Performance Appraisal versus Performance Management

‘Performance appraisal’ and ‘performance management’ are two different concepts. Using these two interchangeably is wrong.

Performance appraisal is a confined practice regarding the evaluation of the performances of employees. Here, managers rate their subordinates every year on the basis of their performance.

Whereas, performance management is a wider and integrated approach intended towards the betterment of the organization as a whole.

Here, the roles and responsibilities are assigned to every employee, and performance standards have been set in order to derive greater performance from employees.

In performance management, employees are prepared to work as a team so that performance improvement at the individual level directly impacts organizational performance positively.

Performance appraisal is different item performance management in the following manner:

Basis of DifferencePerformance Appraisal (PA)Performance Management (PM)
1. ObjectivesFocuses only on individual objectivesStresses upon integrated, i.e., organizational and team objectives along with the individual objectives
2. Nature of Performance Measuring MethodsQualitative as well as quantitative measuresQuantitative measures and on the basis of skill required to perform a particular task
3. Repetitive OccurrencesConducted annuallyConstant reviewing
4. System of EvolutionRatings are assigned by the managers to the subordinatesCombined and collective discussion
5. Reward SystemMostly associated with monetary benefitsNo direct reward system
6. OwnershipConducted by the HR departmentDirected by line management
7. Nature of IntentA separate process, i.e., not in line with the organizational developmentAn integrated approach, i.e., intended to achieve individual as well as organizational goals
8. Approach of AssessmentReactive approach, i.e., on the basis of past performanceProactive approach, i.e., in order to improve future performance
9. Nature of QuestionsFeedback of earlier performances, e.g., how well the task was implemented?Discussion regarding future tasks, e.g., how employees should be assisted to derive effective performance?

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