The performance management cycle in a hybrid age: a guide for HR professionals

‍The traditional performance management system — where managers lead annual reviews and rarely offer other feedback — mostly stayed in the pre-pandemic era. According to our research, the real issue HR leaders are dealing with today is how to create a more efficient performance management cycle in an asynchronous, remote-driven world.

Responding to our 2023 State of People Enablement Report, 84% of HR leaders said they’ve implemented performance enablement software, and 97% shared that it’s helped them improve their overall processes (1). Yet, 63% reported an increase in turnover, and three out of four employees would prefer more frequent, meaningful feedback; this shows that even the most tech-enabled teams can still improve their performance management cycle (2).

According to a Willis Towers Watson survey, only 55% of employees feel their managers have the tools to holistically assess their performance (3). The same report also discovered that highly effective organizations allow for more flexible goal-setting in performance management and connect performance reviews with conversations about career development.

So, why should today’s HR professionals care about this shift in performance management? A simple performance evaluation process in which managers review their reports infrequently and based on results alone isn’t enough to retain employees and build a resilient company.

It’s time to embrace a performance management cycle that aligns with the present world of work — one that uses reliable processes to foster more collaboration around employee growth. In this article, we discuss what the performance cycle looks like today, why it matters, and how you can implement one within your organization.

1. Leapsome State of People Enablement Report, 2023

2. Leapsome Workforce Trends Report, 2023

3. Willis Towers Watson, 2023

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What is performance management?

When built with your people in mind, performance management helps employees and leaders do their best work, set better career goals, and improve based on the feedback they receive. Modern performance management prioritizes employee growth and encompasses all of the input that supervisors and colleagues share with team members — it’s no longer about holding employees accountable for results once or twice a year with a one-way evaluation.

This is why more companies have embraced the management cycle approach; it allows them to reinterpret what performance management can look like and forge stronger feedback loops between leaders, reports, and peers.
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What is a performance management cycle?

A performance cycle is a recurring process that companies implement to facilitate ongoing employee development and feedback. The performance review cycle allows managers and reports to set and track performance goals that align with broader company objectives, and it usually consists of five stages:

• Setting goals or defining specific objectives and expectations
• Planning what strategies and tools you’ll use to achieve your goals
• Monitoring or using metrics and check-ins to track progress
• Evaluating or discussing results and deciding if you need a new approach
• Rewarding and recognizing team and individual contributions

Performance management cycles are particularly effective because they’re designed to be collaborative. Team leads and individual contributors work together to set realistic objectives instead of managers delegating the goals from the top down.

They’re also highly flexible. As you monitor and evaluate progress toward specific objectives, you can determine what’s working and what’s not, tweaking these strategies as you go. 

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How performance management cycles can empower today’s hybrid workforce

People-centric organizations need well-designed performance management cycles more than ever; these cycles can help restore trust in the manager-direct report relationship, which has been highly disrupted in recent years.

When remote and hybrid work became more prevalent and team members gained more autonomy over their work-life integration, some managers panicked and became micromanagers in a desperate attempt to keep performance metrics up. This led to employees exercising their power in a broader labor market by looking for other opportunities and advocating for themselves more in the workplace. Then, the labor market cooled off, and many organizations felt empowered to bring back top-down decisions like return-to-office mandates.

“The needle [between remote and in-office work] is leaning far more toward remote work than it was before the pandemic, but it’s swinging back as employers gain some bargaining power,” LinkedIn’s principal economist Guy Berger shared in an interview. “The labor market isn’t as hot as it was during the Great Reshuffle, so employers are flexing their muscles a bit more and being a little stingier about offering remote work and flexibility.”

So, what does success look like when organizations leverage the performance management cycle to embrace a collaborative mindset, set clear priorities and goals, and track relevant metrics?

