What is the Performance Management Process?

Performance management is a cycle that consists of 4 necessary steps. They all work
together, so when taking part in performance management, don’t skip a step! 

1. Planning: 

‍ mployees must understand what’s expected from them to gauge how they are doing and be
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able to receive actionable feedback.  

 ‍ efining: It begins by defining their goals and communicating these goals with them.
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Not only should this be done in the job description, but once a new hire joins the
team, it’s important to reiterate what will be expected from them. 

 ‍ rite SMART targets: To do this efficiently, you can define goals using SMART -
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which means that they are: specific, measurable, attainable, relevant and time-based. 

 ‍ et Performance Standards: Given these SMART targets, you can set the standards
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by which their performance will be assessed. 

 ‍ eedback: As mentioned, performance management is a two-way street. Once you’ve

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communicated with employees what they will be held accountable to do and
measured upon, get their feedback. It’s essential because they may have questions,
modifications or be able to confirm that they feel ready to take on the tasks. 

 ‍ pproval: Upon completion of the feedback stage, both managers and employees can
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approve this step so that the process has been kicked off collaboratively. This also
gives employees a sense of ownership over their work. 

2. Coaching: 

‍ nce the goals have been set, the coaching stage, which consists of continuous meetings
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commences. 

 ‍ rganisation: Organise regular check-ins and meetings so that managers and

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employees can communicate how things are going. 
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 Training: When an employee is struggling, they want to know that they can ask for
help. Setting up the relationship as one in which you train employees and allow them
to air their challenges will make this step more transformative. 
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 Feedback: Both parties should feel comfortable to give and receive feedback. 
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  Objectives: By staying connected with the original purposes defined in step 1, then
management can make sure that the work is being done and up to the standards set.
Not only will this include checking that the job is being properly carried out, but it
also involves the reward stage to acknowledge when an employee has been crushing
goals! 

3. Review: 

‍ ormal reviews typically take place annually within an organisation. Automation tools can be

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highly useful in storing historical data so that you can see how an employee has grown year-
over-year. 

 ‍ eview performance: Over a set period, management looks over an employee’s

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performance in what’s also known as a performance appraisal. Since performance
management consists of regular check-ins throughout the year (be it weekly, monthly
or quarterly), this annual check-in will also serve to plan future goals. 
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 Review process: Managers and employees should not only focus on employee’s
performance. It’s also an excellent time to review the overall process and ask
questions like, “Did the employee achieve goals?” / “Were there challenges that
persisted?” / “How did management’s feedback help/hurt their performance?” and
“Can this process be better?” 
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 Goal completion: Take a look at both small and large goals. If you pinpoint
challenges in these areas, you can brainstorm solutions together. For example, many
employees who have a lot of work to complete in a short amount of time may make
avoidable human errors. If you notice employees entering data wrongly, for example,
then the business can suffer losses. Instead, a solution could be to implement a data
automation tool that automatically sources data and inputs it into a centralised
location with no errors. 
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 Constructive feedback: Again, both parties should have the freedom to share their
actionable input. 

4. Action: 

‍Within business, it takes action to make changes! 

 ‍ ewards: An essential way to motivate employees is to reward them and give

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recognition for a job well done. While it doesn’t have to be just monetary, it probably
will include some form of compensation. It can also be in the form of time-off,
granting leadership opportunities or giving said employee new and exciting projects. 
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 Looking ahead: The final step is to look forward and work together on how this
process will take shape next year.  
The Performance Management Cycle

The performance management process or cycle is a series of five key steps. These steps are

imperative, regardless of how often you review employee performance.

 1. Planning
 

This stage entails setting employees’ goals and communicating these goals with them. While

these goals should be disclosed in the job description to attract quality candidates, they

should be communicated once again when the candidate becomes a new hire. Depending on

the performance management process in your organization, you may want to assign a

percentage to each of these goals to be able to evaluate their achievement.

The goals should be clearly outlined using the S.M.A.R.T. method.

SMART goals are:

 Specific - The goal is clearly outlined, with detailed information such as what
is to be achieved, how well it must be done, and why it is important.

