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employee performance vs employee appraisal

What is the difference between Performance Management & Performance Appraisal

Here is a quick guide to performance management and performance appraisal. You can use this guide to compare and contrast performance appraisal vs performance management and understand the key differences between these two terms. Read more here.

Success relies heavily upon how well employees work together and how well they contribute to the overall operation of an organization. Although performance management and performance supervision are often used interchangeably, they’re both different aspects that play a part in ensuring the success of a company or organization as a whole.

Table of Content

  1. What Is Performance Appraisal?
  2. What Is Performance Management?
  3. Performance Management Vs. Performance Appraisal

What Is Performance Appraisal?

Performance appraisal is an assessment of a person’s performance. It is an evaluation of the person’s strengths and weaknesses. There are different types of performance appraisal such as job performance appraisal, manager’s performance appraisal, employee performance appraisal and peer performance appraisal.

This is a method of determining the key elements which an employee must know and do to achieve acceptable performance and then measuring them against the standard. The appraisal can be done by the employee’s immediate supervisor and also by superiors, subordinates, peers and outside consultants.

Objectives of Performance Appraisal:

The major objectives of performing a performance appraisal are as follows:

  • Assigning the correct tasks to the right employees after evaluating their strengths and weaknesses as per company norms.
  • Keeping records to decide stipend structure, bonuses, etc.
  • Identifying and evaluating the potential of an employee for further growth and development.
  • Providing feedback and positively impacting the working habits of employees.

Benefits of Performance Appraisal:

  • Boosting employee development.
  • Increased employee motivation
  • Increased employee loyalty
  • Deciding upon the salary/stipend structure of the employees.
  • Appraising whether the employee should be promoted or dismissed.
  • Establishing clear and effective communication between employers and employees.

What Is Performance Management?

Performance management is an ongoing, ever-evolving process that focuses on analyzing employee objectives as a way to measure individual performance over time in an effort to enhance employee development. This type of long-term approach when paired with regular performance appraisals can play a role in helping employees achieve company goals and therefore make for a better working environment overall.

How to better manage someone in a team with clear goals? By assessing their performance every now and then. Good performance management does not aim at enhancing every skill. It only intends to improve the specific skill sets that align with the company’s interests and goals. Criteria should be set such that an employee’s overall contribution can be assessed by weighing various aspects like bonuses, promotions and dismissals for example.

Objectives of Performance Management:

  • Clearly defining the company’s goals & objectives.
  • Establishing clear communication between teams and individuals.
  • Setting realistic expectations for company managers and employees.
  • Defining a performance plan by setting performance benchmarks.
  • Shape individual training and performance plans.

Approaches for Conducting Performance Management: 

  • Result-oriented approach:

    This approach is known by the “top-down” method. The final result is more important than the means, which are based more on objective criteria rather than subjective observations. Sales professionals and call center employees utilize this method.
  • Behavioral approach:

    This approach is best suited for situations where detailed results of individuals’ efforts cannot be clearly defined. By identifying certain behaviors that are deemed desirable, it becomes possible to evaluate employees. This approach can be effectively used in any environment where teamwork and support staff come in play.

Performance Management Vs. Performance Appraisal

Performance management and performance appraisal are two distinct terms used by business professionals to help organize different areas of their operations. Performance management deals with structuring a set of ways to help guide employees towards reaching goals established by the company while performance appraisal is a way for an employer to provide feedback concerning how well or poorly an employee’s progress aligns with these set goals at any given point in time within a specified amount of time.

Performance Appraisal Performance Management
Performance appraisal evaluates past performances and effectively communicates how an employee has worked at the current task. It does not provide a strategy for future growth.Performance management, on the other hand, focuses on expending time and resources on employees for the growth of the company.
Performance appraisal only evaluated employee’s performance objectively for the year and gave final feedback.Performance management ensures that the employee has accomplished the set goals or not. It also guides them with blockers on the way 
Performance appraisal evaluates an employee’s mistakes and communicates how an employee could have given better efforts. Performance management, on the contrary, guides employees so that they can perform better in the future.
Performance appraisal takes place not more than twice a year. Performance management contrastingly is a continuous process that might be a part of day-to-day conversations between managers and employees.
Performance appraisal typically uses a quantitative approach. Performance management, however, uses a mix of both qualitative and quantitative approaches to enhance employee performance.
Performance appraisal is usually undertaken by the HR department. Performance management, on the other hand, is conducted by managers and supervisors, and multiple other stakeholders involved in the ongoing process.


Performance Appraisal and Performance Management are two terms that are often used and confused. One is a process, the other is a tool. They are different, but they do have some similarities. Performance Management tools help organizations and managers do Performance Appraisals, but Performance Appraisal is a more far reaching process.

Performance Appraisal takes into account a person’s strengths and weaknesses, and how those strengths and weakness affect the person’s performance on the job. It is important that everyone on the team or in the organization understands the difference between Performance Appraisal and Performance Management, so that everyone is on the same page and they are able to collaborate more effectively.

We hope you enjoyed our article on differences between Performance Management & Performance Appraisal. It is crucial that people understand that their performance has a direct impact on their career. If you want to learn more about the best certification training courses to advance your career or need help in getting the best deal for a certification training course, please feel free to contact us.

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