The performance review is one piece of the performance management cycle. Unfortunately, countless managers have never had formal performance management training and simply do a performance review like a zombie once a year without any regard for the long term performance management opportunities available to them.

The Performance Management Cycle has three components:

1. Goal setting & planning
2. On-going feedback and coaching
3. Appraisal and reward

Goal Setting and Planning

Goal setting and planning is the first component of performance management. Goal setting allows an employee to understand what is expected of him or her and work towards a plan throughout the year. Proper goal setting is crucial to the performance management cycle.

First, set goals which are meaningful for your organization. The goals should directly align to organizational goals so that the employee has the best chance for success.

Second, the goals should be specific and measurable. The employee should understand what he will achieve with the goal and how to measure it. General goals such as “improve customer satisfaction” or “increase communication” are hard to quantify for an employee and will result in different expectations for you and the employee.

Finally, set goals with your employee which provides the employee with a sense of ownership. Each employee should own one thing about her job.

On-Going Feedback and Coaching

It is very important to provide on-going feedback and coaching throughout the year concerning the employee’s goals and performance. Waiting until once per year to provide feedback and coaching to your employee is both a disservice to the employee and will result in poor performance from your team. At the very least, it reduces the effectiveness of your team.

You should measure performance on a regular basis and have on-going conversations with your employees to keep the employee on task with goals and objectives.

Appraisal and Reward

Finally, we reach the time for the performance appraisal. Though some managers cram all of “performance management” into once a year, as you can see, it’s an on-going process throughout the year and one of the core competencies of high quality managers.

The appraisal and reward portion of the cycle should also occur throughout the year. The performance review for HR could happen just once a year, but reviewing performance should occur frequently. Though you may only be able to reward with a raise once a year, you can reward employees through other ways throughout the year. Try giving an employee a Friday afternoon off or bring in donuts in celebration of a job well done.

Performance Management Cycle

Understanding the performance management cycle and how the performance review fits in will make you a better manager.