When employees perform well, organizational success often naturally follows. Research from McKinsey shows that when companies place a high priority on performance, they’re 4.2 times more likely to succeed than their competitors. That’s why getting performance management right is a top priority for high-performing human resources teams.
Lattice’s 2025 Lattice State of People Strategy Report found that performance is HR’s second-place priority, coming in just after engagement. And because performance and engagement are so intertwined, the best performance management models focus on creating a continuous loop of feedback, reviews, and recognition.
We’ve outlined the main elements of effective performance management models, and included four options that can be tailored to suit companies of all sizes and industries.
What is a performance management model?
Performance management models help companies manage and review each individual employee’s performance. They create a consistent framework for how performance-related activities are managed throughout the entire organization, including:
- setting employee goals
- evaluating progress toward those goals
- aligning employees’ work with company goals
- providing constructive feedback
- recognizing employees for their achievements
- standardizing how employees move up the ladder
Because these models impact every level of the company, they’re also critical to its success or failure. “They can be enormously important to the culture of the organization, but if implemented badly they can have a long-term deleterious effect on morale, motivation, and performance,” said Andrew McNeill, leadership consultant and cofounder of LXLeaders.
Because of the strong link between performance and engagement, these models should dovetail with your employee engagement and retention strategies. Part of their effectiveness, said McNeill, also depends on the transparency and equity of their application.
Elements of a Performance Management Model
Performance management models usually include some or all of the following elements:
- Goal-setting: Employees need effective goals to perform their best, according to a 2023 survey by Lattice and YouGov. Once those individual goals are set, employees also need clear methods to measure progress. Your company might use key performance indicators (KPIs), SMART goals, or objectives and key results (OKRs). Goal-setting conversations should be a collaborative process, as a sense of agency is shown to improve engagement. This, in turn, helps boost performance.
- Performance Reviews: These help monitor and evaluate individual performance and progress toward goals. They’re typically a formal assessment concentrating on a specific period, for example, six months of the year. While traditional manager-employee reviews are common, peer reviews, 360-degree reviews, and self-assessments can also be valuable depending on team size and needs.
- Development Planning: Employee development conversations should address any resources an employee needs to develop their careers, discuss short and long-term career plans, and check they’re on track to meet their objectives.
- Engagement Surveys: By collecting employee feedback, HR teams can take steps to maximize a wide range of metrics, including productivity and performance.
- One-on-Ones: Short, weekly meetings between managers and their direct reports allow progress — and roadblocks — to be discussed and resolved as soon as possible.
- Continuous Feedback: Informal but regular feedback helps employees know they’re on track in between formal review cycles. This feedback can be delivered in many ways, including informal conversations, public recognition, or one-on-ones with their manager.
Types of Performance Management Models
While there are many different types of performance management models to choose from, McNeill said the most effective models foster personal growth and creativity, clarify expectations, establish goals, and provide rewards.
“These models should also make clear what behaviors and deliverables are expected. Both must be measurable and understood by the manager and team member,” he said. How often those behaviors and deliverables are outlined and assessed depends on a range of factors including the size and industry of the company and whether there’s already an established performance management process in place.
To help you pick the option that’s best suited to your company, we’ve rounded up four of the most popular choices.
Option 1: Annual Goal-Setting and Performance Reviews
This “starter” version of performance management follows a fairly traditional format, including:
- Performance reviews: Annually, using 360-degree feedback
- Goal-setting: Annually, alongside development planning
- Engagement surveys: Annually
- One-on-ones: Weekly
- Informal feedback, praise, and recognition: Ongoing
By combining formal reviews with weekly one-on-ones and informal praise and feedback, this model helps keep employees focused and engaged. It also helps generate open dialogue and create a feedback culture where employee opinions are heard and valued.
“Regular, light-touch check-ins around any issues or opportunities ensure the manager and team member know there is a time to take stock and communicate openly, avoiding issues building up over extended periods,” said McNeill.
By including engagement surveys, HR teams can also gather vital data while demonstrating their commitment to going the extra mile to address employee needs.
Best Suited For:
Companies that want to incorporate continuous feedback alongside annual reviews, but don’t yet have a formal process for capturing that feedback. By embracing the more intuitive, first-stage elements of performance management — including praise for good work and regular one-on-one meetings — companies can set the foundations for ongoing performance management.
