PERFORMANCE APPRAISAL VS PERFORMANCE MANAGEMENT: CLEAR CUT CONCEPT

 Performance Appraisal implies a rational assessment of the performance of an individual, based on pre-determined standards. On the other hand, performance management alludes to the management of performance of the manpower working in an organization. While Performance Appraisal is a yearly system while if we talk about Performance Management, it is a continuous process that does not occur eventually

What kind of evaluation process is adopted by the organization is one of the biggest questions, as the appreciation and development of employees rely on it? Some employees work silently but does not show himself/herself, while there are also such employees who put up a show but hardly performs. So, the performance appraisal and management play a crucial role, as the success of the organization is combined effort of all the employees and the entrepreneur.

For organizations who haven’t yet pursued performance management and performance appraisal activities, it may be easy to use the two terms interchangeably. That would be incorrect. The difference between performance management and appraisal is subtle, but distinct.

WHAT IS PERFORMANCE MANAGEMENT?

Unlike performance appraisals, a performance management system looks at the present and the future of an employee’s position with the organization and provides ways for employees to do better in their role with the future in mind. Performance management can be defined as “all activities which enable staff to perform to the best of their abilities.”

Performance management can mean everything from HR’s activities in choosing the right candidates, to giving staff access to training and courses to build core competencies, to assigning a mentor that will give feedback, and more. In contrast to performance appraisals, performance management is an ongoing process of evaluating employee performance and providing constructive criticism to encourage and support the progress of staff toward organizational goals.

It is the process of managing and developing employee performance throughout the organization. It aims at planning, tracking and assessing employee performance for a specific period. The end result of performance management is to motivate employees and further increase their efficiency and effectiveness.

Performance Management is a continuous process that aims at planning, monitoring and evaluating the objectives of an employee and his total contribution to the organization. The basic purpose of performance management is to encourage and improve employee’s efficiency and effectiveness.

In this process, both the employees and the managers participate in setting the objectives, assessing the performance or progress, providing training and feedback to the employees at regular intervals for improvement, implementing development programs for employees and rewarding them for their achievements.

With the help of this process, both the employee and the employer get a chance to set the combined goals of the employee that relates to the ultimate goal of the organization by considering the employee’s performance. In this way, the objectives of the parties became clear that helps to achieve the overall objectives of the organization and the growth & development of the employee as well.

WHAT IS A PERFORMANCE APPRAISAL?

A performance appraisal (also called a performance evaluation) is one small step in a performance management system. An appraisal refers to the process of evaluating an employee’s past work and accomplishments with the purpose of rating their performance. Performance appraisals are often done by a manager or supervisor and aim to give employees a score of some kind to establish how well they have performed in the past year.  For some organizations, the data might then be used to help decide things such as an employee’s pay rate, whether they’re eligible for a promotion or even if they should continue being employed by the company.

When organizations conduct performance appraisals outside of a performance management plan, they tend to be paper-based and very structured, leaving little room to convey an employee’s true progress and the nuances of their position or what may have transpired within the organization over the past year.

For example, if a performance appraisal has a set of questions such as, “how many projects did you complete? Did you complete more projects than last year?” The answer may be “no” because a much larger project may have taken more time to complete than previous projects. On paper, it might look like that staff member was not progressing because they completed less projects than the previous year; however, when you know all the details, that really isn’t the case. For this reason, performance appraisals can be detrimental to employee morale and have adverse effects on long-term performance management activities.

The process of evaluating employee performance on a regular basis is called as performance appraisal. Although, unlike performance management, it is restricted to evaluating past performance and conducted once or twice a year, depending upon the organization’s policies.

Performance Appraisal is an organized way of evaluating employee performance, for which a comparison is made between actual performance and the preset standards. The results of the performance appraisal are documented. After that reviews are given to the employee about their performance during the year, to tell them where they require improvements. Employees also wish to know their position in the organization after a particular period of time.

Thus essentially, performance appraisal is an integral part of a comprehensive performance management approach.

PERFORMANCE APPRAISAL METHODOLOGY

There are several methods for scoring staff members in a performance appraisal, including: being ranked according to their performance levels in general or against another employee; rated on a scale of some kind (1-5 or 1-10, etc.); rated based on a checklist of yes or no, or a checklist with a scale such as below average to excellent.

While there are several ways to carry out a performance appraisal, the commonality is that the focus is on a staff member’s past performance vs. present and future performance. This technique for evaluating employee performance does not provide recommendations for improvement and, many times, is not an ongoing process (usually occur once per year).

THE PROBLEM WITH PERFORMANCE APPRAISALS ALONE

Performance appraisals are an important piece of the performance management plan; however, appraisals alone are not enough to elicit change and progress within an organization. Successful organizations create strategic performance management plans which include appraisals but are supported by competency-based assessments, training programs and e-learning initiatives as well as succession and promotion planning.

