| Potential Appraisal | Performance Appraisal |
| 1. It is a future-oriented activity. | It is both past and future-oriented activity. |
| 2. In this the employee’s abilities are evaluated to judge if those abilities are worthwhile in future functions and work accountabilities. | The extent up to which an individual has attained the targets or goals set by the organization forms the basis of performance appraisal. |
| 3. The activity of appraising potential is associated with competencies. | Performance appraisal activity is associated with key performance areas. |
| 4. There are very fewer chances of examining the appraiser in newer roles by the appraisers as there are no past records. | Appraisal has the previous data related to the employee performance for the performance appraisal. |
| 5. The time period for appraising potential is uncertain. It is dependent on the manager who performs the potential appraisal. | Performance appraisal is one after a fixed period of time. |
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