 Measurable - The goal must have a definite and measurable indicator to tell if
it has been achieved.

 Achievable - While the goal should stretch the employee, it should not be so
lofty as to not be realistically achievable at all.

 Relevant - The goal is in line with both the employee’s job and the overall
goals of the organization.

 Time-bound - There should be a definite timeline as to when this goa

 
2. Monitoring

 In this phase, managers are required to monitor the employees performance on the goal. This
is where continuous performance management comes into the picture. With the right
performance management software, you can track your teams performance in real-time and
modify and correct course whenever required.
 

3. Developing

 This phase includes using the data obtained during the monitoring phase to improve the
performance of employees. It may require suggesting refresher courses, providing an
assignment that helps them improve their knowledge and performance on the job, or altering
the course of employee development to enhance performance or sustain excellence.
 

4. Rating

 Each employees performance must be rated periodically and then at the time of the
performance appraisal. Ratings are essential to identify the state of employee performance
and implement changes accordingly. Both peers and managers can provide these ratings for
360-degree feedback.
 

5. Rewarding

 Recognizing and rewarding good performance is essential to the performance management

process, as well as an important part of employee engagement. You can do this with a simple
thank you, social recognition, or a full-scale employee rewards program that regularly
recognizes and rewards excellent performance in the organization.
The Deming Cycle (or Plan-Do-Check-Act (PDCA)) is a four-step iterative technique used to
solve problems and to improve organizational processes. Dr. Walter A. Shewhart, the
renowned physicist and statistician from Western Electric and Bell Labs, developed the
original concept during the 1920s. His approach was a three-step linear problem-solving
method. 
what is PDCA and the Deming Cycle?
 Plan: In this step, you investigate the current situation in order to fully understand the
nature of the problem being solved. Be sure that you develop a plan and a framework
to work from, and specify the desired outcomes and results.
 Do: To identify the real problem by analyzing the data and defining and
implementing a solution plan. The PDCA cycle focuses on smaller, incremental
changes that help improve processes with minimal disruption. You should start with a
small-scale pilot so as not to disrupt the organization should the solution not work as
expected.
 Check: To monitor the effect of the implementation plan and find countermeasures if
necessary to further improve the solution. You should do a check during
implementation to make sure that the project’s objectives are being met. Do a second
check upon completion to allow for successes and failures to be addressed, and for
future adjustments to be made based on lessons learned.
 Act: Implement your solutions and recommendations. Decide if the solution is
effective, and either integrate it into standard work practices or abandon it. If you
abandon it, you should ask what you’ve learned from the process and restart the cycle.

3 benefits of the Deming Cycle

1. Facilitates continuous improvement: The fact that PDCA is an iterative cycle
encourages users to pursue ongoing and continuous improvement. The key is that it
requires a commitment from leadership because the Deming Cycle is not a one-time
event.
2. Flexibility: The Deming Cycle can be used for a wide array of organizational
processes regardless of the function.
3. Simple yet powerful: The concept and the steps are easy to understand. The tools
needed are basic. Yet, the outcomes and solutions coming from PDCA can have a
significant impact on the organization.
Why is the Deming Cycle important to understand? 
1. Organizations and leaders must understand that all processes can be improved. PDCA
is a great tool for starting on the journey to continuous improvement.
2. The Deming Cycle is a well documented and proven methodology. There is no need
to start from scratch and reinvent the wheel when an effective solution already exists.
3. With this method, change can be quick and solutions implemented in a timely fashion
so that your organization can see benefits right away.

Who developed the PDCA methodology? 

Dr. Walter A. Shewhart developed the original concept of an improvement process based on
Scientific Management. Dr. W. Edwards Deming popularized the concept of an improvement
method but added the all-important need for an iterative approach and coined the term
PDCA, which stands for Plan – Do – Check – Act 
What is the difference between PDCA and PDSA?
Dr. W. Edwards Deming revised the original term PDCA to PDSA because he felt that the
use of Check was too closely aligned with the concept of inspection and success/failure. He
felt that using the letter S for Study would put more emphasis on data and learning rather than
just success and failure. 