• More transparency and equitability — A cyclical performance management system gives employees more visibility into company and cross-departmental goals, empowering them and encouraging them to participate more actively. This approach is more open and equitable, giving equal weight to each team member’s input. ‍
• Increased engagement — The ongoing communication, cooperation, rewards, and recognition built into performance management cycles will strengthen people’s investment and trust in the process and your organizational culture.
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• ‍Improved competencies — As employees take more ownership over how they’re progressing toward their goals, managers can assume the role of coaches. Coaching strengthens leadership skills while encouraging direct reports to develop professionally. 
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• ‍Better overall productivity — When you set achievable team and individual goals relevant to company targets, employees’ work will actively help move your organization in the direction you want to go. 

“Performance management for us is an ongoing process — especially learning to give and receive feedback the right way. We’re happy to have a solid and comprehensive tool like Leapsome to help us highlight the importance of performance management. 

The tool provides a comprehensive overview of performance and behavior and consistently helps us develop and improve individual performance and, hence, the company’s overall performance.”

— Leonie Stratbüker, Team Lead for People and Organization at CHRONEXT, on how Leapsome optimizes the performance management cycle

5 stages of the performance management cycle

Every step of the performance management cycle process encourages growth and teamwork between managers and reports. 

This approach makes performance reviews more powerful and streamlined, but it requires buy-in at every company level if you want to see meaningful results.
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1. Goal-setting: Defining expectations & objectives

Effective performance management cycles work in tandem with the cascading goals framework. This objective-setting framework involves translating high-level company goals into smaller team and individual personal development; this way, everyone can see how they contribute to the bigger picture.

To make this first phase more impactful, you’ll need to know:

• Your organization’s “parent goals” (broader goals)
• Your team goals
• The time frame in which you hope to achieve these
• The core competencies each report needs to develop

Working with your direct report asynchronously or in a 1:1 meeting, you’ll decide which skills they should prioritize and use them to create personal development goals. Suppose a junior sales representative wants to improve their strategic thinking skills. In that case, you can set a personal development goal such as “create and share a detailed plan on how to target a specific customer segment.”

It’s worth noting that managers shouldn’t use progress with performance development goals as their only criteria for reviewing results at the evaluation stage. Alongside goals, team leads should consider position-specific competencies, core values, achievements, and milestones for a fairer, more well-rounded evaluation.

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2. Planning: Identifying resources & strategies to achieve goals

Here, you’ll decide how to structure and track goals. The objectives and key results (OKR) framework is the most strategic approach because it makes every objective specific and outcome-focused. The KRs are like markers on a map, illuminating employees’ steps.

We recommend setting between one to three individual development OKRs for each quarter — more than that may be unrealistic. 

Every personal objective should be accompanied by three to five time-bound, trackable key results. The format is shown in the example below; note how the objective statement is broad but outcome-focused, and every key result has a target metric to help you gauge success.

Objective: Start a mentorship role to improve coaching skills

• Key Result 1 | Completing a personal development course and getting certified to mentor others on creating better goals
• Key Result 2 | Guiding the mentee(s) through a structured mentoring plan‍
• Key Result 3 | After the mentorship, a survey reported that the mentee(s) felt confident about applying their new skills to the work context
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3. Monitoring: Tracking progress & performance

Connecting development goals with your reports’ daily tasks makes it easier for them to incorporate these goals into their workload. You can monitor employees’ progress regularly throughout the quarter to ensure the workload is distributed evenly and they are getting the support they need to achieve their goals.

Managers and reports can do this asynchronously with a dedicated goal management solution like Leapsome, which allows users to track advancement toward individual goals at their leisure and share feedback when needed.

Team leads should also set up regular 1:1 meetings with team members to discuss:

• What they’ve accomplished — What steps has the employee taken to achieve their development goals?
• What went well — What successes, big or small, do they have to share?
• What’s blocking progress — Are there any obstacles or dependencies preventing them from staying on track?
• The support they need — How can their manager (or other stakeholders) help them meet their goals?
• The next action steps — What do they plan to accomplish before the following check-in?
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4. Evaluating: Assessing outcomes & results

If you’ve utilized the performance management cycle well, you won’t have to worry about surprising employees with anything during the review. You will have checked in and regularly discussed progress with development goals and core competencies before you meet for the assessment.

