How Is Performance Appraisal Different From Performance Management?

Performance appraisal and performance management are the tools that many business organisations have not yet pursued because of which these two terms are frequently used interchangeably but of course, this is incorrect. Performance management and performance evaluation/appraisal are considerably different from each other. Let’s understand them in-depth and see how performance management varies from performance appraisal:

What Is Performance Appraisal?

The performance appraisal system is a part of the performance management process. This refers to the system intended to assess the past work and accomplishments of employees to quantitatively score their performance, which is also known as Performance evaluation. Performance appraisals strive to give employees a ranking based on how well they have done in the past year. It plays a major role in deciding the salaries of employees, whether they are eligible for a promotion or whether they should be working with the organisation any further.

What Is Performance Management?

The assessment of employee performance is concerned with performance management and offers constructive criticism to encourage and assist employees. The Performance management process is continuous and it looks at the current and the potential of the organisational role and performance of an employee. Business performance management is very important since it is conducted to help employees and provide them with better ways to effectively and efficiently accomplish their duties, eventually contributing to improved organisational efficiency. Performance management includes all the operations that enable the employees of a company to perform to the best of their abilities.

Difference Between Performance Management And Performance Appraisal System

The criteria based on which performance management and performance appraisal are differentiated is listed below:

Nature

Performance management is a process. The manner in which employees perform their daily tasks makes a difference. It is concerned with the relationship between an organization and its employees. It is versatile and complex and requires a lot of communication between higher-level managers and employees.

Performance Appraisal is a system. It relies on employees’ past performances. In the terms of communication, it is rigid and quite a liner as it as it moves from top to bottom towards employee performance. It does not interfere with the everyday work of the employee as a separate staff activity.

Primary Objective

Performance management’s primary goal is to genuinely assist workers with their personal growth and improve their productivity. It seeks to encourage advancement within an organisation.

Performance appraisal is mainly performed to evaluate the real performance of employees. In this position, an organisation goes through the performance of its employees for the year and provides the final feedback accordingly. It helps to recognise the ability of workers and makes it easier to assess compensation.

Approach And Frequency

Performance Management focuses on both quantitative and qualitative aspects with a holistic approach. It is an ongoing process as it gives real-time instant performance reviews.

Performance Appraisal has an individualistic method that focuses on objective aspects and once or twice a year reviews employee performance.

Scope

Performance management is a strategic tool. It keeps an eye on employees’ performance while focusing on the present and future of the organization as they are the strengthening pillars of all the functions and work done over there. Corrections made by the Performance Management Process are

It assesses the performance of employees’ based on how they have done in the recent past. The Performance appraisal system’s corrections are retrospective.

Participation

Performance management includes staff and their respective supervisors. Sometimes other stakeholders, who can positively impact an employee’s performance, also play an important role.

Performance appraisal is administered by the organization’s HR department in conjunction with direct managers of employees. Certain parameters such as employee, designation, job description, experience, etc., play an important role in it.

Conclusion

These days, having a strong understanding of performance management and performance evaluation is of utmost importance as the pace of business firms grows, it is getting difficult for companies to manage larger workforce efficiently.  Therefore, a better understanding of how performance management and performance appraisal are distinct from each other can address a lot of areas to ensure organization’s success by mastering these two tools!

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.