Learn about the key differences between performance appraisal and performance management.
Performance appraisal is a part of the performance management system- no more or less important than its other parts. Performance management of the supervisors’ is essential role to help and support her supervisees in putting the extraordinary performance to achieve their goals.
Performance management is a systematization of normal managerial and supervisory tasks. Problems are due to lack of supporting systematic infrastructure and many of these should disappear, or become insignificant when appraisal is used as part of a comprehensive management system.
Difference between Performance Appraisal and Performance Management
Difference between Performance Appraisal and Performance Management
Performance Appraisal:
1. Types of objectives – Individual objectives
2. Types of performance measures – Quantitative and qualitative
3. Frequency – Annual appraisal
4. Rating system – Top down system, with ratings
5. Reward linkage – Often linked to pay
6. Ownership – Owned by human resource department
7. Corporate alignment – Isolated system not linked to organizational goals
8. Focus of performance reviews – Focused on past
9. Questions asked – How well was the work done?
Performance Management:
1. Types of objectives – Emphasis on integrating organizational, team, and individual objectives
2. Types of performance measures – Competency requirements as well as quantified measures
3. Frequency – Continuous review with one or more formal reviews in a year
4. Rating system – Joint or participative process, ratings less common
5. Reward linkage – Does not have direct linkage to reward
6. Ownership – Owned by line management
7. Corporate alignment – Integrated business driven system aimed at organizational and people development
8. Focus of performance reviews – Focused on future
9. Questions asked – What can be done to help employees perform as effectively as possible?
Difference between Performance Appraisal and Performance Management
Performance is often defined simply in output term that is needed for achievement of pre-decided goals. Performance is concerned what job is done, how it is done and what has been achieved. The concept of performance has been expressed by Brumbach as follows – Performance means both behaviour and results.
Behaviours are the product of mental and physical efforts applied to tasks and that can be observed apart from the result from the job. This definition of performance concludes that when managing performance both inputs (behaviour) and outputs (results) need to be considered. In present turbulent and highly competitive business environment the question of survive and grow matters a lot.
Management is under pressure to increase the productivity of everyone so that competitive advantage over competitors can be achieved. This is the main objective of performance management. Performance management is a process for establishing a shared understanding about what is to be achieved and an approach to managing people that increases the probability of achieving success (Weiss and Hartle).
It is about the everyday actions and behaviours people use to improve performance in themselves and others. It cannot be divorced from the management processes that pervade the organisation. Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed.
It ends when an employee leaves your organisation. The overall goal of performance management is to ensure that the organisation and all of its sub-systems (processes, departments, teams, employees, etc.), are working together in an optimum fashion to achieve the results desired by the organisation. Performance management strives to optimize results of everyone and results of the organisation.
Any focus of performance management within the organisation (whether on department, process, employees, etc.), should ultimately affect overall organisational performance management as well.
Achieving the overall goal requires several ongoing activities, including identification and prioritization of desired results, established means to measure progress towards those results, setting standards for assessing how well results are achieved, tracking and measuring progress towards results, exchanging ongoing feedback among those participants working to achieve results, periodically reviewing progress, reinforcing activities that achieve results and interviewing are also measures.
Organisation is established to achieve certain objectives. Achievement of goals or targets depends upon the performance of individual employees. Hence it is quite necessary to understand as to what extent employees have been successful at their jobs for achievement of their goals. Thus performance appraisal forms an important part of HRM. This necessitates the study of this topic.
“It is the evaluation or appraisal of the relative worth to the company of a man’s services on his job.” (Alford and Beatty)
“Performance appraisal is a systematic periodic and impartial rating of employee’s excellence in matters pertaining to his present job and to his potentialities for a better job.” (Flippo)
Performance appraisal is mainly used for three purposes – (i) As a basis of reward allocation such as salary increments, promotion and other rewards, etc. (ii) Performance appraisal will point out the weaknesses of employees and will spot the areas where development efforts are needed. Performance appraisal is a tool for identification of deficiencies, (iii) it can be used for the selection and development programme.
It will differentiate satisfactory performers from unsatisfactory ones. It will help the management to perform functions relating to selection, development, salary, promotion, penalties, lay off and retrenchment. It is sometimes assumed that performance appraisal is the same thing as performance management.
But there are significant differences. Performance appraisal can be defined as the formal and periodical assessment and rating or ranking of individuals by their managers or immediate supervisors at, usually, an annual review meeting. Whereas performance management is a continuous, broader, more comprehensive and natural process of management that clarifies mutual expectations, emphasizes the support role of managers who are expected to act as coaches rather than judges and focuses on the future.
Performance appraisal has been criticized by people because here approach is like bureaucratic and top-down under the control of human resource managers. It was often backward looking, concentrating on what had gone wrong, rather than looking forward to future development needs.
Performance appraisal schemes existed in isolation. There was little or no link between them and the needs of the business. Line managers have frequently rejected performance appraisal schemes as being time-consuming and irrelevant. Employees have resented the superficial nature with which appraisals have been conducted by managers who lack the skills required, tend to be biased and are simply going through the motions. As Armstrong and Murlis assert, performance appraisal too often degenerated into ‘a dishonest annual ritual’.
