Understanding the Difference Between Performance Management and Appraisal Systems

What is the difference between the performance management system and the performance appraisal system?

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The performance management system and the performance appraisal system are two distinct processes within an organization.

The performance management system is a comprehensive approach that involves setting clear goals, providing regular feedback, and supporting employees in reaching their full potential. It focuses on continuous improvement and development throughout the year.

On the other hand, the performance appraisal system is a more specific process that typically occurs annually. It involves evaluating an employee's performance against predetermined goals and standards. This evaluation is often used to make decisions regarding promotions, salary increases, or training opportunities.

While both systems are aimed at enhancing employee performance, the performance management system is more holistic and ongoing, whereas the performance appraisal system is a periodic assessment of past performance.

Dear Kunal
According to me, PERFORMANCE MANAGEMENT is a … system designed to assess, monitor, and enhance the performance of employees.
It involves performance appraisal, formal training, day-to-day coaching, goal setting, feedback, as well as motivation and reward systems used to enhance employee performance.
Thanks
Ann M

Hi Kunal!

Performance appraisal is a past-oriented process, whereas PM is future-oriented. PA is concerned with an employee's past performance, whereas PM is concerned with the organization's desired performance. I'm sure the following attachment will make things clearer for you.

Sindhuja

Most people associate performance management with performance appraisals, performance-related pay, achievement of targets, motivating people, and enforcing discipline. Unfortunately, the above is not what performance management is all about, though they do form a fundamental part of it. So, what is a performance management system? Performance management system (PMS) has to evolve from performance appraisals. A well-designed performance appraisal system tells you the status of the health of an organization, but it indicates only the symptoms of any ills. It is like a medical checkup. It tells you what is right or wrong but does not lead you to the cure of the organizational ills. Performance Management System has to be evolved for a cure and to keep the organization healthy. Most often, we attack the symptoms rather than attacking the root cause of the problem. A properly designed performance management system helps us to take action for curing the organizational ills. PMS has to be designed in such a manner that it leads to the achievement of the organization's goals and objectives and at the same time it enables people to achieve their full potential, lead to job enrichment, and job satisfaction.

Performance management is about getting results. It is concerned with getting the best from people and helping them to achieve their full potential by enabling them to recognize their roles and contribute to the goals of the organization.

Performance appraisals indicate what has been done against what should have been done. It is an audit of the performance of the people. They also enable management to set future goals and objectives.

Regards,

Dr. Prageetha

Hi Sindhuja,

You have very effectively differentiated between performance management and performance appraisal. Good job!

Pinki