Performance Reviews

A Comprehensive Guide to Performance Management Cycles

May 31, 2022
November 7, 2023
  —  
By 
Lyssa Test
Lattice Team

Businesses usually place a heavy importance on employee appraisals, but performance management consists of so much more than a single annual conversation. While performance reviews are the culmination of an employee’s work over the last three, six, or even 12 months, the performance management cycle extends well beyond employee evaluations. 

In fact, the performance cycle consists of four phases, with reviews being only one. While many Human Resources teams focus solely on improving performance reviews, having a holistic view of the entire performance management cycle can help your business create a workplace experience where employees feel their contributions are valued throughout the year and have ample room to continuously grow. 

In this comprehensive guide, we take a closer look at the performance management cycle and each of its four stages, who’s responsible for what throughout the process, and the tools your business can use to build a performance-minded organization

The 4 Stages of the Performance Management Cycle

Performance management doesn’t start and end with annual reviews; it’s a months-long process that includes everything from setting goals to awarding merit raises and promotions. In fact, the cycle consists of four distinct stages: planning, monitoring and developing, reviewing and rating, and rewarding.

Here’s what each stage of the performance management cycle entails, and what managers and employees should expect during each phase of the process.

1. Planning

At the beginning of every new performance management cycle, managers need to sit down with their employees to align on performance expectations and agree on goals and objectives. Employees should use effective goal-setting frameworks like SMART goals or objectives and key results (OKRs) to explicitly define what they are trying to achieve and how they will measure their success. Defining these and other key performance indicators (KPIs)  — like, for instance, the amount of quarterly revenue secured by a sales team or the average call time for a customer service team — at the start of each performance cycle will ensure employees understand the criteria against which they’ll be rated during performance reviews. Not to mention, cascading goals also help employees learn how their responsibilities directly tie to company goals and impact the organization’s overall success, which can give their work meaning and help boost employee engagement.

During the planning stage, employees should also set personal goals, like learning new skills, developing new competencies, or taking ownership of more projects. These career development goals can give employees attainable, short-term steps they can take in the present to get closer to their long-term career goals. Establishing these goals during the planning phase can motivate employees throughout the review cycle, and help managers know how best to coach their teams and help their direct reports progress on the path toward their dream roles.

2. Monitoring and Developing

Once performance expectations are set, the real work begins. Now employees must tackle the day-to-day work that brings them closer to meeting or surpassing their goals — but they don’t have to do it alone. In this stage, managers must support their direct reports every step of the way. 

The most common way for managers to monitor and develop their teams is through weekly one-on-ones. These ongoing conversations allow the pair to stay in frequent contact, so they can discuss progress, identify challenges, resolve obstacles, and exchange real-time feedback to keep projects on track. These regular check-ins create an ongoing feedback loop that helps ensure employees make steady progress toward their goals, while also giving managers the ability to update targets and readjust expectations as needed. 

For example, if a sales associate hits their quarterly quota in just one month, they can work with their manager to create a new, more ambitious quota to keep them motivated and productive during the rest of the review period. On the flip side, one-on-ones allow managers to notice immediately if an individual is falling behind on their goals, so they can work together to strategize a way for that employee to boost their performance or create a performance improvement plan (PIP).

One-on-one conversations shouldn’t just include performance goals and to-do list items; managers should also allocate a significant portion of these meetings to checking in on employee well-being, shaping and updating individual development plans, and helping their direct reports grow professionally. Employees want to know what they’re doing well and where they can improve their skills, so managers should also use this time to share constructive feedback, coach their teams, and motivate their employees to reach their maximum potential.

3. Reviewing and Rating

Next, it’s time to formally evaluate an employee’s overall performance for the last year, half-year, quarter, or whatever time frame for which your organization conducts reviews. If managers have met regularly with their direct reports throughout the monitoring and developing stage, the content of the formal review should not contain any surprises. Even so, performance reviews are extraordinarily valuable and ensure managers and employees have a mutual understanding of what performance areas are working and which ones require further improvement. And importantly, performance reviews allow your organization to identify standout talent and reward their efforts accordingly. 

It’s crucial to note, however, that bias can be present during performance reviews, especially when one individual, like a manager, is solely responsible for determining an employee’s overall performance rating. To help mitigate bias and build a fairer employee appraisal process, many organizations use 360-degree feedback, which incorporates self and peer reviews to provide additional context on an individual’s performance and introduce more diverse perspectives into the review process. 

4. Rewarding

Regularly recognizing and rewarding hard work helps motivate your employees, increase productivity, and even boost company loyalty. This also allows your business to build a culture of recognition in which every employee knows that their efforts and accomplishments will be noticed and rewarded.

Here are a few ways you can properly celebrate employees’ achievements:

  • Increase their salary
  • Offer a bonus
  • Award stock options
  • Give a promotion
  • Offer additional paid time off (PTO)

Whatever you choose, finding a way to reward your top performers will ensure they feel valued by your organization. This stage should only be one part of your ongoing recognition strategy, so make sure managers are celebrating their employees’ hard work year-round, and not just at review season. 

Performance Review Cycle Roles and Responsibilities 

Running a successful performance review cycle is a group effort. While your HR team is in charge of the administrative side of performance appraisals, most of the day-to-day work falls on managers and employees. To help your company organize a seamless review process that motivates every employee to participate from start to finish, here’s a closer look at the responsibilities required of each role throughout the cycle.

