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March 8, 2024

Performance Management Cycle: Inside the Key Stages, Tips and Tools

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Employee development is an ongoing journey. But without a gentle hand and formalized process to guide growth, it can be easy to fall out of step.

That’s where performance management comes in.

A well-oiled performance management cycle aligns individual and organizational goals and gives every member of your team a clear plan to meet them. But, according to our recent Hiring Challenges survey, more than half of employers still rely on informal check-ins to guide performance management.

If you’re falling back on the same ol’ Slack kudos channel or one-and-done annual review, now is the time to lean in and level up. In this guide, we’ll help you create a stage-by-stage performance management plan to make your employees feel heard and seen.

The 5 stages of the performance management cycle

With roughly $1.9 trillion in lost productivity due to low employee engagement, employers are facing what some have labeled a “disengagement epidemic”. But getting employees excited to come to work is harder than it sounds. 

To reignite the spark, start by taking a good look at every stage of the performance management process. Your goal is to find the missing pieces, pinpoint the bottlenecks, and create a system that works for everyone.

Let’s dive into the five core stages of the performance management cycle, with ideas and examples of simple ways to improve in each area.

1. Plan

The planning process is all about goal setting. But according to Breezy’s latest employer survey, setting, monitoring, and empowering employees to achieve individual goals is a challenge for 34% of companies.

So what exactly does a successful planning stage look like?

In the planning stage, a manager and employee work together to lay out a shared vision of success, finding the intersection between individual goals and organizational objectives. 

And ideally, you’ll each walk away with a clear roadmap for reaching those goals.

Let’s take “Emily” for example:

Emily is a software developer with five years of experience at TechSolutions Inc. At the start of the upcoming performance management cycle, Emily sits down with her manager, Sarah, to discuss her individual goals.

One of Emily's main objectives is to enhance her skills in a specific programming language for an upcoming project. Emily and Sarah align this goal with the company's objective of improving technical expertise in key areas, making it a mutual goal.

In addition to this technical goal, Emily might also set personal development goals, such as taking on leadership responsibilities in project planning meetings. This aligns with Emily's long-term career vision of moving into a leadership role. 

Together, Sarah and Emily create a roadmap for achieving these objectives. From attending programming workshops to seeking mentorship opportunities with senior developers at TechSolutions, both Emily and Sarah have a clear understanding of success for the upcoming performance cycle.

As a result, Emily feels motivated knowing her personal goals align with the company's objectives. Sarah feels confident in her ability to support Emily's growth and development throughout the cycle. Both employees know exactly what steps they need to take in order to win.

Tools: Performance goal-setting software, OKRs (Objectives and Key Results) frameworks, performance management system


  • Set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals to provide clarity and focus
  • Align individual employee goals with the strategic objectives of the organization
  • Encourage employees to participate in goal-setting to increase ownership and motivation

2. Monitor

There’s no point setting goals you don’t track. The monitor stage of the performance management cycle focuses on actively discussing an employee’s work, providing regular feedback on key tasks, and coaching individuals to meet or exceed performance expectations.

In this phase, Sarah and Emily engage in biweekly one-on-one meetings to discuss Emily's workload, goal progress, and any day-to-day challenges she may be facing. These meetings go beyond the big-picture goals to actively track core KPIs so that both Emily and Sarah know how to measure their success.

During these one-on-ones, Sarah and Emily also exchange feedback in real-time and discuss any obstacles hindering Emily's progress. These ongoing conversations give Sarah a regular opportunity to support Emily and keep her motivated to achieve her goals.

Tools: Feedback and recognition templates, performance management platform, private 1:1 chat


  • Establish metrics and KPIs to measure progress
  • Check in weekly, biweekly, or monthly to provide constructive feedback and address any concerns

3. Develop

At the develop stage, employers go beyond monitoring day-to-day progress to help employees grow professionally. And with 32% of employers struggling to identify training needs, it’s clear we need to bridge the gap between goal-setting and go-getting.

