Deep Dive
Team Rituals: Performance Management
How to design performance management in your organization with the right structure and cycles
part 1
Why performance management is more than just an end-of-year conversation
Where talent development is all about fostering growth and learning, performance management is about aligning expectations, making achievements visible, and linking development to reward. It's a continuous process where employers and employees together monitor contribution, results, and growth.
For employees, performance management revolves around the question: “Am I seen and rewarded for the impact I make, and do I get space to further develop myself?”
For employers, there's an other question: “Am I paying my people in proportion to their contribution, and do they meet the expectations that fit our direction?”
The risk of making performance management just an end-of-year conversation
That performance management turns into a tense end-of-year conversation in which one party (often the employee) is caught off-guard and dreads it. While it should actually be a continuous rhythm of clear goals, progress meetings, and honest, concrete feedback: so that no one is surprised and it is seen as a development moment instead.
part 2
Performance management in practice
A solid performance management system does three things at once:
- It explicitly aligns expectations.
- It creates a rhythm in meetings, connecting development and results.
- It links performance and development to rewards.
Most important: end-of-year reviews should never come as a surprise. They should be the logical conclusion of a series of discussions held throughout the year. This way, both employee and manager have the same information about progress and development, making the review not something frightening or unpredictable, but transparent and fair.
part 3
Performance management cycles
Not every organization works the same. Performance management takes shape depending on context, structure, and culture. Roughly speaking, there are five common cycles—of course, they may differ a bit, but these are the main types:
PM CYCLE #1
Fixed Performance Management Committee
Objective: focus on performance and vertical development, high level of personal accountability.
Context: project-based work in rotating teams, often in homogeneous roles such as law, consultancy, or financial services.
Features: evaluation by a fixed committee, mandatory mentor role, peer feedback that is not anonymous.
Archetype: Achievement Culture.
PM CYCLE #2
Flexible Review Panel Performance management
Objective: strong focus on performance and development, but with broader perspectives.
Context: hierarchical organizations with less project-based work, such as investment or trading firms.
Features: employee selects their own feedback givers, assessment by a flexible panel of seniors, 360° perspective.
Archetypes: Achievement, One-Team, Innovation.
PM CYCLE #3
Continuous Talent Development Performance management
Objective: people-oriented approach with a focus on retention and talent development.
Context: flat, customer-focused service organizations with little hierarchy.
Features: no formal performance reviews, but ongoing feedback and reflection. A coach supports development.
Archetypes: Customer-Centric, One-Team.
PM CYCLE #4
Cross-Functional Performance Management
Objective: foster collaboration and development across disciplines.
Context: cross-functional start-ups or agencies with many different areas of expertise.
Features: employees are evaluated on skills by an expert lead and on culture by a people lead. Buddies support growth but do not evaluate.
Archetypes: Innovation, One-Team.
PM CYCLE #5
Manager-Led Performance Management
Objective: clarity and consistency in daily leadership and results.
Context: traditionally managed organizations with clear hierarchy and manageable teams.
Features: manager leads the entire process, peer input is optional.
part 4
Different archetypes, different approaches
Because organizations are so different, performance management always requires a tailored approach. An innovative scale-up that relies heavily on experimentation and self-management benefits from short feedback cycles and cross-functional evaluations. A law firm, on the other hand, flourishes with a fixed committee and a strict review rhythm, because hierarchy and performance are central there. And in customer-focused service providers, you often see that client feedback plays an important role in performance evaluation. The art is to choose an approach that fits your organization’s culture and structure, so that performance management doesn't feel like an imposed system but like a natural rhythm.
part 5
The art of a good appraisal conversation
Conducting an appraisal conversation is a skill in itself. It's not just about performance or targets, but about creating an open dialogue where expectations, results, and development are discussed in balance. A good conversation is transparent, reciprocal, and without surprises. It requires managers to be clear about performance, yet also leave space for reflection and forward-looking agreements. That way, an assessment conversation transforms from a nerve-wracking exam moment into a meaningful ritual that builds trust.
"Transparent, reciprocal and future-oriented: that's what an appraisal conversation should be."
part 6
Tools and frameworks: the nine-grid
A tool we often use is the nine grid. This model doesn’t evaluate employees just on results or skills, but also on how someone contributes to the Cultural DNA of the organization. On one axis you find the level of performance or craftsmanship, on the other axis the level of cultural fit and behaviour. The result is a matrix that shows who excels on both dimensions, who still has a lot of potential and where the risks are. The advantage of the nine grid is that it enables a richer conversation: it’s not just about what someone delivers, but also how it happens.
part 7
What if performance falls short?
Not every evaluation is positive. Sometimes less is delivered than expected. Especially then, it’s crucial to have a clear process. First, openly explore the cause: is it knowledge that’s lacking, is it motivation, or is there a mismatch with the role? Then, make agreements on concrete improvement steps and the support needed. If improvement is absent, clarity is needed here as well: maybe someone no longer fits the course of the team or organization. That, too, is part of professional performance management: being honest about where it does and doesn’t work, and making timely choices.
WRAPPING UP:
Talent development gives employees the chance to learn and grow. Performance management ensures that growth is linked to concrete expectations, results, and rewards.
By not reducing it to an annual event but designing it as a constant rhythm of conversations and feedback, performance management becomes a valuable team ritual. It creates clarity for both employer and employee, encourages ownership, and keeps rewards fair and transparent.