TheTorrington & Hall Model

The model developed by Torrington and Hall, in 1995, emphasises the point that
the performance management process is continuous, rather than static. Although targets are
set and reviewed, they are constantly evolving and being updated and therefore the process
can be represented as a cycle, as shown below. The key is that when the first set of
expectations are reviewed, more targets are set, based on the current level of performance.
This means employees and their managers never stand still and are always working towards
their next goal. This maintains productivity and creates a learning environment where
employees are always developing new skills and striving for better performance. A more
static approach may see an initial improvement in performance, however is less likely to see
sustained and long-term changes. 

The Characteristics of a Healthy Organization

1. Effective Sharing of Goals

A healthy organization shares its business goals with employees at every level of the
organization. Management shares goals with employees and gets them on board with the
mission and vision of the organization. Employees and managers understand what is
required to reach these shared goals and make every effort to achieve them.

2. Great Teamwork

Another characteristic is teamwork. Healthy companies know how to develop teams that
collaborate to achieve common goals. Employees and managers readily offer their
assistance to each other to meet corporate objectives.

3. High Employee Morale

Healthy organizations possess high employee morale. Employees value their positions in
the organizations and desire to work there for a long time. Productivity is high and
organizational events are enjoyable and successful.

4. Offers Training Opportunities

Companies provide on-the-job training and opportunities for employees to enhance their
work-related skills. Organizations bring in other individuals to provide necessary
departmental and corporate-wide training. Companies also offer opportunities to pursue
certification and continual education.

5. Strong Leadership

Good leadership is one of the main characteristics of a healthy organization. Employees

have good relationships with management that are based on trust. Managers know how to
get employees to function together. When correction is needed, employees readily accept
the constructive criticism offered by leaders.

6. Handles Poor Performance

Companies confront poor performance instead of ignoring it. Organizations take corrective
actions to improve performance. Upper-level management values the input of employees
who make suggestions on how to improve productivity and achieve high performance rates.
Companies may even bring in specialists to detect problems and offer solutions.

7. Understands Risks

Healthy organizations understand the risks they are open to and take the necessary steps to
protect themselves against them. When an event happens due to organizational risks, a
healthy organization learns from the event. Companies use precaution but understand that
risks are necessary to facilitate growth.

8. Adapts to Opportunities and Changes

Healthy organizations know how to recognize and seize good opportunities. Healthy
organizations always look for opportunities to grow. They also know how to adapt to
technological or operational changes. They try to stay ahead or inline with changes in the
industry and business environment.
9. Clearly Defined Structure

Companies possess a sense of order and organizational structure. The structure and order of
the organization does not limit innovation and growth. Employees do not mind complying
to the company's order because they understand it and see the benefits of its
implementation.

10. Well-Known Company Policies

Organizations create and implement company policies that are readily available to their
employees. Healthy organizations follow the policies and regulations of local, state and
federal governments. When employees or managers break policies, the issue is dealt with
immediately and in a professional manner.

What is a Performance Review?

A performance review is a formal assessment in which a manager evaluates an employee’s

work performance, identifies strengths and weaknesses, offers feedback, and sets goals for
future performance. Performance reviews are also called performance appraisals or
performance evaluations.

When done right, performance reviews can help employees understand what they’re doing
well, how they can improve, how their work aligns with larger company goals, and what is
expected of them. Managers who use performance reviews effectively can more easily
recognize high performing employees, correct issues before they become insurmountable,
communicate expectations, encourage growth and development, and foster employee
engagement.
How Should Employees Prepare for Performance Reviews?

 Prepare notes. Encourage employees to make notes before each performance

review. They should document topics they want to discuss, strengths, weaknesses,
and goals.
 Brainstorm examples. Employees should be able to share concrete examples of
how they have met goals set at the last review and how they have improved
overall.
  Self-evaluate. Employees should practice self-evaluation by giving themselves a
mock performance review. They should identify new strengths, weaknesses,
accomplishments, and goals.
 Come with questions. Employees should have a safe environment to ask
questions in performance reviews. Preparing questions ahead of time can help
ensure everything that needs to be asked is asked. 

