How to build a performance management process that actually works (and doesn’t just sit on a shelf)

When companies think about improving performance, they often jump straight to designing templates. But before focusing on structure, it’s essential to commit to consistency and develop an ongoing performance management process.

The truth is—even the best-designed process will fail if it’s not consistently applied.

Performance Management Process

“I think one of the biggest issues with performance management is employers committing to a big process—and then not following through,” says Vana Greischar, Senior HR Consultant at Lakeside HR Group.

In this post, we’ll explore how to create a performance management process that’s clear, consistent, and genuinely helpful for both managers and employees. We’ll also cover what to include in a performance review template and how to avoid common missteps.

Why the Performance Management Process Often Falls Short

Let’s be honest—most employees don’t dread performance reviews because of the paperwork. They dread them because feedback is late, lacks context, or feels disconnected from their day-to-day work.

“In an exit interview I just conducted, the employee said they’d never received any actionable feedback in a performance review—until one piece of negative feedback came totally out of the blue,” Vana explains. “By the time the feedback was provided, nearly a year had passed and thus it was outdated and had zero impact.”

The solution? Stop treating performance reviews as isolated events. Make them part of a broader process that supports real-time feedback, growth, and mutual accountability.

6 Key Steps in the Performance Management Process

Here’s a practical timeline for building and implementing a performance management process that actually delivers results:

1. Create Clear Review Templates by Role

Start by designing your performance review templates based on job descriptions and KPIs. Keep it focused—Vana recommends including around 3 goals or KPIs per role.

Each KPI should be objective and measurable. For example, for an Accounts Payable Specialist: “No more than 30 days of outstanding payables” is a clear benchmark.

2. Define the Review Cycle

Establish when reviews will happen—and stick to it. If your fiscal year ends in December and company performance ties into reviews, plan for a Q1 review cycle the following year.

“Whatever cadence you choose—annual, bi-annual, quarterly—it has to be realistic for your team to maintain,” Vana says.

3. Use a Two-Sided Review Format

To reduce bias and build trust, both the employee and the manager should complete their reviews independently before coming together to discuss.

“When a manager reads the employee’s self-evaluation first, it can unconsciously skew their perspective,” Vana notes. “High performers especially tend to rate themselves lower, either due to their own high expectations of themselves or in comparison to other high performing employees—so it’s important managers assess independently.”

4. Build in Goal Setting (and Involve the Employee)

Every review should include a section for goal setting—but not in a vacuum. Invite employees to shape their own goals and show how they align with company objectives.

This is especially helpful for organizations using EOS® or OKRs. Think of it as a way to connect individual performance to the bigger pic

5. Rate Performance with Intention

Your performance review template should clearly define what each score means. A 1–5 scale is common, but consider how your language affects expectations.

“If no one ever gets a five, employees begin to believe it’s unattainable,” Vana warns. “You need to explain what each rating truly means and be consistent in how it’s applied.”

6. Close the Loop

After the review conversation, clarify what’s next. Is the employee meeting or exceeding expectations? Are they ready for new challenges or in need of a development plan? Is this a promotion conversation—or a pivot moment?

Common Pitfalls to Avoid When Following a Performance Management Process

  • Skipping the review altogether: Nothing damages trust like committing to a process and then dropping the ball.
  • Relying only on subjective feedback: Tie reviews to data and outcomes, not just personality impressions.
  • Leaving employees out of goal setting: Participation creates buy-in and a stronger sense of ownership.
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Make the Performance Management Process Work for You

You don’t need a fancy platform or a five-layer rubric to build an effective performance management process. You just need clarity, consistency, and a commitment to following through.

Whether you’re building from scratch or updating your current system, Lakeside HR Group can help you create a performance review process that actually works, without overwhelming your team or wasting time on templates that don’t drive results.

Need help implementing a performance management process or designing a performance review template?

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About Lakeside HR Group

We are a premier HR Consulting and Recruiting firm connecting people and businesses through personalized, full-service solutions. As a boutique firm of seasoned HR professionals, we specialize in providing customized HR services for small to midsize businesses. With expertise across diverse industries, positions, and states throughout the U.S., we partner with our clients to discover top talent and deliver the support needed to help their businesses thrive.

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