Performance management: understanding, cycle, and how to maximize it

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Performance management: understanding, cycle, and how to maximize it

Every organization or company certainly has its purpose. Later, this goal will be driven by employees who work in the company. Well, to maximize the work of employees, performance management or performance management is needed.

But, what is performance management? What are the steps and the process so that it can run optimally? The following is the explanation.

Understanding of performance management

Reporting from UC Berkeley’s official website, performance management is a continuous communication effort that is carried out continuously and occurs between employees and their superiors and is done to achieve the company’s main goals. Effective performance management is very much needed by the company.

As reported from the official McKinsey page, performance management can help align employees with various other resources so that the company’s goals can be achieved properly. On the other hand, the official page of The Balance Careers states that there are several components included in the Performance Management System. The various components are:

  • Making a bright and clear job description based on what has been planned on employee recruitment.
  • Choose prospective employees who can qualify for being interviewed.
  • Conduct interview sessions with prospective employees as the selection stage to deserve to enter the next stage.
  • Asking prospective employees whether they can achieve goals and also fulfill the job description that has been set by the company.
  • Select prospective employees with various processes based on corporate culture.
  • Offer jobs to prospective employees who have been selected, including in terms of the excess of the company, facilities, salaries, benefits, etc.
  • Welcoming newly elected employees, doing the orientation stage, appointing employee mentors, and introducing the company’s culture to elected employees.
  • Make performance standards that can be measured by selected employees.
  • Provide training for employees.
  • Provide coaching and reciprocation for employees.
  • Routinely discussed performance development with employees.
  • Make a certain award system for various achievements and contributions of employees.
  • Offering promotion or career development, including shift position, employee transfer, etc.
  • If there are employees who resign, the company must conduct an evaluation and find out the cause.

These various components are not always equated to each type of company. However, the principles and elements are still similar to good performance management.

Performance management cycle

In the process, there are 4 performance management cycles that you can follow. These four cycles must be done continuously. Reporting from the official valamis page, various stages are as follows:

1. Planning

In this stage, the management and company directors will discuss related goals and what the company wants to achieve, both in a certain period or overall.

This is very important to do so that each employee has a guide in designing every purpose in more detail. These objectives are not only about business strategies, but they can also be about the indicators of achieving employee performance in a team, such as tasks, targets, development, actions, etc.

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After the purpose plan has been established in general, then the manager below can begin to determine the purpose for the performance management of his employees. This goal is often set by using the method S.M.a.r.t or specific, measurable, achievable, relevant, and time-bound.

At this stage, there can also be planning for employee development.

2. Monitoring

In general, in a year there will only be control or monitoring as much as one or two times. In this stage, managers must carry out various ways to ensure whether various goals that have been planned can be achieved.

If later there will be a problem with the employee, the manager must be able to help resolve employee problems. Adjustment of goals can still be done if indeed it will be needed.

At this stage, it does not rule out the possibility that there are new goals to be established because there are many changes that occur.

3. Reviewing

The next cycle stage is reviewing or two-way assessment. At the end of the year, later the management and employees will discuss whether all the objectives that have been set from the beginning can be achieved properly.

This stage is considered very important because managers can carry out various collaborations with the employees. Increasingly involving workers, the workers involved will be more encouraged to continue working in the company. Some of the things studied include the realistic objectives that have been set from the start, and how employees can gain new experiences or skills.

4. Award

This stage is a stage that cannot be ignored because rewards or rewards are important to improve employee work spirit. If employees do not get enough awards, the spirit of work will decline, and they are likely looking for another job.

Some forms of awards that can be given include increased salary, bonus giving, increase in terms of leave, position promotion, additional projects, written testimonies, etc. If employees have received awards, the performance management cycle can return at the initial stage.

How to Maximize Performance Management

So that the performance management carried out by the company can be done optimally, various ways can be done. Reporting from the Workfront official page, several ways that can be done are:

  • More frequent work evaluations, so not only once or twice a year, but can be several times a year.
  • Doing OKR activities to harmonize personal achievement standards with the company’s goals as a whole.
  • Develop a feedback system on employees weekly so that the monitoring process can be done effectively.
  • Managers must be used as instructors or for exercises and direction.
  • Develop a more effective standard for use as an indicator of work performance.

Differences in performance management and performance assessment

Often performance management is exchanged with other things, such as performance appraisal. Quoted from the official website Inc., work assessment is a process or way of company management in providing feedback or input to employees.

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This input is related to the work, and other things that can be done so that employees can be better. Several other things distinguish performance management and performance appraisal, namely:

1. Emphasis

Performance assessment is more focused on evaluation and input for employees. While performance management is more focused in terms of integration so that the work of employees can be appropriate and help the company achieve its goals.

2. Destination

Performance assessment is done to add and also develop employee performance, help develop employee talents and expertise, and focus on providing corporate culture to employees.

On the other hand, performance management is done to establish, evaluate, and also improve employee performance to be following the company’s goals and employee performance can increase.

3. Employee involvement

Performance assessments tend to be done by employee managers. That is, employee involvement will be very minimal or not even at all. Whereas in performance management, employees can contribute to providing feedback that can be discussed with managers.

Performance management requirements

In carrying out performance management, several tools and requirements must be met. These various tools such as Lean Six Sigma, ISO quality management, BALANCED SCORECARD “BSC, Six Sigma, Malcolm Baldrige” MBNQA “, etc.

But, these tools must meet the following terms:

  • In realizing its objectives, companies must have a clear strategy.
  • The company must have a KPI (Key Performance Indicator) that can be measured quantitatively, has a target to be achieved, and also has a clear time limit.
  • In employment contracts, various benchmarks for performance can be written in the form of an agreement.
  • The existence of a default performance management cycle must be obeyed by all employees involved in the company in the form of implementation, supervision, performance planning, and evaluation.
  • The existence of rewards and punishment to improve and maintain the consistency of the company.


Based on the explanation above, we can take the conclusion that performance management is one of the company’s management tools that can help the managers monitor and also evaluate the work of employees.

The aim is to create a more effective and efficient environment, both for companies and employees. The success of performance management depends on how all elements of the company’s organization carry out their duties seriously.

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