Performance Feedback

Performance feedback is critical to helping employees understand expectations, make

adjustments and get the coaching necessary to improve and succeed. On the other side of
the equation is feedback managers may receive in the process as well that helps them more
effectively lead the organization.

7 Different Types of Feedback

Appreciation Feedback

Leaders who give appreciation feedback show they value how a worker performs. Hard work
does not go unnoticed. Appreciation feedback can act as a motivating factor for many people.
This type of feedback can be as simple as acknowledging someone for reaching a hard
deadline, or it can go into detail, showing thanks for the work they put into a complex project.
Appreciation feedback works best with specifics. A generic “well done” feels empty and,
when used too often, meaningless. Specifics make the feedback feel more personal and gives
the receiver a firm reason to be proud.

Guidance Feedback

Guidance feedback allows leaders the opportunity to not only praise their team members but
to offer advice. Guidance feedback can happen in the form of suggestions for improvement.
That doesn’t mean it’s an indirect approach because it gives the receiver a chance to ask
questions for clarification. 

Encouragement Feedback

Another way to provide added motivation is to give encouragement feedback. Similar to the
previous feedback types, encouragement feedback is an excellent way to boost morale,
especially when someone happens to be struggling. It also applies to situations where
someone is stepping into new territory for the first time. For example, newly hired employees
may feel overwhelmed when starting their job. With encouragement feedback, they receive
an extra boost that tells them to keep at it. This feedback really shines as a quick exchange in
the office or a brief instant message. It goes to show that a little goes a long way when it
comes to feedback.

Forward Feedback

 Forward feedback looks toward the future and doesn’t fixate on people’s mistakes. That
doesn’t mean leaders condone mistakes, but they understand that constantly bringing up the
past does little to help someone improve for the future. Forward feedback provides necessary
context for people, giving them goals to work toward. 

Coaching Feedback

When giving coaching feedback, the leader will act just like a coach, planning winning
strategies that help people see where they fit in on a team. Coaching feedback is normally
more formal than some of the above types of feedback. Often, it involves regular reviews
which combine guidance feedback with forward feedback. Much like a coach hyping up the
players on a team, leaders can inspire through this feedback, which can help workers become
more effective at their jobs and keep them away from actions that might impede reaching
their goals.

Informal Feedback

Informal feedback has several notable advantages, including not having to wait for scheduled
events before giving it. It’s a more spontaneous form of feedback, one that happens in the
moment. It should occur during the course of conducting regular business.

Formal Feedback

Formal feedback includes the use of detailed information taken from an employee’s work,
giving them a more thorough look at how they’re doing. This is where leaders can review if
they’re reaching established goals and how well they contribute to the team.

Different types of feedback

There are three distinct feedback scenarios:

1. Positive feedback
Positive feedback recognises positive behaviour and reinforces positive behaviour.

 Positive feedback, on the other hand, reinforces desirable behaviour. Immediate and
positive recognition for positive performance will motivate an employee to want to
repeat the behaviour.  Leaders can create a cycle of productive behaviour by
recognising positive behaviour which encourages further positive behaviour and
positive feedback. This creates a continuous improvement process.
 2. Negative feedback
Negative feedback is directed at unacceptable activities or behaviours and stops negative
behaviour.

 Negative feedback can be used to keep a team member from repeating negative
behaviour but does not necessarily contribute to the substitution of a positive
behaviour to replace the negative one.

3. No Feedback
A lack of feedback is just as powerful an influence on people’s behaviour as either positive or
negative feedback.  For example, people who are not receiving any form of recognition or
feedback will often resort to negative behaviour, making mistakes or causing trouble as a
result of being disheartened by lack of feedback.
Lack of feedback creates a psychological vacuum in people’s minds.  When they don’t
receive feedback, they don’t believe that their leader or managers are concerned or invested
in what they are working on.  They feel they hold no value in their leader’s eyes.  Attention is
often gained by doing something wrong rather than by doing something well.  In the absence
of feedback people will often move to doing things differently or incorrectly.

What is 360 degree feedback?

360 degree feedback, also known as multi-rater feedback, is a system in which anonymous
feedback is gathered about a member of staff from various people they have working relationships
with.

