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Performance Management Cycle Properties

Paper Type: Free Essay Subject: Business
Wordcount: 3737 words Published: 1st May 2017

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The performance management cycle is a premiere technique used by many companies to guide their performance management system. It is regarded as a continuous, future oriented and participative system; as an ongoing cycle of criteria setting, monitoring, informal feedback from supervisors and peer, formal multisource assessment, diagnosis and review action planning and development resourcing (Bach1999; Williams 2002).

The Performance Management cycle involves a continuous learning process as stated by Kaufman, R., Thiagarajan, S., & MacGillis, P.1997 “Performance is not a one shot process, it is ongoing. The continuous improvement and quality management process is vital. An organisation’s survival depends on it to be done correctly and consistently”. Though the above authors identified that it is a continuous process Bach1999; Williams 2002 went on to say that it is far more than a simple process, there are many facets of this cycle.

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The Performance Management cycle comprises of planning, monitoring, developing, rating and rewarding and back to planning again Neely (1998), but on the other hand, many view performance management to be one step process of appraising the individual only, but as the following cycle explains there is more to performance management than appraising. This cycle provides a framework to help organisations and employees better manage the process of performance management which aids in the future success of the organisation. This research will analyse each aspect of this cycle to assess how it relates to the processes being used at AATT.

Performance Management Cycle


The first step of this continuous cycle is to plan. Planning entails developing and setting performance objectives. Armstrong (2004:488) defines objectives as “what organizations, functions, departments and individuals are expected to achieve over a period of time”. It is important that company values and goals used as the basis for goal setting be understood and communicated to all employees and managers. Objectives, or goals, are the foundation for good performance.

These objectives are used to provide a well thought-out approach to the achievement of the desired performance level for individuals and teams. Employees are usually involved in the planning process, this helps them understand their goals of the organization, what needs to be done; why it needs to be done and how well it should be done.

Many companies involve their employees in the process so they can identify and understand the required behaviours. This enables the company to produce plans to meet the objectives of the company and enhance the knowledge, skills and competencies, also reinforcing desired behaviours.

This was reinforced by Ducker (1954), He stated that the planning process typically done by senior managers should be prepared by all employee, they should partake in the strategic planning process which would give the employees a sense of ownership and responsibility to fulfil their objectives. Drucker (1954) also contradicted his statement by saying “managers are responsible for achieving results”. However the researcher is of the opinion that the planning phase should not be left to the managers alone as the employee are the lifeline of an organisation and careful planning and involvement of the employee will encourage them to work along their seniors to foster a successful company.

An analysis will be conducted to identify whether this step currently is being enforced at AATT and if the result of this is clear and concise objectives.


Monitoring entails continuously measuring performance and its effectiveness in achieving the organisation set objectives in the planning process. It also allows the company to update and refine any current and future demands which may arise. This enables the organisation to stay on the right part. During the monitoring phase, it’s important to keep notes. Document both positive and negative performance issues, and make notes consistently throughout the performance management cycle. Specific instances should be looked at when employees meet and exceed expectations, and when they fall short of performance goals. These notes should be objective, job-related and accurate, focusing on behavior and void of personal option and emotion.

Based on these findings the supervisor will be able to identify the employees’ strengths and shortcomings. The shortcomings are then addressed in the developmental stage of the performance cycle.


At the development stage the developmental needs of the employee are assessed and addressed. This phase focuses on the improvement of current knowledge and skills and also on the development of new ones. This improvement is done via coaching; training and giving assignments that challenges the employee to take on more responsibility which improves their skills and ability.

At This development stage many companies offer training and developmental opportunities to their employees’ but on the other hand some companies completely disregard this stage of the performance management cycle as they see it as the employees’ responsibility to further their development and also they avoid the costliness of training programs. The researcher will look at how AATT assess and implements this phase and the employee’s reactions to implemented training programs.