HR Professionals

HR professionals are responsible for supporting and administering every stage of the performance review cycle, and they need to ensure every manager and employee knows exactly what’s expected of them throughout the process. To that end, HR teams usually create training programs at the start of new review cycles to refresh employees on key dates and deadlines, how to give and receive feedback, how to conduct review conversations, and best practices for fair and equitable reviews

For larger organizations, HR professionals are often also responsible for leading calibration conversations, which aim to remove bias from reviews and ensure employees are consistently rated across managers, teams, and departments. Of course, HR teams should also be available throughout the entire performance cycle to give additional guidance and support to managers and employees as needed.

Managers

Managers play a crucial role in the success of the performance review cycle, so it’s imperative that they buy into the process and understand its importance. From the beginning, managers must work closely with their direct reports to align on performance expectations and finalize both performance and development goals. Once goals have been set, managers must conduct regular check-ins with their team members to track goal progress, remove roadblocks, and coach employees. 

Come employee appraisal time, managers are responsible for collecting feedback from their employee — and, if conducting 360-degree reviews, two to three of their colleagues as well to gain more context into their direct report’s overall performance, so they can make a fairer assessment and share more actionable feedback. From there, managers determine the final employee rating, participate in calibration conversations (if applicable), and deliver the rating and feedback to their employee. Should the individual’s performance fall short of expectations, the manager would need to help create a PIP and continue meeting with the employee one-on-one to track their progress and professional development.

Employees

Lastly, we have employees, who are the party most affected by the performance management process. After they create their goals and have them approved by their manager, employees must work toward achieving those objectives. Throughout the performance cycle, employees should keep their manager updated on their progress and make them aware of any challenges hindering their ability to achieve their goals. Employees should also document all of their personal and professional accomplishments throughout the year, so come review season they have an organized list of everything they’ve achieved and deserve recognition for. 

5 Helpful Performance Management Tools

While Google Docs and paper forms might suffice until your organization hits a certain size, a growing company will eventually need tools that can scale with your business. When it’s time to make that switch, you’ll want a solution that makes it easy to document and organize all of your performance-related needs. 

Not sure where to start? Below, we’ve listed some of the different types of tools growing organizations can adopt to streamline their performance management cycle and empower their employees to do their best work. 

1. Goals

In order to be effective, goals must be written down and stored somewhere safe so they can be easily referenced and revisited throughout the year. For smaller companies, storing these goals in a spreadsheet or email can work just fine, but as teams scale and a company hierarchy develops, you may find yourself searching for a better way to improve the visibility and alignment of employee goals. For this reason, goal-tracking software might be a strong addition to your existing HR technology stack.

Goal-tracking software, like Lattice, allows employees to set transparent objectives tied to larger organizational goals, so they know exactly how their contributions are helping move the business forward. Employees can update goal progress in real time so they and their managers can see which areas are on schedule, ahead of schedule, and lagging behind, allowing them to surface issues as they arise and make sure everything stays on track for success. 

2. One-on-Ones

Between checking in with their employees, discussing their current projects, talking about career development opportunities, and troubleshooting workplace issues, managers have a lot to cover in one 30-minute meeting. Using a one-on-one tool can help managers get the most out of these meetings with a shared agenda to keep them on task, space for notes to remember exactly what was discussed, and action items so nothing falls through the cracks between meetings.

In addition, one-on-one tools often give your HR team unprecedented visibility into these casual check-ins so you know your employees aren’t just meeting, but are having meaningful conversations that help drive productivity and build workplace connection. 

3. Reviews 

Companies are always looking to improve their performance review process and ensure employees and managers have meaningful performance and career conversations. Unfortunately, confusing paperwork and filing processes can easily hurt your performance review participation rates

Choosing a performance management system that puts user experience first, like Lattice, can make it painless to run a review, by allowing your employees and managers to focus more on the content of their conversations than the administrative burden of reviews. Plus, by having updates, peer feedback, and goals all in one place, your team can effortlessly track employees’ accomplishments and improvement areas, ensuring managers give a fair and comprehensive evaluation of their direct reports’ overall performance. 

4. Feedback

Annual reviews shouldn’t be the only time employees receive feedback from their managers and peers. Investing in a feedback tool that makes it easy for employees to request, send, and receive feedback can foster a culture of continuous improvement at your organization. And when feedback is all stored in one place, managers can easily look up past critiques to get additional context during reviews.

5. Praise

The first step toward building a culture of recognition involves finding a way for employees to easily and regularly acknowledge the hard work of their colleagues. A public recognition tool helps raise the visibility of your employees’ efforts and allows your workforce to celebrate wins as a company, rather than just as a department or team. A recognition tool can make the employees who are receiving these accolades feel seen and valued in their roles, which in turn can help make them more engaged and even more productive at work. While recognition is often reserved for managers, the right recognition tool empowers employees to draw attention to the great work of their colleagues and peers and give them the spotlight they deserve.



The success of the performance management cycle within your organization rides on how easy it is for your managers and employees to track goals, share feedback, and recognize hard work. Lengthy paperwork, convoluted processes, and a lack of clear guidance are all it takes to discourage employees from taking continuous feedback and career conversations seriously.

Fortunately, the right tools can make the performance management cycle a breeze for both managers and employees, enabling everyone to effortlessly track and reference accomplishments and improvement areas at review time. Learn more about Lattice’s performance tools and how they can empower your employees to do their best work — from the planning to rewarding stages of the performance management cycle, and everything in between — by scheduling a demo today.