This is usually their managers, peers, direct reports, subordinates - hence the name "360 degree".
It's designed so a range of people can share their opinion to provide a well-rounded view on the
individual.

It's used mostly as a development tool because it provides information about a subject's work
competencies, behaviour and working relationships. It's also mainly used for individuals higher up
in the organisation's hierarchy.

The Purpose of 360 Degree Feedback

1. Employee Development

Founder of Barrington Coaching says that 360 degree feedback encourages employees to

share the purpose of their development with their manager. Ideally, the employee and their
leader use the data to identify strengths that they should continue to leverage and how they’ve
made them successful to date. They then focus on one or two areas of improvement in which
they could close some gaps.

 
2. Performance Appraisals
While experts believe that there are many 360 degree appraisal advantages and
disadvantages, the involvement of multiple feedback can definitely lend more credibility to
the appraisal and promotion process. 
The benefit of 360 degree appraisal is that it is designed to align with the company’s
performance management system, enabling measuring the desired behaviors for performance
management purposes. In this case, the data is used as input for the final performance rating.
While the merits and demerits of 360 degree appraisals are highly debated, we believe one
should tread with caution when using 360 degree feedback for appraisals. To take
full benefits of 360 degree appraisal, organizations should focus on them as part of a larger
development scheme.

3. Succession Planning
Finally, the 360 degree feedback tool comes in handy when preparing certain employees for
new roles, especially critical leadership roles. In this particular scenario, the review helps
familiarize the administration with a potential leader’s strengths and possible blind spots that
may hinder the company’s progress.

The Advantages of 360 Degree Feedback

1. Creates Self-Awareness About Strengths & Weaknesses

2. Identifies Training Gaps
3. Improves Productivity & Work Relationships
4. Gives Insight into Employees’ Work
5. Increases Transparency Within the Organization

The Disadvantages of 360 Degree Feedback

1. Side-lines Positive Feedback
2. Garners Dishonest Reviews
3. Increases Distrust in Leaders
4. Time-Consuming Process
5. Provides Biased Opinions

Objectives of 360 Degree Performance Appraisal

1) Identifies Strengths and Weaknesses
2) Strengthens Change Management
3) Promotes Development
4) Provides a Basis for Personnel-Related Decisions
5) Aligns Individual and Organisational Goals
The 360 feedback system process

Administering the survey:

 Around 6-10 respondents complete an anonymous online feedback form.

 Respondents are arranged into groups depending on the relationship with the subject, such
as, manager, peers etc. If it's appropriate, feedback can also be gathered from external
sources, such as clients or customers.
 The surveys are competency based and the questions typically consist of: rating
management competencies, such as, leadership and communication skills and open ended
questions, for example, "What does X do well as a leader?"
 Questions should always be regarding observable behaviour as this will be easier to
quantify.
 The subject of the feedback also completes the same questionnaire.
 The whole process should be supervised by a manager, coach or a trainer - often external
to the organisation.

Post-survey completion:

 Individual answers cannot be identified as the feedback is provided as averages from the
different rating groups.
 Feedback is provided in a report usually created by a trusted third party and crucial areas
for development are highlighted.
 The information helps to create a development plan.
 Those who give the feedback to the subject should be well-trained and they should
provide the information objectively and constructively.
 Support should be offered to help achieve the goals set, including follow-ups.

Transformational Leader

A transformational leader is someone who:

 Encourages the motivation and positive development of followers

 Exemplifies moral standards within the organization and encourages the same
of others

 Fosters an ethical work environment with clear values, priorities and standards.

 Builds company culture by encouraging employees to move from an attitude of

self-interest to a mindset where they are working for the common good

 Holds an emphasis on authenticity, cooperation and open communication

 Provides coaching and mentoring but allowing employees to make decisions

and take ownership of tasks.
Transactional vs. transformational leadership

Transactional leadership is the exact opposite of transformational leadership — it relies on

motivating employees through rewards and punishments. It requires supervision, oversight,
organization and performance-monitoring. This leadership model doesn’t try to innovate.
Instead, it’s rooted in keeping things consistent and predictable over time. Errors and faults
are closely investigated, and the overall goal is to create efficient, routine procedures.