This phase of the cycle is most synonymous with performance management. It is regularly regarded as the only step in performance management, though this is not the case. At this phase in the cycle the employee is assessed on their performance. When used correctly, performance appraisals can be powerful career development tool and help a company retain its current workforce by boosting performance and morale. According to Flippo (1984) “performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job.” As stated this phase enables the company to measure the employee performance and assess if they are meeting the objectives set out at the planning phase, it also allows the company to identify the employee weaknesses, strengthens, and opportunities for further development/ promotion. He also went on to point out that it should be unbiased, this is of great concern for many employees as they something feels that the evaluator is prejudiced and they cannot highlight their concerns.

The following factors are critical for an effective performance appraisal, these are: proper documentation, Clear cut objectives and goals, Simple understandable evaluation format, evaluation technique, communication and feedback.

Picket (2003 pp 237-240) states that the performance review continues in many organisations despite evidence that it has the potential to be one of the most effective management tools in the entire kit. However, according to Steers and Black (1994), “performance appraisal is one of the most important and often one of the most mishandled aspects of management”.

This scenario is one of great concern considering the importance of the evaluator to the success of the appraisal process; Imundo (1993 p158) stated that “it is an inherent responsibility of those in managerial positions to pass judgment on what employees do with respect to meeting job requirements”. He went on to say “While individual employees are responsible for their own performance, it is supervisors who should shoulder overall responsibility for the performance of the unit under their direction.” In light of the above, in today’s organisation many managers have little or no training concerning the evaluation of employees. As a result of this lack of training supervisors are not equipped to provide proper assessment and effective feedback. Therefore sometimes employees are left up to the own initiative to manage their department and personal performance.

Recent studies suggest that organizations fail to conduct effective rigorous, skills-based training and rater training with their managers (Fink, and Longenecker, 1998). Torrington and Hall (1991) stressed that appraisers need training on how to appraise and how to conduct appraisal interviews. However, many organisations stray from this and they provide the manager with the appraisal forms and instructions on how to complete the form and the rating schemes. This procedure currently utilized by organisations underhand’s the appraisal process. However, Bacal (2001 p 201) states that:

“Performance appraisal isn’t about the forms. The ultimate purpose of performance appraisal is to allow employees and managers to improve continuously and to remove barriers to job success, in other words, to make everyone better. Forms don’t make people better, and are simply a way of recording basic information for later reference. If the focus is getting the forms “done”, without thought and effort, the whole process becomes at best a waste of time, and at worst, insulting”.

Bacal highlighted that the mundane process of form filling is not what an appraisal is all about, you have to look at the bigger picture which is the successful attainment of the organisations strategic objectives and the success of the organisation.

There are many techniques and methods to performance appraisal such as the traditional methods and the Morden methods. These are highlighted below:

Traditional Methods


Morden methods







360-Degree-Performance-Appraisal Method


Management By Objectives(MBO) Method





The researcher will assess the above methods and examine the different approaches and methodologies which relates to Performance Management at AATT.

If these factors are adhered to, they assist the company in formulating strategies for the employee future promotion and rewards.


The final phase in the cycle is rewarding. At the rewarding phase, the employee or team is recognized and acknowledged with regards to their ability to attain the organisations set objectives in the planning phase. These rewards may be monetary, non-monetary, such as praising the employee for a job well done, and promotions. The researcher will assess if and how AATT determines reward.

What Should organisations manage?

The most widely recognized and implemented approach to measure performance is the Balanced Scorecard Approach. This is now widely used as a strategy development and execution tool .This approach was developed by Kaplan and Norton (1992, 1996), it provides a system of aligning business actions to the vision and strategy of the organization, improving internal and external communications, and monitoring organization performance against strategic goals it focuses on measurement and evaluation using criteria that will provide a balanced view rather than using only the financial criteria. The four perspectives which Kaplan and Norton recommended that managers assess their employees on are:

The financial perspective -This perspective measures the financial outcomes of the organisation. These may include profits, new commercial business ventures or it can be result based.

The customers’ perspective – An organisation success depends on their customers, as such, this perspective measures the customer’s satisfaction and their perception of the organisation. The data collected allows the organisation to gauge if they are effectively satisfying their customers’ needs and if there is a need for further improvement.