If Emily is struggling to reach her performance targets, it’s Sarah’s job to provide resources that help Emily meet her goals – and make adjustments if necessary.

For example, Sarah might investigate training or career development opportunities and encourage Emily to enroll in a new bootcamp or workshop to expand her skill set. Or, she could look to internal support, assigning a mentor or scheduling a deep dive meeting with a senior developer, to help Emily troubleshoot.

By identifying issues before they become roadblocks, Sarah can go from manager to leader. This also empowers Emily to learn new skills and competencies and achieve her goals. And both employees will be more likely to stay with the company.

Tools: Learning management systems (LMS), mentorship programs, professional training programs


  • Adjust goals and offer continuous feedback to keep employees motivated and on track
  • Offer a range of learning opportunities: online courses, workshops, on-the-job training
  • Provide regular coaching and development feedback

4. Review

Ah, the part of the performance management cycle that everyone loves to hate. The review stage is where a manager buckles down and evaluates an employee's performance against documented goals and expectations.

For many companies, employee appraisals come in the form of an annual performance review. But for the more than one-third of employers who struggle to run efficient reviews, it might be time to rethink this part of the process.

Let’s check back in with Emily and Sarah to see how it's done:

After a series of regular check-ins during the monitoring and developing stage, Sarah blocks out time for a major goal-evaluation meeting. This performance review is informed by a mutual understanding of Emily's performance and areas for improvement, so there are no big surprises.

In addition to a self-assessment, Emily may choose to participate in a 360-degree feedback process, soliciting input from her peers and bosses. This helps capture a wider range of feedback so Emily isn’t graded solely on Sarah’s opinion, which also helps reduce top-down bias.

The core components of the review process are performance assessment and feedback. But this review isn't just about measuring Emily’s performance – Emily also has a chance to deliver feedback on Sarah’s managerial performance. Afterward, they work together to outline future development opportunities and create a roadmap for Emily’s future at the company.

Tools: Performance management software, appraisal form templates, performance review questions


  • Implement a fair and transparent performance evaluation process, including self-assessments, peer feedback, and manager assessments
  • Consider a multi-dimensional approach to employee performance ratings, including both qualitative and quantitative measures
  • Beware of unconscious bias and how it can impact a manager's perspective when evaluating employees from other backgrounds

5. Reward

Today nearly 36% of employers use informal recognition and rewards, such as impromptu shout-outs and employee lunches. But many human resources experts recommend moving beyond the office pizza parties to show your appreciation in more meaningful ways.

This stage isn’t just about recognizing outstanding work – it’s also about valuing it.

Let’s take another look at TechSolutions:

During the review stage, Emily’s manager Sarah acknowledged her exceptional contributions and growth.

In line with the company's commitment to fostering a culture of recognition, Sarah decides to offer Emily a well-deserved promotion. This promotion not only acknowledges Emily's hard work – it also provides her with increased responsibilities and opportunities for career advancement within the organization.

Sarah also offers Emily a salary increase to reflect her new role and reinforce her sense of appreciation and belonging. And she doesn’t stop there.

Sarah ensures that Emily receives additional paid time off (PTO) as a reward for her dedication and outstanding performance. This extra time off allows Emily to recharge and enjoy the fruits of her labor, promoting a healthy work-life balance and increased productivity.

By recognizing and rewarding Emily's efforts, Sarah not only motivates Emily to continue delivering exceptional results, she also sets a precedent for other employees.

Tools: Compensation strategy, employee recognition apps and platforms, internal interview questions


The end of crappy performance reviews

Rallying your employees isn’t easy. But with the right performance review cycle, it is possible.

With the right tools and intentional strategy to guide the way, you can build a productive, recognition-rich environment that puts the spark back into performance management. ✨

Ditch the clunky Google Forms and Excel spreadsheets and create a performance review cycle that works for everyone. Breezy makes it easy.

Try Breezy Perform free for 14 days and access easy goal-setting and tracking features, plus done-for-you 1:1 prompts that make regular performance check-ins a breeze.