A 360-degree review, which involves a self-assessment and feedback from the reviewee’s peers, direct reports, and manager, can make the evaluation more constructive and thorough. 

One way to assess outcomes in a 360° review is by using a Likert scale, including questions like:

• What’s the most crucial development goal the employee should work on?
• How well do they take feedback and suggestions from others?
• How well do they prioritize tasks and make decisions?
• How well do they manage their workload and meet deadlines?

“Our whole review system runs through Leapsome now. There are no more human errors, and it’s much easier for our managers to see previous feedback. Everyone locks in their development goals after the review and can easily incorporate them into the next review cycle.

— Tina Chater, Director of People and Organization at hy, on how Leapsome has optimized the company’s review process

5. Rewarding: Recognizing & rewarding employee contributions

Even though 67% of leaders and 61% of managers say they recognize team members a few times a week, 40% of employees report that they only receive recognition a few times a year. One reason behind that difference in perception is that recognition may not always feel authentic and personalized. In addition, team leads often fail to connect praise with the tangible results and skills employees are trying to build. 

Another issue is that many organizations don’t measure employee success based on impact, with some leaders relying on arbitrary metrics to decide when and how to reward staff. That means team members often don’t receive rewards for short-term contributions, which can be demotivating. 

In light of this, leadership and managers can build an impactful recognition and rewards process by:

• Designing a recognition and rewards (R&R) program with clearly defined criteria for monetary and non-monetary rewards. It should be outlined in an internal document for all team members to review and refer back to.
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• Explaining the specific rewards that are available to your team as part of your program.
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• Weighting all achievements based on organizational impact, no matter how small.
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• Consistently praising direct reports and co-workers with a Slack or Microsoft Teams channel dedicated to praising peers and sharing wins.
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• Implementing a compensation management plan and philosophy to make all pay- and benefits-related decisions fairer, more transparent, and closely connected to performance goals.

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Tips for a successful performance management cycle

To make the performance management cycle more people-centered and impactful, consider these essential best practices:

• Set clear priorities and deadlines — “Where employees spend their time is where their priorities lie, but this often doesn’t line up with their leaders and the larger goals of the company,” Infragistics’ CEO Dean Guida shared. “Once teams are aligned on the same goals and objectives, employees are clear on their priorities and expected outcomes, and leaders can have peace of mind that the right things are getting done in a timely manner.”

• Offer more support and training for managers — McKinsey research revealed that employees’ relationships with their managers account for 86% of their satisfaction with their interpersonal workplace connections. This means managers need more coaching and development to enrich and expand their capabilities.
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• Foster a collaborative and supportive environment — Companies that value innovation believe great ideas can come from anyone, at any time, but that doesn’t work if people feel their voices aren’t heard. An encouraging work environment ensures people feel comfortable sharing their perspectives.
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• Use technology to support performance management — Performance management platforms like Leapsome allow you to automate the administrative, repetitive aspects of the review cycle. Not only will they send you helpful reminders and alerts, but you can also use them to arrange meetings, create agendas, share feedback, track goals, create training courses, and design compensation and rewards programs in one place.
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Streamline your performance management cycle with Leapsome

Fortunately, more and more companies worldwide are replacing the standard performance review process with one that caters to the needs of the hybrid era: focusing on employee development and growth.

Intentionally designed performance management cycles combine traditional review structures with goal-setting frameworks and development plans to create people-centric systems that deliver tangible business outcomes.

Leapsome makes it easy for HR/people teams to design a successful performance management cycle that drives continuous improvement. With Leapsome’s Learning, Goals, and Reviews features, you’ll have the tools you need to support, track, and evaluate development progress. Moreover, you can individualize employee growth with transparent competency frameworks, tailored learning paths, collaborative goal management, and automated review cycles.

Best of all, managers have granular visibility over team members’ progress and access to comprehensive analytics, so they can make the process more impactful and fair by sharing instant feedback and making data-driven decisions.

By integrating all elements of a performance management cycle into one platform, Leapsome empowers HR to enhance productivity, improve employee engagement, and promote a culture of feedback — ultimately contributing to the overall success of your organization and people.

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