When done without an overall performance management plan, performance appraisals typically cause high stress and low confidence for staff. Without objectives or a strategic plan, appraisals do not move employees toward higher performance or closer to reaching organizational goals.

PERFORMANCE APPRAISALS AS PART OF A PERFORMANCE MANAGEMENT SYSTEM

As part of the performance management system, performance appraisals can play a vital part in discovering areas that need improvement, aiding management in deciding on corrective actions to take to get staff on track and meet company goals. Ultimately, the two activities should be used together to increase performance among staff and to improve the effectiveness of your organization.

For one, performance management is a comprehensive approach that involves the maximum amount of dialogue among all the stakeholders. Performance appraisal on the other hand is primarily a top-down assessment for grading/rating employee’s performance periodically. While performance appraisals have gained a unfavorable reputation, there are some methods that can help you get better at the process.

SCOPE OF EXECUTION

There are some similarities between the two terms when it comes to execution. Both performance appraisal and performance management involve:

1. Setting targets and clear expectations
2. Setting guidelines about measuring success
3. Reviewing whether targets were achieved
4. Identifying barriers towards effective performance
5. Determining ways to help employees meet these targets

 

FREQUENCY:

·         Performance appraisal is a reactive function that only evaluates past performance of employees. In most organizations, it is usually conducted only once or twice in a year. It’s a distinct staff activity that doesn’t interfere with an employee’s daily work.

·         Performance management is a proactive, forward-looking process that manages employee performance in an ongoing manner. The intent here is to make sure employees attain their targets in real-time. Ideally there shouldn’t be a need for corrective action if the goals have been set according to the employee’s potential. This process does make a difference to how employees carry on with their daily tasks.

RESPONSIBILITY:

·         Performance management involves both employees and their line managers. Additionally, other stakeholders do play an important role. These other stakeholders can be any one who can positively impact employee’s performance. Customize the process according to each individual employee’s actual work.

·         Performance appraisal is typically a standard procedure conducted by the HR department in collaboration with direct managers. It depends upon the employee’s designation, experience and job description. Here, more often than not the supervisor or manager plays the role of a judge and has the final word.

·         In some companies, there are appraisal systems that allow setting up of joint targets by the employee and their managers. You can also review them on frequently which is why they appear quite similar to performance management. The only problem is that they are not able to monitor targets in real-time, a comfort offered by the performance management process.

STRUCTURE:

·         Although the performance appraisal process is more structured and formal, it does allow customization of the key performance areas which vary from employee to employee. However, when it comes to setting rating parameters, it is quite rigid as these ratings are applicable for every employee.

·         In contrast, the performance management process is quite flexible at evaluating performance. While there are certain guidelines that constitute optimal performance, they can vary from employee to employee depending on their job description and capabilities.

TIPS FOR A SUCCESSFUL PERFORMANCE MANAGEMENT SYSTEM

·         Outline expectations: when staff know exactly what is expected of them, they’ll know what they’re working toward and how to approach their daily responsibilities.

·         Establish ways for staff to progress: whether it’s mandatory training, courses through an e-learning platform or matching staff with a mentor who can give them feedback, it’s important to continue to build employee skill sets and align them with your organization’s core competencies.

·         Have ongoing performance check-ins: unlike performance appraisals which only declare a score for past performance, ongoing performance management check-ins establish ways to stay on track toward goals, provide corrective advice, sharpen current skills or gain new ones, and most importantly, help employees feel valued and comfortable in their position.

·         Implement individual development plans: in order to stay motivated, keep progressing and be valuable assets to your organization, employees need to understand their career path clearly. Be sure to develop individual plans for employees which outline the steps you’re anticipating, provide goals and milestones and create a clear plan for succession and promotion.

 

DIFFERENCES

BASIS FOR COMPARISON	PERFORMANCE APPRAISAL	PERFORMANCE MANAGEMENT
Meaning	Performance Appraisal, means the analysis of an employee's performance and their caliber for future growth and development.	Performance Management is the management of human resources in an organization.
What is it?	It is a system.	It is a process.
Nature	Rigid	Supple
Type of tool	Operational Tool	Strategic Tool
Owned by	Human Resource Department	Managers
Conducted	Annually	Continuously
Approach	Individualistic	Holistic
Focused on	Quantitative Aspects	Qualitative Aspects
Corrections	Retrospective	Prospective

 CONCLUSION

Therefore, we can say that the term performance appraisal and performance management are completely different. But it can’t be said that they are contradictory because performance appraisal itself is a part of performance management. In this way, we can say that performance management is a bigger term that involves some steps.