Difference between Performance Appraisal and Performance Management
The comparative study between performance appraisal and performance management are given here:
Performance Appraisal (PA):
1. Concept – A systematic process of evaluating the performance of employee at a specific job
2. Ownership – Owned by human resources department
3. Corporate level status – Isolated system not linked to organisational goals
4. Integration – To integrate among individual objectives
5. Performance measures – Qualitative and quantitative measures
6. Frequency – There is annual appraisal
7. Rating system – Top-down system, with ratings
8. Reward provision – Often linked to pay or reward
9. Focus of performance reviews – Focus on past performance future
10. Desirable questions – How well was the work done?
Performance Management (PM):
1. Concept – A wide and integrated approach to evaluate the performance of employees
2. Ownership – Owned by line management
3. Corporate level status – Integrated business-driven system aimed at organisational and people development
4. Integration – Emphasis on integrating and coordinating organisational and individual objectives
5. Performance measures – Competency and skills as well as different quantified measures
6. Frequency – It has the continuous review with one or more formal reviews in a year
7. Rating system – Joint, participative and integrated process
8. Reward provision – It does not have direct link to reward
9. Focus of performance reviews – More focuses on present and future
10. Desirable questions – How to help employees perform as effectively as possible?
Difference between Performance Appraisal and Performance Management
How is performance management different from appraisal systems?
Performance management operationalizes the supervisory role of a manager to maximize performance. It is not something that a line manager has to do in addition to her normal chores. Properly implemented, it saves the manager’s time. Like any other changes intervention, there can however, be a hump in activity during its initial implementation phase.
Several organizations use the term performance management to cover performance appraisal plus some related activities. Some others use part of an integrated performance management system. Most organizations seek performance management as a troubleshooting tool for the fallouts of performance appraisal. Frequently, performance management is offered as a remedy of problems that arises when traditional performance appraisal is practiced as a standalone system.
Performance management is a systematization of normal managerial and supervisory tasks. Problems are due to lack of supporting systematic infrastructure and many of these should disappear, or become insignificant when appraisal is used as part of a comprehensive management system.
Performance appraisal is a part of the performance management system- no more or less important than its other parts. Performance management of the supervisors’ is essential role to help and support her supervisees in putting the extraordinary performance to achieve their goals.
Traditional performance appraisal emphasizes the supervisor’s role as a judge.
Performance management emphasis that performance is the joint responsibility of the supervisee and the supervisor, whereas performance appraisal substantially sees it as a supervisee’s sole responsibility. In organizations, there are any numbers of examples where a supervisor is rated as a high performer even though her supervisees do not perform well. In performance management, this should normally not happen.
For this, a deep understanding of the nature of work and performance is needed.
Performance Appraisal System:
1. Main focus area is performance Appraisal and generation of rating.
2. It lays emphasis on relative evaluation of individuals.
3. It is an annual exercise.
4. Emphasis is on rating and evaluation.
5. Here the reward and recognition of good performance is an important component.
6. Designed and monitored by the HR department.
7. Ownership lies with HR people.
8. KPA’s and KRA’s are used for bringing in objectivity.
9. Developmental needs are identified at the end of the year on the basis of the appraisal of competency gaps.
10. There are review mechanisms to ensure objectivity.
11. It is a system with deadlines, Meeting, inputs and output and a format.
12. It is a format driven process with emphasis on the process.
13. Linked to promotion, rewards, Training and development, interventions and placements.
Performance Management System:
1. The focus is on performance management.
2. It Stress upon performance improvement of individuals of individuals, teams and the organizations.
3. This is a Continuous process with quarterly performance review, discussions.
4. Emphasis is on performance planning, analysis, review, development and improvement.
5. Performance rewarding may or may not be an integral part. Defining and setting performance standards is an integral part.
6. It is designed by HR department but monitored by the department themselves.
7. Ownership is with the line managers. KPA’s and the point
8. KRA’s are used as planning mechanisms.
9. Development needs are identified in the beginning of the year on the basis of the coming year.
10. There are review mechanisms essentially to bring performance improvements.
11. It is a system with deadlines, Meeting, inputs and output and a format.
12. Format driven process.
13. Linked to performance improvements and through them to other HR decisions as and with necessary.
Difference between Performance Appraisal and Performance Management
The terms ‘performance management’ and ‘performance appraisal’ are sometimes used synonymously, but they are different. Performance management is a comprehensive, continuous and flexible approach to the management of organisations, teams and individuals which involves the maximum amount of dialogue between those concerned. Performance appraisal is a more limited approach which involves managers making top-down assessments and rating the performance of their subordinates at an annual performance appraisal meeting.
Difference # Performance Appraisal:
1. System – It is a formal system of review and evaluation of individual or team performance.
2. Time span – It is a periodic event to reflect and evaluate past performance.
3. Objective – Its main objective is to identify strengths and weaknesses of an employee’s performance and to discover developmental goals.
4. Focus – It is mainly focused on the individual’s past mistakes and misbehaviours.
5. Linking – It is linked to financial rewards.
6. Perspective – It has an individualistic perspective.
7. Concentrated upon – Largely concentrated upon quantitative aspects of performance.
8. Nature – It is rigid and inflexible in nature.
9. Goal-setting – Goal setting is done for short to mid- run goals.
10. Approach – Its approach is operational.
11. Ratings – Use of ratings.
12. Ownership – Owned by the HR department.
Difference # Performance Management:
1. System – It is a goal-oriented system to ensure that organisational processes exist to maximise the productivity of employees, teams and ultimately the organisation.
2. Time span – It is an ongoing organisational process that is conducted to maximise the productivity of employees.
3. Objective – Its main objective is of improving the organisation’s effectiveness.
4. Focus – It is mainly focused on individual’s growth.
5. Linking – Can be linked to total rewards.
6. Perspective – It has a holistic perspective.
7. Concentrated upon – Largely concentrated upon qualitative aspects of performance.
8. Nature – It is flexible and adaptable in nature.
9. Goal-setting – Goal setting is done for long-run goals.
10. Approach – Its approach is strategic.
11. Ratings – Ratings less common.
12. Ownership – Owned by line managers.