Difference Between Performance Appraisal and Performance Management (with Comparison Chart)

January 2022 · 4 minute read

performance management vs performance appraisalPerformance Appraisal implies a rational assessment of the performance of an individual, based on pre-determined standards. On the other hand, performance management alludes to the management of performance of the manpower working in an organization. While Performance Appraisal is a yearly system while if we talk about Performance Management, it is a continuous process that does not occur eventually.

What kind of evaluation process is adopted by the organization is one of the biggest questions, as the appreciation and development of employees rely on it? Some employees work silently but does not show himself/herself, while there are also such employees who put up a show but hardly performs. So, the performance appraisal and management play a crucial role, as the success of the organization is combined effort of all the employees and the entrepreneur.

Take a read of this article to understand the difference between performance appraisal and performance management system.

Content: Performance Appraisal Vs Performance Management

  • Comparison Chart
  • Definition
  • Key Differences
  • Conclusion

    • Comparison Chart

    Basis for ComparisonPerformance AppraisalPerformance Management
    MeaningPerformance Appraisal, means the analysis of an employee's performance and their caliber for future growth and development.Performance Management is the management of human resources in an organization.
    What is it?It is a system.It is a process.
    NatureRigidSupple
    Type of toolOperational ToolStrategic Tool
    Owned byHuman Resource DepartmentManagers
    ConductedAnnuallyContinuously
    ApproachIndividualisticHolistic
    Focused onQuantitative AspectsQualitative Aspects
    CorrectionsRetrospectiveProspective

    Definition of Performance Appraisal

    Performance Appraisal is defined as an assessment of employees by the manager, in which he/she evaluates the overall contribution made by the employee to the organization. It is a systematic and logical review, conducted by the organization annually to judge his potential in performing a task. It helps to analyze the skills and abilities of an employee for their future growth that increases the productivity of employees. It helps to identify, the employee who performs their task well and those who are not, along with the reasons for the same.

    Performance Appraisal Process

    Performance Appraisal Process

    Performance Appraisal is an organized way of evaluating employee performance, for which a comparison is made between actual performance and the preset standards. The results of the performance appraisal are documented. After that reviews are given to the employee about their performance during the year, to tell them where they require improvements. Employees also wish to know their position in the organization after a particular period of time.

    Definition of Performance Management

    Performance Management is a continuous process that aims at planning, monitoring and evaluating the objectives of an employee and his total contribution to the organization. The basic purpose of performance management is to encourage and improve employee’s efficiency and effectiveness.

    In this process, both the employees and the managers participate in setting the objectives, assessing the performance or progress, providing training and feedback to the employees at regular intervals for improvement, implementing development programs for employees and rewarding them for their achievements.

    With the help of this process, both the employee and the employer get a chance to set the combined goals of the employee that relates to the ultimate goal of the organization by considering the employee’s performance. In this way, the objectives of the parties became clear that helps to achieve the overall objectives of the organization and the growth & development of the employee as well.

    Key Differences Between Performance Appraisal and Performance Management

    The following are the major differences between performance appraisal and performance management:

  • An organized way of evaluating the performance and potential of employees for their future growth and development is known as Performance  Appraisal. The complete process of managing the human resources of the organization is known as Performance Management.
  • Performance Appraisal is a system while Performance Management is a process.
  • Performance appraisal is inflexible, but performance management is flexible.
  • Performance Appraisal is an operational tool to improve the efficiency of employees. However, performance management is a strategic tool.
  • Performance Appraisal is conducted by a human resource department of the organization, whereas managers are held responsible for performance management.
  • In performance appraisal, corrections are made retrospectively. In contrast to performance management is forward looking.
  • Performance Appraisal has an individualistic approach which is just opposite in the case of Performance Management.
  • Performance Appraisal is carried on eventually, but Performance Management is an ongoing process.

    • Conclusion

    Therefore, we can say that the term performance appraisal and performance management are completely different. But, it can’t be said that they are contradictory because performance appraisal itself is a part of performance management. In this way, we can say that performance management is a bigger term that involves some steps.

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