Most companies don’t stay with this classic model forever, but use it to establish the foundations of performance management. Once employees have completed their review cycle and become familiar with what a high-performance culture looks like, they transition to one of the more comprehensive models below.
Benefits:
- Build comfort and consistency by incorporating frequent feedback.
- Create capabilities to measure performance.
- Establish foundations for employee growth while also addressing their needs.
Option 2: Biannual Goal-Setting and Annual Performance Reviews
This option increases the pace with more regular reviews, including:
- Performance reviews: Twice a year, using 360-degree feedback
- Goal setting: Twice a year, alongside development planning
- Engagement surveys: Twice a year
- One-on-ones: Weekly
- Informal feedback, praise, and recognition: Ongoing
By upping the frequency of performance reviews, goal-setting, and engagement surveys, this model supports employees in their overall performance. At the same time, ongoing public praise and real-time feedback help quickly address any performance issues and development opportunities.
Best Suited For:
High-growth companies because it establishes time to check in formally about performance and evolving organizational objectives. It helps to keep employees engaged by providing feedback on their performance while ensuring they’re being compensated fairly.
Twice-yearly goal-setting keeps goals aligned with rapidly evolving business needs. This model is best for companies already practicing performance management, as they can implement the increasing frequency of reviews more easily than starting from scratch.
Benefits:
- Align goals directly with the performance review process.
- Increase internal communication between managers and their teams.
- Improve visibility into company initiatives and organizational goals and objectives.
Option 3: Biannual Goal-Setting and Biannual Performance Reviews
This option adds formalized career development into the mix:
- Performance reviews: Twice-yearly, with 360-degree feedback
- Growth: Twice-yearly developmental reviews
- Goal-setting: Twice a year
- Engagement surveys: Quarterly engagement surveys plus shorter pulse surveys
- One-on-ones: Weekly
- Informal feedback, praise, and recognition: Ongoing
Quarterly performance reviews are the gold standard — for good reason. A market study by Lattice found that employees who set and discuss their goals more frequently are also more engaged than when their reviews are held less often. A quarterly check-in cadence (switching between performance and growth) means employees can stay focused on their performance while still having breathing room and the opportunities they need to make strides.
Best Suited For
Companies with strong employee performance management foundations seeking a more comprehensive process. Quarterly reviews give managers and their employees clear expectations on the regular.
This model also provides constant opportunities for effective feedback through one-on-ones, status updates, and real-time feedback. Begin this model with one-on-one meetings and a goal-setting cycle, before reviewing performance each quarter.
Benefits:
- Accelerate team development.
- Give employees more chances to demonstrate growth and reflect on their performance.
- Boost employee engagement and performance with regular recognition.
Option 4: Project-Based Reviews
For companies completing project-based work, this model is often the best fit:
- Performance reviews: As needed, focusing on specific projects or team performance
- Goal-setting: At the start of each new project
- Engagement surveys: Twice a year
- One-on-ones: Weekly
- Informal feedback, praise, and recognition: Ongoing
- Status updates: As needed
Best Suited For
Teams working on standalone projects, as it combines continuous performance management with as-needed performance appraisal. This doesn’t mean employees aren’t continuously working on their development though: it still incorporates one-on-ones, status updates, and goal-setting.
For companies using this model, internal communication like quick status updates can be particularly useful, as they give team members the ability to report achievements toward their performance goals and request help with any obstacles.
Benefits:
- Keep everyone in the loop with status updates.
- Ensure flexibility with customized timing for reviews.
- Take time to reflect on project successes before starting the next one.
Bring your strategies to life with Lattice’s performance management system.
Whichever performance management model you choose, there’s a lot of paperwork. But the right HR tech can help streamline and standardize this process. “Intuitive IT systems will make a line manager’s job easier and provide central points of record keeping that can be extremely helpful,” said McNeill.
For example, Lattice’s people management system simplifies the employee journey by keeping everything in one place. This makes it easy for employees and HR to access performance records, compensation adjustments, and employee feedback because they’re all in the same platform.
With a fully connected people platform, HR can generate reports using real-time data to spot trends and ensure fairness and transparency across the entire performance management process.
To create a performance management model that fits your business's unique needs, schedule a demo with Lattice.
