4 Steps of the Performance Management Process

John Spacey, April 07, 2022

The performance management process is a repeated set of steps that an organization adopts to manage employee performance. The following are the basic steps in the process.

Strategy → Performance Objectives → Feedback → Performance Review

Strategy

The performance management process requires a set of objectives for each employee. These begin with the strategy of your organization, department and team. As such, strategic planning is the basis for performance management. For example, a restaurant that sets goals to improve menus and service that uses these goals to formulate performance objectives for staff.

Performance Objectives

Managers negotiation performance objectives with each of their direct reports. This is documented with a list of objectives for each employee for a time period such as a year or quarter. Objectives are often designed to be SMART. It is also common for them to be weighted whereby large initiatives count more towards performance.

Feedback

Low performance is communicated immediately to give employees every chance to turn things around.

Performance Review

At the end of the performance period specified in the performance objectives, each manager reviews performance with each of their direct reports. The manager formally documents their evaluation and the employee is also asked to document a self-evaluation. The manager's review of the employee is used for performance management and the employee's self-evaluation facilitates the conversation and allows the employee to document their view of their performance. Employees may be asked to submit feedback from stakeholders or may reference this in their self-evaluation. The results of performance reviews feed into compensation reviews, bonuses, promotions, demotions, awards and recognition. Employees with low performance enter a performance improvement process that may lead to termination.

Notes

Employees may be asked to sign the performance review of the manager to indicate that they have received the evaluation.

The performance management process often includes an employee development process whereby there is a learning and development plan embedded in the performance objectives document.