The internal business perspective – This perspective focuses on the organization’s critical internal operations which enable the organisation to attain customer satisfaction. It includes the infrastructure, long and short term goals and objectives, organisational procedures, and human resources.

The innovation and learning perspective – This perspective cover the organisation’s ability to innovate, learn, and improve. This links directly with the values of the organisation.

For the Balanced scorecard approach to be effective the manager should have the capability to observe and take note of several instruments and measures concurrently. It is frequently stated that one of the main benefits of the Balanced Scorecard, is that is translates strategy into action. However, despite its popularity Norreklit (2003) questioned the existence of a causal relationship between the different perspectives, the fact that this system does not address the needs and wants of all the stakeholders of a company; and the lack of theory behind the scorecard concept.

Notwithstanding this criticism the balance scorecard approach has proven to be an appropriate tool to address the organisation performance and if the four perspectives are properly assessed in the end the company and their stakeholders will benefit from their success. As part of this research the researcher will use this universally known model to assess the performance measurement system at AATT.

Performance management as a motivational tool.

Understand each individual’s motivations and triggers can assist an organisation to motivate their employee to perform at their maximum potential. Performance management is constantly associated with theories of motivation. There are several written motivational theories in literature, with the most popular being; Taylor (1890, 1911) Scientific Management, Maslow’s (1954) needs hierarchy theory, Locke and Ladham (1968, 1990) goal setting theory, Herzberg’s 1957 two-factors theory, and Vroom 1964 expectancy theory.

Frederick Winslow Taylor (1890, 1911), put forward the idea that workers are motivated mainly by pay. His Theory of Scientific Management argued that workers do not naturally enjoy work and so need close supervision and control; therefore managers should break down production into a series of small tasks. Workers should then be given appropriate training and tools so they can work as efficiently as possible on one set task. Workers are then paid according to the number of items they produce in a set period of time- piece-rate pay. As a result workers are encouraged to work hard and maximise their productivity.

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However this approach became repetitive and insulting to the workers as they felt like they were being treated like human machines. This theory is often linked to Macgregor’s two fundamental approaches to managing people, theory X and theory Y, namely theory X which speaks to employees being self-serving, unwilling to take on responsibility and essentially only working for money. It follows an authoritarian management style. On the other hand theory Y speaks to a participative management style saying work is as natural as rest or play, without the threat of punishment people will work to pursue organizational objectives and people accept and seek out responsibility, which is what the performance management cycle is all about, including the employee in the process.

Elton Mayo went against those theories saying that “workers are not just concerned with money but could be better motivated by having their social needs met whilst at work”. This factor was ignored by Taylor. Mayo introduced the Human Relation School of thought, which focused on managers actively communicating to their employees, and treating them as individuals who have meaningful opinions. His theory most aligns with the paternalistic management style and incorporates elements of the performance management cycle, whereby employees are encouraged to give their opinion and work alongside management.

Abraham Maslow (1954) in conjunction with Frederick Herzberg 1957 introduced the Neo-Human Relations School in the 1950’s, which focused on the psychological needs of employees. Maslow put forward a theory that there are five levels of human needs which employees need to have fulfilled at work. These are identified in the figure below. It is a bottom up approach, he identified that if certain need cannot be met the person will not be motivated to move on to the other level.

Whereas, Hertzberg’s’ two-factor theory are hygiene factors and motivator factors. Hygiene factors speak to the need for a business to avoid unpleasantness at work. If these factors are inadequate for employees, they therefore can cause discontent at work. Hygiene factors include:

Company policies and administration

Wages, salaries and other financial remuneration

Quality of supervision

Quality of inter-personal relations

Working conditions

Feelings of job security

Motivator factors are based on the individual need for personal development. When they exist, motivator factors actively create job satisfaction. If they are effective, then they can motivate an individual to achieve above-average performance and effort. Motivator factors include:


Opportunity for advancement

Gaining recognition


Challenging / stimulating work

Sense of personal achievement & personal growth in a job

There are similarities between Maslow (1954) and Frederick Herzberg theories; they both suggest that needs have to be satisfied for the employee to be motivated. However, Herzberg argues that only the higher levels of the Maslow Hierarchy (e.g. self-actualisation, esteem needs) act as a motivator. The remaining needs can only cause dissatisfaction if not addressed. (Motivation in theory n.d.)

