Performance Management vs. Performance Appraisal: What's the Difference?
There's a lot of confusion about the difference between performance management and performance appraisal. Many people use the terms interchangeably, but they are actually quite different processes. In this blog post, we will discuss the key differences between performance management and performance appraisal and explain which process is right for your business.
01. Process
The main difference between performance management and performance appraisal is the way in which they are executed. Performance management is a continuous process, whereas performance appraisal is a one-time event.
Performance management involves setting goals, tracking progress, providing feedback, and taking corrective action as needed. This process happens on an ongoing basis, so employees can always be aware of where they stand and what they need to do in order to get better.
Performance appraisals, on the other hand, are conducted once per year or every other year. They don't involve much feedback or corrective action; instead, they're more like a summary of the employee's performance over time.
02. Focus
Another key difference between performance management and performance appraisal is the focus of each process. Performance management focuses on employee development, whereas performance appraisal focuses on evaluating employee performance.
Performance management helps employees to improve their skills and become more productive. In contrast, performance appraisals are used to determine whether or not an employee has met the standards set by the company.
03. Goals
The goals of performance management and performance appraisal are also quite different from one another. The goal of a performance management system is to ensure that all employees have the tools they need in order to succeed, whereas the goal of a performance appraisal process is simply to evaluate employee performance.
Performance management helps companies achieve their overall business objectives because it empowers employees to do their jobs more effectively.
Performance appraisals, on the other hand, are often seen as a necessary evil that must be done in order for an organization to remain compliant with labor laws and regulations.
04. Methodology
The methodology of performance management is also quite different from that of performance appraisal. The process of managing performance is typically more informal, whereas the process of appraising performance is more formal.
Performance management relies on feedback and communication between employees and their managers, whereas performance appraisal relies on data from questionnaires or interviews.
05. Purpose
The purpose of performance management is to improve employee productivity and effectiveness, whereas the purpose of performance appraisal is to document employee performance. Performance management can be used for a variety of purposes, including:
• Helping employees develop new skills
• Providing ongoing feedback to employees about their work
• Identifying areas where employees need improvement or additional training
Performance appraisal is typically used for one purpose only: to evaluate an employee's performance over time. It often serves as the basis for promotions, raises, or even terminations.
06. Outcomes
Performance management and performance appraisal often have different outcomes as well. Performance management leads to improved employee productivity and effectiveness over time, whereas performance appraisals are used to determine the level of an employee's compensation at a given point in time (such as during their annual review).
07. Execution
Another key difference between performance management and performance appraisal is the way in which they are executed. Performance management is a continuous process, whereas performance appraisal is a one-time event.
Performance management involves setting goals, tracking progress, providing feedback on an ongoing basis to ensure that all employees have the tools needed for success.
Performance appraisal, on the other hand, is a process that takes place once per year or every other year. It involves reviewing an employee's performance against predetermined standards and taking corrective action if necessary.
Which One is Right for Your Company?
The key to deciding whether performance management or performance appraisal is right for your company is to understand the difference between the two processes. If you're looking for a system that will help you develop your employees and improve their productivity, then performance management is probably the best option. However, if you're looking for a system to document employee performance and make decisions about compensation, then performance appraisal is the better choice.
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Is this the first time we’ve met? If so, I’m Cari Hawthorne and I love helping HR professionals accelerate their careers.