Difference Between Performance Appraisal and Performance Management

Performance Appraisal and Performance Management are the most commonly confused terms
because they both are associated with the evaluation of employees. Therefore, these terms are
used interchangeably. But the truth is that they both differ in their meaning and
concept. Performance Appraisal, is a yearly system while if we talk about Performance
Management, it is a continuous process that does not occur eventually.
So, the wait is over; we are here presenting you all the important differences between
performance appraisal and performance management. Have a look.
Content: Performance Appraisal Vs Performance Management
1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion

Comparison Chart
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

BASIS FOR
COMPARISON

PERFORMANCE
APPRAISAL

PERFORMANCE
MANAGEMENT

Approach

Individualistic

Holistic

Focused on

Quantitative Aspects

Qualitative Aspects

Corrections

Retrospective

Prospective

Definition of Performance Appraisal

Performance Appraisal is defined as an assessment of employees by the manager, in which he
evaluates the overall contribution made by the employee to the organization. It is a systematic
and logical review, conducted by the organization annually to judge his potential in performing a
task. It helps to analyze the skills and abilities of an employee for their future growth that
increases the productivity of employees. It helps to identify, the employee who performs their
task well and those who are not, along with the reasons for the same.
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.
You can understand the procedure of the performance appraisal, with the help of the following
diagram:

Definition of Performance Management

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 employees 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 employees
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.
Key Differences Between Performance Appraisal and Performance Management
The following are the major differences between performance appraisal and performance management:
1. An organized way of evaluating the performance and potential of employees for their future
growth and development is known as Performance Appraisal. The complete process of managing
the human resources of the organization is known as Performance Management.
2. Performance Appraisal is a system while Performance Management is a process.
3. Performance appraisal is inflexible, but performance management is flexible.
4. Performance Appraisal is an operational tool to improve the efficiency of employees. However,
performance management is a strategic tool.

5. Performance Appraisal is conducted by a human resource department of the organization,

whereas managers are held responsible for performance management.
6. In performance appraisal, corrections are made retrospectively. In contrast to performance
management is forward looking.
7. Performance Appraisal has an individualistic approach which is just opposite in the case of
Performance Management.
8. Performance Appraisal is carried on eventually, but Performance Management is an ongoing
process.

Conclusion
Therefore, we can say that the term performance appraisal and performance management are completely
different. But, it cant 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.