This style is best suited to departments or organizations that require routine and structure —
areas where businesses want to reduce chaos or inefficiency. But it doesn’t allow for
innovation or future planning the same way transformational leadership will.

Transformational leadership, on the other hand, supports agile environments, especially

where failure carries less risk. You want the development and maintenance of a current
product to remain consistent and error free, but you don’t want that to hinder the progress and
growth of future updates and improvements.

Transactional leadership takes care of creating a consistent development process, while

transformational leadership leaves people free to come up with new ideas and look at the
future of products, services and ideas. 

Four Levels of Feedback

Task Level

The task level is the most common type of feedback given. It tells how well the learner has
performed a specific task, such as finding the main idea of a paragraph or story. Task
feedback can be effective when distinguishing correct from incorrect answers; acquiring
more or different information; building more surface knowledge; and addressing
interpretations, such as what must be corrected for a specific project. But because it doesn’t
generalize what the student must do in order to improve across the board, it is not effective
over time. Incidentally, task level feedback is often mixed with self feedback. Too much
feedback at this level ensures that students focus on the goal rather than the processes.

Process Level

Process level feedback is specific to the processes used for tasks, such as how information is
obtained and how the task is connected to relating tasks. It challenges the student to form a
deeper understanding of the learning and encourages him to construct meaning on his own. It
provides information about connections between ideas, strategies for identifying errors, and
cues about how to “fix up” strategies. The power of feedback at this level is that it promotes
error detection, which is when a student reflects on his own work. Some delay in providing
this type of feedback is useful.

Self-Regulation Level

This level addresses the way that the learner examines and adjusts his actions toward his
learning goal. Much like the process level, it encourages the learner to self asses, but to a
more critical degree. It also prompts him to engage with the feedback, requiring commitment,
control, and confidence. A learner that is not confident in his own abilities or is not as
effective a learner (not willing to invest the time or effort seeking feedback, not willing to
seek further information or help, not being able to review work) will not benefit from this
type of feedback.

Self Level

Used too often in the classroom, this level of feedback focuses more on the person than on
the work and is the least effective. It typically builds a student up, but gives them little
information for improvement. Comments from the teacher such as “great work,” “nice job,”
and “Sally is a good student” may actually be counterproductive and interfere with the
student’s ability to self assess. Refrain from using this level of feedback unless it is linked to
effort, self regulation, or engagement or to comfort and support a struggling student.

Performance Goal

Performance goals are short-term objectives set for specific duties or tasks in your current
job position. These goals are usually related to the overall company goals or specific
department goals where you work.

Performance Goal-Setting
Performance goals enable employees to plan and organize their work in accordance with
achieving predetermined results or outcomes. By setting and completing effective
performance goals, employees are better able to:

 Develop job knowledge and skills that help them thrive in their work, take on
additional responsibilities, or pursue their career aspirations;
 Support or advance the organization's vision, mission, values, principles,
strategies, and goals;
 Collaborate with their colleagues with greater transparency and mutual
understanding;
 Plan and implement successful projects and initiatives; and
 Remain resilient when roadblocks arise and learn from these setbacks.

Effective goal-setting starts with an analysis of all aspects of the goal, including:

 Reasons for pursuing the goal;

 Intended results or outcomes and measures of success;
 Alignment with the organization's vision, mission, values, principles, strategies,
and goals;
 Potential stakeholders or others that may be impacted;
 Resources or capabilities needed, wanted, and available; and
 Possible roadblocks that may arise along the way.
 The SMART model is a popular goal-setting tool. As an acrostic, it is easy to
remember. Each letter in the word "SMART" represents a key element of a complete
and actionable goal:
 S – Specific: Is the goal explained with enough detail that it can be well understood
by those involved in its completion and by any stakeholders?
M – Measurable: How will those involved in completing the goal know it has been
accomplished and how will stakeholders determine its success?
A – Attainable: Is the goal attainable or feasible given the resources available?
R – Relevant: Does the goal align with, support, or advance the organization's
vision, mission, values, principles, and strategies?
T – Time bound: Does the goal have a target date for completion?