Performance Management Masterclass

Week 1

What comprises an effective performance management system and what is a performance management cycle?

Over the course of our 10-week Performance Management Masterclass, we’ll be exploring how you can make performance management a success in your organisation. The first step in this journey is to understand what an effective performance management system is.

In order to do this, we will address the following questions:

  • What is effective performance?
  • What does an effective performance management system look like?
  • What are the stages of the performance management cycle?

What is effective performance management?

Over the course of our 10 week Performance Management Masterclass, we’ll be exploring how you can make performance management a success in your organisation. The first step in this journey is to understand what effective performance management is.

Performance Management defined

When discussing performance management, many people immediately think of performance reviews. But this is only one component of what we would consider to be performance management. One of the best definitions of performance management is provided by Michael Armstrong in his Handbook of Performance Management, which carefully and plainly lays out the Armstrong performance management cycle:

“Performance management is the continuous process of improving performance by setting individual and team goals which are aligned to the strategic goals of the organisation, planning performance to achieve the goals, reviewing and assessing progress, and developing the knowledge, skills and abilities of people.”

A key point here is that it is a continuous process, not a once-a-year activity. Quality performance management should, therefore, bring together a number of different, integrated activities to form an ongoing ‘performance management cycle’, as shown below.

What are the stages of the performance management cycle?

Performance Management Cycle

In this section, we are going to explain the performance management cycle and how implementing this cycle could benefit your organisation.

The first stage of the Armstrong performance management cycle is the “Planning” phase for the forthcoming period. Planning should involve agreeing on SMART objectives, a personal development plan and reviewing the job requirements, updating the role profile where necessary. Historically, organisations tended to carry out this planning stage once a year. However, with the business environment becoming increasingly fast-moving, so many organisations are adapting their processes to set “near-term” objectives every three months.

The organisation’s goals and values should feed into performance planning to ensure that individual performance is aligned with the overall strategy of the organisation. Specifically, each SMART objective should contribute to achieving one or more of the organisation’s goals. Personal development planning, meanwhile, should consider what behaviours, skills or knowledge the individual needs to develop in order to successfully achieve their objectives and uphold the organisation’s values.

Traditionally, organisations have placed a lot of their emphasis on the “Review” part of the cycle, often because a performance assessment is required for rewarding purposes. However, we have always advised that it is the “Act” and “Track” stages that are the most important. These stages are where performance is actually delivered and results are achieved. Individuals need to be encouraged to schedule in regular time to work on achieving their objectives and personal development plans. Similarly, managers need to be checking in with their staff regularly. They must give frequent feedback and use coaching skills to help their team members overcome challenges and identify opportunities for learning and performance improvement. If this is left until an end-of-year review, it is too late; objectives and development plans may end up only being partially achieved.

Since 2015, this philosophy of continuous performance management has been adopted by leading organisations such as Deloitte, Adobe and General Electric. All these major names recently announced they were abandoning traditional once-a-year performance appraisals in favour of regular check-ins and frequent feedback. That said, there is still a place for periodic, formal performance reviews. But these should ideally be developmental and future-focused discussions. They should be an opportunity to explore what went well and why, what didn’t go so well and what can be learned from this, to discuss career goals and agree actions that both the individual and manager need to take to develop the individual and further improve their performance.

Notice that in our performance management cycle, there are no arrows between the four stages. This is because, in reality, the stages do not flow one after the other. Act and Track should be continuous throughout the year. Reviews may take place at any point in the year and planning may take place a number of times during the year and be re-visited, as the needs of the business change.

So what exactly is effective performance management?

Having all of the elements of this performance cycle in place is very important, but that will not necessarily lead to effective performance management for your organisation. What determines success will depend on the specific goals for performance management in your organisation — what you want it to deliver. This is what we will look at in Week 2 of our Performance Management Masterclass.

Can’t wait until next week? Read Week 2’s guide now from Clear Review. In the weeks to come, we’ll also cover how we can measure the effectiveness of performance management, how to address individual performance management and how to launch a new or improved performance management process.

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Masterclass Programme

  • Week 1 – What is effective performance management?
  • Week 2 – Define your organisation’s goals for performance management
  • Week 3 – How to measure the effectiveness of performance management
  • Week 4 – The 5 keys to successful performance management
  • Week 5 – How to get buy-in to performance management
  • Week 6 – How to ensure high quality objectives and personal development plans
  • Week 7 – Avoiding the 4 pitfalls of performance appraisals
  • Week 8 – Developing performance management skills in your employees
  • Week 9 – How to launch a new or improved performance management process
  • Week 10 – How to implement an online performance management system