The global economic forecast for this year doesn’t look great. As departments face budget cuts, hiring freezes, and mass layoffs, organisations will be looking to L&D teams to support and develop internal talent by upskilling from within. Performance management, the ongoing model of continuous employee learning and development, has never been so important.
Applying the performance management cycle to your training programmes allows you to continually identify skill gaps and design training programmes that resonate with your employees’ needs in line with your overall organisational objectives.
In this article, we share what the performance management cycle is, show you how to connect it to training programmes, and explain why performance management is key to upskilling from within.
What is the performance management cycle?
The performance management cycle is a continuous process of planning, monitoring, and reviewing employee performance. It aims to create a structured procedure of employee development, enabling you to align an employee’s role with the company’s goals. This allows you to foster continuous growth at the individual and organisational levels.
You can tailor the performance management cycle model to your business needs. Traditionally, the cycle would be a year-long process, but some organisations have adopted more frequent, quarterly cycles. The main benefit of a shorter cycle model is that employees do not have to wait for the yearly reviews to get an update on the goals or how to improve.
This close collaboration builds stronger relationships and fuels employee engagement. According to research, involving employees in goal setting increases their engagement and motivates them to achieve their goals. As a result, organisations also record improved performance and better employee retention.
The 4 stages of the performance management cycle
The performance management cycle is an age-old concept that traces its earliest origin to 221 AD when emperors used to rate their family member’s performance. Centuries later, in the 1920s and 1930s, a shift to operational effectiveness and efficiency popularized the concept as companies sought to optimize their budgets.
In 1954, management consultant Peter Drucker , described the concept of Management by Objectives (MBOs) in his ‘The Practice of Management’ book, introducing the need for businesses to manage their business based on needs and goals.
Over recent years, companies have continued to embrace the concept even as they realize the benefits of aligning team and organisational goals for improved individual and organisational performance. The process involves the following stages:
Planning is the first step in the performance management cycle. It involves leadership teams identifying and setting the goals the organisation wants to achieve during the year or review cycle. Upon defining the company-wide goals, managers and employees set their own personal and team goals. This should go hand in hand with establishing the learning and development goals.
All goals must be SMART, i.e., specific, measurable, achievable, relevant, and time-bound.
- Specific – Must provide clear information on what, how, and why it needs to be done
- Measurable – Must also have performance indicators to help monitor the progress
- Achievable – Should be realistic and attainable
- Relevant – Should align with the employee’s job and the organisation’s overall goals
- Time–bound – Should have a timeline within which it must be completed
Once you have laid down the organisational, team, and individual expectations, everyone hits the ground running, ushering in the next cycle in the process–monitoring.
The monitoring stage involves tracking the set goals, i.e., assessing the performance and giving feedback on the progress. Continuous monitoring allows you to identify challenges early, which might hinder goal achievement if left unaddressed until the end of the year, and adjust goals as necessary.
The frequency of follow-up varies from one organisation to the other. You can opt for quarterly, monthly, biweekly, or weekly, whichever is convenient and practical for your team. Continuous monitoring is much more effective than annual or semi-annual exercises, as it allows managers and employees alike to oversee the process better.
3. Developing and reviewing
The third stage of the cycle focuses on evaluating the employee’s performance and the new skills they have acquired. Here, you need to establish whether the employee had the required skill to perform the duty. If they received training before the assignment, you might want to evaluate how it contributed to their performance. You should also identify any additional skills they require to perform the task better.
Overall, you will also be looking at whether the employee achieved or underachieved, the support they received, or if the goal was realistic and aligned with the company objectives. Besides equipping them with essential skills, identify other aspects of the process that needs streamlining.
4. Rating and rewarding
Rating and rewarding is the last step in the process and is equally vital in the performance management cycle. Rating allows you to determine the value the employee has added to the organisation and take the appropriate action depending on whether they have underachieved or excelled.
Rewarding exemplary performance is essential in motivating employees. Recognising their efforts makes them feel valued by the organisation, which motivates them to work harder and encourages employee engagement. The benefits of employee engagement are immense, including increased productivity, high job satisfaction, and a better retention rate.
For employees that have excelled, you can recognise good performance through praise, promotion, award/gift, or pay rise. On the other hand, you can act on underperformance by putting together an employee improvement plan.
3 ways to apply the performance management cycle to your training programmes
Implementing the performance management cycle is an excellent way to ensure your company needs are met whilst supporting your employees’ career development goals. Here are three ways to successfully employ the model to optimise your training programmes.
1. Review performance quarterly instead of yearly
The performance management cycle model increases urgency in managing performance. It requires managers to monitor progress regularly instead of waiting for annual reviews. These could be weekly and bi-weekly check-ins, with comprehensive quarterly reviews.
Frequent check-ins allow you to detect challenges and review goals as necessary to fast-track their achievement. By evaluating the results, you also identify skill gaps that should be addressed to enable the employees to complete the tasks as required.
2. Set SMART training goals that tie into your business’s larger goals and objectives
Another strategy for optimising your training programmes using the performance management cycle model is involving your employees in developing SMART goals. Setting achievable goals enables the attainment of both personal and organisational success.
Involving the employees in the process also makes them feel like a part of the organisation. Specific and relevant goals also motivate people to do their best work. When they’re fully committed to achieving personal and organisational objectives, it gives you a better opportunity to identify their weak areas and any missing skills and design appropriate training to bridge the gaps.
3. Reward employees for achieving their goals
Lastly, rewarding your employees for achieving their goals is a vital step in the performance management cycle. Training programmes play a central role in the process as you can determine their effectiveness by evaluating individual employee performance versus the training they acquired.
Some of the incentives you can consider include salary raises, bonuses, promotions, awards and recognition ceremonies.
Performance management goes hand-in-hand with upskilling from within
An excellent performance management cycle is critical to upskilling and achieving company goals. Continuous performance monitoring highlights challenges that hinder timely goal fulfilment. For instance, an assessment could fill skill gaps to enable the employees to achieve the expected goals.
Once you identify the missing skills, you can decide on the appropriate forms of learning, depending on the employees’ learning styles. These may include mentoring, peer-to-peer, job rotation, or digital learning. By combining frequent performance management with continuous internal upskilling, you can unlock a powerful strategy for driving better business outcomes.
Freddie Campbell is Content Lead for the UK market at 360Learning, a collaborative learning platform that enables companies to upskill from within by turning their experts into champions for employee, customer and partner growth.
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