Dear Sejal,
The performance management system, performance appraisal system and the evaluating performance of a employee and highly interlinked.
For example, Evaluating the performance of a employee in a organization is performance appraisal. Every company has a different system for their performance appraisal and that system is known as performance appraisal system. This system includes the tools and techniques used by a organization for evaluating the performance.
Performance appraisal system :
Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does.
Performance management system
Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves your organization.
As per these definitions, one shall clearly understand that performance appraisal system is a part of performance management system. So, the short answer is that performance appraisal (annual review, employee review) fits under performance management.
Hope this would have given you a small idea on your query
Regards
K.Jayavel