These motivational theories can be applied to a wide range of management functions, but these will be used by the researcher to fulfil her objective of determine the Performance Management process as it relates to the motivation of employees in the workplace and how it is implemented in the organization and the impact it has on the motivation of employees.

This chapter outlined literature key to the researchers’ study of performance management as it relates to AATT. The following chapter will address the methodologies’ the researcher will utilize to ascertain her objectives.

Drucker, P., “The Practice of Management”, Harper, New York, 1954; Heinemann, London, 1955; revised edn, Butterworth-Heinemann, 2007

The Economist Guide to Management Ideas and Gurus”, by Tim Hindle

Flippo, E. B. 1984. Personnel management. 6th Ed. New York: McGraw-Hill Book Company.

Steers, R.M. & Black, J.S. 1994. Organizational behaviour. Ed. ke-5. New York: Harper Collins.

Grote, R.C. & Grote, D. 2002. The performance appraisal question and answer book: a survival guide for managers. AMACOM.

Les Pickett, (2003) “Transforming the annual fiasco”, Industrial and Commercial Training, Vol. 35 Iss: 6, pp.237 – 240

Armstrong, M & Baron, A 2005, Managing performance: Performance management in action. Chartered Institute of Personnel and Development, London.

Weiss, Tracey B., and Franklin Hartle, Reengineering Performance Management, Breakthroughs in Achieving Strategy Through People, St. Lucie Press, Boca Raton, 1997. Pg 3-6

Kaufman, R. (1997). A Strategic Planning Framework: Mega Planning. In Kaufman, R., Thiagarajan, S., & MacGillis, P. (Editors), The Handbook for Performance Improvement. San Francisco, CA: Pfeiffer & Co/Division of Jossey-Bass

Laurence S. Fink, Clinton Oliver Longenecker, (1998) “Training as a performance appraisal improvement strategy”, Career Development International, Vol. 3 Iss: 6, pp.243 – 251

Douglas Maxx, Robert Bacall. 2001. Perfect Phrases for Performance Reviews 2/E. McGraw-Hill Professional p 201.

Neely A., Adams C. and Kennerley M, (2002), ‘The Performance Prism: The Scorecard for Measuring and Managing Business Success’, London, UK: Financial Times Prentice Hall

Norreklit, H. (2003), ‘The Balanced Scorecard: What Is the Score? A Rhetorical Analysis of the Balanced Scorecard.’, Accounting, Organisations and Society, Vol. 28, No. 6, pp. 591.

KAPLAN, R. S. and NORTON, D. P. 1992. “The Balanced Scorecard: Measures that Drive Performance,” Harvard Business Review, Jan-Feb, pp. 71-79.

KAPLAN, R. S. and NORTON, D. P. 1996. “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review, Jan-Feb pp 75 -85.

HERZBERG, F. et al. 1957. The motivation to work. 2nd ed. New York

LOCKE, E.A. 1968. “Towards a Theory of Task Motivation and Incentives,” Organisational Behaviour and Human Performance, Vol. 14, No.2, pp. 157-189.

LOCKE, E.A. and LADHAM, G.P. 1990. A Theory of Goal setting and Task Performance, New York, NY: Prentice-Hall.

MCCLELLAND, P. C. 1975. Causal explanation and model building in history, economics and the new economy. Ithaca; London : Cornell University Press.

Maslow, Abraham (1954). Motivation and Personality. Harper and Row New York:

VROOM, V.H. 1964. Work and Motivation., New York, NY: John Wiley.

TAYLOR, F. W. 1890. The rise of scientific management. Madison; London : University of Wisconsin Press.

TAYLOR, F. W., 1911. The principles of scientific management. London : Harper & Brothers.

http://tutor2u.net/business/people/motivation_theory_herzberg.asp motivation in theory

Neely, A 1998, Measurement of business performance – why, what and how, The Economist,



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