Performance Management vs Performance Appraisal

Performance Management

Methods of Performance Management (Refer Performance Appraisal Methods)
  • Comparison Method
  • Rating Methods
  • Behaviorally Anchored Rating Scales (BARS)
  • Management By Objectives
  • 3600 Performance Appraisal
The terms 'performance management' and 'performance appraisal' are sometimes used as synonymous, 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.

Performance appraisal

Performance management

Top-down assessment

Joint process through dialogue

Annual appraisal meeting

Continuous review with one or more formal reviews

Use of ratings

Ratings less common

Monolithic system

Flexible process

Focus on quantified objectives

Focus on values and behaviours as well as objectives

Often linked to pay

Less likely to be directly linked to pay

Bureaucratic - complex paperwork

Documentation kept to a minimum

Owned by the HR department

Owned by line managers

We have worked with some of the most advanced organizations in terms of Performance Management

Most organizations have some type of employee appraisal or review system and are experiencing the shortcomings of manual Appraisal systems. In talking about Employee Performance Management, the question we are asked most often is “what is the difference between Appraisal systems and Performance Management”

Following is a process diagram that provides a graphical view of the major differences between the two processes:

Performance Management systems typically are:
  1. A definition of what you want an employee to do for the next performance period (normally the next quarter, half year or full year). The definition includes specific objectives for the period, backed up by a job description which includes the normal expectations for that position
  2. A review of remuneration/bonuses if these objectives are met
  3. A review of the personal development objectives
  4. Formally Performed quarterly, half yearly or annually but with input all year round
  5. Typically fully automated where the information is accessible to all participants at any time
  6. Content rich if the automated Performance Management system has features such as a Performance Diary