Difference Between Performance Appraisal & Performance Management

Lesson Transcript
Instructor: Martin Gibbs

Martin has 20 years experience in Information Systems and Information Technology, has a PhD in Information Technology Management, and a master's degree in Information Systems Management. He is an adjunct professor of computer science and computer programming.

Feedback is crucial for employees when evaluating job performance, but organizations and companies also benefit from encouraging employee growth in alignment with their goals and the opportunities available. Discover the difference between performance appraisal and performance management and the value of both. Updated: 01/24/2022

Appraisals & Performance Management

When you hear the words performance appraisal and performance management, do you consider them to be the same general concept? While this is a common perception among supervisors, it's a misconception; they are actually very different. Let's begin by defining each of them.

If you've worked for an organization for any length of time, you've most likely received a performance appraisal, which is also often called a performance review. This is usually a checklist with various markers that assess how well you are performing your job. It measures performance over a time frame. It does not have anything to do with employee development or how you are going to improve performance in the organization.

When appraising performance, the words ''measure,'' ''evaluate,'' and ''feedback'' are the keywords used. Supervisors often use performance appraisals as a way to make sure that employees are doing their job or meeting a set of criteria as set out by the organization. For example, the image on your screen is a sample of what an evaluation would look like:

Performance evaluation sample
Performance evaluation sample

Performance management, on the other hand, refers to the development of employees in an organization. It isn't a single concept, but rather it's a process and a system. The intent is to create a work environment where employees can succeed and perform their best.

If you're managing employees' performance, you are ensuring that their work is aligned with organizational goals. The words ''facilitate'' and ''encourage'' are keywords in performance management.

An appraisal reflects past performance. Performance management is about the future. Now that you have evaluated their performance via the appraisal or review, what are you going to do now? How can you convert the negatives into a positive for the employee so that they are more valuable to the organization?

Performance management goes beyond just the employee, however. It's an entire process in which you create a work environment that lets people perform at their best. Good performance management starts before the employee is ever hired and lasts through employment. Some key components of an effective performance management program include:

  • Clear, concise, realistic job descriptions
  • Negotiate terms and conditions of employment (which can include benefits, salary, etc.)
  • Ongoing training and education
  • Continuous feedback and coaching as needed
  • Create a development plan and discuss and monitor it quarterly
  • Offer opportunities for advancement, job shadowing, job sharing, or even lateral moves

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Coming up next: Performance Appraisals: Best Practices & Examples

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Differences and Alignment

Performance management vs. performance appraisal
Performance management vs performance appraisal

While this tells you if the employee is meeting organizational expectations, what does it really tell you about their development? The short answer is, well, nothing. We'll address this shortcoming momentarily, but let's talk briefly about performance management.

Appraisals and performance management are separate concepts, but as a supervisor, you can embrace each and use them together effectively. We'll first look at an example of appraisal, then an example of management, then we'll link the two.

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