Performance Appraisal vs. Performance Management: What's the Difference?
Edited by Janet White || By Harlon Moss || Updated on October 23, 2023
Performance appraisal evaluates an employee's past performance, while performance management is an ongoing process of improving performance.
Key Differences
Performance appraisal is a structured review where an employee's work performance over a specific period is assessed. It often involves rating an individual's performance against various criteria set by an organization. On the contrary, performance management is a broader and more continuous process that focuses on planning, monitoring, and developing an employee's performance to align with organizational objectives.
While performance appraisal is typically an annual event, performance management happens throughout the year. The appraisal often results in feedback, ratings, or recommendations for future actions, possibly impacting promotions or raises. In contrast, performance management encompasses regular check-ins, goal-setting sessions, and consistent feedback loops, aiming for continuous improvement and alignment with company goals.
The primary goal of a performance appraisal is to evaluate an employee's contributions to a company in the past. It's retrospective. The feedback from these appraisals can help in decision-making processes related to rewards, promotions, or training needs. Performance management, however, is proactive and future-oriented. It seeks to identify potential, harness strengths, and address weaknesses in real-time to ensure an individual's growth and alignment with a company's strategic objectives.
For many companies, performance appraisal is a formalized system requiring managers to fill out standardized forms and check off competencies. Performance management, on the other hand, often encourages more organic, regular conversations between employees and managers. This ensures alignment, offers real-time feedback, and aids in swiftly addressing performance issues.
Comparison Chart
Purpose
Evaluate past performance
Continuous improvement of performance
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Frequency
Typically annual
Ongoing throughout the year
Focus
Retrospective
Proactive and future-oriented
Outcome
Feedback, ratings, and possible reward decisions
Regular feedback, goal-setting, alignment with org
Nature
Formalized system
More organic conversations
Performance Appraisal and Performance Management Definitions
Performance Appraisal
A structured assessment of how well an employee has performed tasks.
The performance appraisal identified areas where training would be beneficial.
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Performance Management
A proactive system of managing and improving worker efficiency and alignment.
Through performance management, Mark felt more connected to the company's mission.
Performance Appraisal
An evaluation of an employee's work achievements over a specific period.
The annual performance appraisal highlighted Jane's accomplishments and areas for improvement.
Performance Management
An ongoing process that aims to enhance employee performance.
With effective performance management, the company saw a steady rise in productivity.
Performance Appraisal
A tool for examining and rating an employee's work behaviors and outcomes.
Sara was eager to receive feedback from her performance appraisal.
Performance Management
A comprehensive approach to ensuring consistent performance and growth.
Performance management tools helped in setting clear expectations and monitoring progress.
Performance Appraisal
A systematic review of an individual's job performance and contributions.
During the performance appraisal, Tom received high marks for teamwork.
Performance Management
Continuous monitoring and feedback mechanism for employee development.
Performance management facilitated regular discussions between staff and supervisors.
Performance Appraisal
An organizational process of evaluating and documenting work performance.
Managers use the performance appraisal to guide decisions about promotions and bonuses.
Performance Management
A systematic approach to aligning individual goals with organizational objectives.
Performance management ensured that all teams worked towards the company's strategic vision.
FAQs
How is performance management different from appraisal?
Performance management is ongoing and proactive, while appraisal evaluates past performance.
Can feedback from performance appraisal impact salary?
Yes, performance appraisal feedback can influence decisions on raises and bonuses.
Can performance appraisal be subjective?
While efforts are made to make it objective, performance appraisal can sometimes be influenced by biases.
How do organizations benefit from performance management?
Performance management fosters alignment, productivity, and continuous growth in organizations.
What activities are part of performance management?
Performance management includes goal-setting, feedback, coaching, and development plans.
What's the primary aim of performance appraisal?
The main aim of performance appraisal is to evaluate an employee's past performance.
How should employees prepare for performance appraisal?
Employees should document achievements, seek feedback, and be open during the performance appraisal.
How are development plans derived from performance appraisal?
Development plans in performance appraisal are based on identified areas of improvement and growth potential.
Why is goal alignment crucial in performance management?
Goal alignment in performance management ensures individuals contribute effectively to organizational success.
Are peer reviews common in performance appraisal?
Yes, many companies incorporate peer reviews into the performance appraisal process for comprehensive feedback.
Why is continuous feedback essential in performance management?
Continuous feedback in performance management ensures real-time improvement and alignment with goals.
Is self-evaluation a part of performance appraisal?
In many organizations, self-evaluation is an integral component of the performance appraisal process.
How can performance management be made effective?
Effective performance management requires clear communication, regular feedback, and a focus on development.
What tools are used in performance appraisal?
Tools for performance appraisal include rating scales, 360-degree feedback, and behaviorally anchored rating scales.
Can performance management help in succession planning?
Yes, performance management can identify potential leaders and help in succession planning.
How often is performance appraisal typically conducted?
Performance appraisal is usually conducted annually.
What's the role of training in performance management?
Training is vital in performance management to address development needs and enhance skills.
What are the outcomes of a performance appraisal?
Performance appraisal outcomes can be feedback, ratings, training recommendations, and reward decisions.
How does performance management support organizational goals?
Performance management aligns individual performance with organizational objectives and strategic plans.
Is performance management only about improving weaknesses?
No, performance management also emphasizes harnessing strengths and aligning with company objectives.
About Author
Written by
Harlon MossHarlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.
Edited by
Janet WhiteJanet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
