, and review the employees’ goals, objectives, and contributions. Moreover, it’s a process to ensure the employees’ goals and work aligns with organizational objectives and goals.

This regular process aims at allowing both employees and management to give continual feedback to each other. This ensures both are happy and have sufficient job satisfaction.

A performance management process offers the following benefits.

  • It motivates employees
  • It provides actionable feedback
  • Helps employees achieve company goals
  • Helps employees achieve personal goals
  • It determines the scope of promotions and rewards for employees
  • Employees feel valued
  • Keeps employees and management on the same page for annual appraisals
  • Helps determine how to improve performance to meet organizational and employee goals

Now that you know what the performance management cycle is and its benefit let’s examine how it works.

The Performance Management Cycle

The performance management process is a vital motivator for employees to do well at their jobs. The performance management process is a cycle of 5 main steps. Each step is ever so crucial to ensure the process is smooth and helps you review the performance of employees.

It is imperative to follow the steps in this cycle to ensure your result satisfies both the organization and the employee.


Planning is one of the foremost stages in a performance management process.

This is the stage wherein employees set their goals. Management also sets goals and communicates their expectation to the employee.

Management generally discloses these goals and expectations in the job profile. However, they must communicate it again to their new employee.

The management and HR team should set the goals to ensure they are specific, measurable, attainable, relevant, and time-based (SMART).

Management should set a clear performance standard that can get evaluated easily and communicate it to the employee.


Monitoring is the phase wherein the managers monitor the employees on the set goals.

This involves setting regular, timely meetings. It enables managers to evaluate the employees’ performance and course correct if required.

This phase involves continuous feedback sessions on a quarterly or preferably monthly basis.

Moreover, both the management and employees need to be receptive to constructive feedback in the monitoring stage. Based on feedback, the employee’s objective and goals can use revision if required.


The monitoring stage should get done diligently as that sets the course for improving employee and management performance.

The developing stage ensures a streamlined course correction that helps improve employees’ performance at the organization. It involves suggesting refresher courses, training programs, knowledge improving assignments, and more to improve employee performance.

Often, it may involve team-building exercises for both the management and employees to enhance performance and to sustain excellence.


The rating stage is when the employees’ performance gets rated periodically.

Traditionally, it used to get rated only during the annual appraisals. Nowadays, there is a periodic rating and reviewing of employees” performance.

Rating helps give an enumerative and definitive understanding of where the employee stands in terms of their performance. It helps identify the level of employee performance on specific metrics and implement course correction.

These ratings get provided by both peers and managers to the employees. Furthermore, even employees can rate their managers and ensure smooth communication to improve the rate of organizational achievements.


The performance management process remains incomplete without rewards. Rewarding is actionable and shows your employees that you value them. Moreover, rewards are what keep the employees motivated to perform better and achieve organizational objectives.

Rewards can be monetary compensation, bonuses, leadership opportunities, company-wide recognition, time off, or more.

The rewarding stage of the performance management cycle recognizes the contributions of the employees and management. It rewards employees and motivates them to sustain or improve their excellent performance.

At the end of the performance management cycle, both the employees and management sit to communicate goals and objectives for the following year. It gives them a last chance to air their feedbacks and grievances and solve any other issues. After resolving, it enables them to move forward to the next performance cycle.


The performance management process is a method to continuously evaluate and communicate employee’s and management’s performance collaboratively. Lack of continuous feedback like this could demotivate employees and proves a roadblock in achieving organizational and personal goals.

So, as an organization, it is crucial you have a performance management cycle in place to keep employees striving for excellence. It enables you to build a thriving organization. What’s more, it helps you keep your management and employees accountable and happy.