Performance Management and Performance Appraisal

Categories: BusinessManagement

Evaluating the performance of an employee has become and important task for managers. This way they know were or in what aspects they need to work more to achieve the companies goals. “Managing employee performance is an integral part of the work that all managers and rating officials perform throughout the year. It is as important as managing financial resources and program outcomes because employee performance, or the lack thereof, has a profound effect on both the financial and program components of any organization.

” 1 (US department of the interior) This essay talks about performance management and performance appraisal, the difference between them, and how a successful performance management plan work and their common mistakes.

To understand the difference between performance management and performance appraisal first we need to understand the meaning of both concepts. These two terms are usually used while evaluating employee efficiency in an organization.

Lets start by learning what performance management is “Performance management is simply a term used to describe a set of activities that assess whether goals or objectives are being met.

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These activities include defining work, setting goals, providing feedback and encouraging development. Performance management is about shared responsibility and understanding of roles, expectations and standards”

For better understanding about PM is really about the university of Berkeley posted this example in their web-side “The campus carries out its mission through the individual and collective contributions of its employees. To do their best, staff members need to know that those contributions will be recognized and acknowledged.

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Performance Management is one of the key processes that, when effectively carried out, helps employees know that their contributions are recognized and acknowledged. Performance management is an ongoing process of communication between a supervisor and an employee that occurs throughout the year, in support of accomplishing the strategic objectives of the organization. The communication process includes clarifying expectations, setting objectives, identifying goals, providing feedback, and evaluating results” 2. (University of Berkeley).

The Office of Personnel Management defines performance management as the systematic Process of:
1. Planning work and setting expectations
2. Continually monitoring performance
3. Developing the capacity to perform
4. Periodically rating performance in a summary fashion; and
5. Rewarding good performance

Know lets look at the meaning about Performance appraisals it is “The process by which a manager or consultant (1) examines and evaluates an employee's work behaviour by comparing it with preset standards, (2) documents the results of the comparison, and (3) uses the results to provide feedback to the employee to show where improvements are needed and why. Performance appraisals are employed to determine who needs what training, and who will be promoted, demoted, retained, or fired” 3 (Business dictionary) A great appraisal needs to be fair, objective, two-way, realistic, clear, on-going and specific.

Just by reading the definitions it easy to see that Performance appraisals is just one part of performance management. Although one helps the other there are a few differences that can be noticed: it can be said that performance management is the older and traditional approach. On the other hand performance appraisal is a sort modern method or approach of evaluating the performance of an employee of a firm or an organization.

“Performance appraisal consists in the setting of job standards and evaluation of the past performance….” On the other hand performance management concentrates on managing the performance in state time so that the performance can reach the expected level” 4 (Aaron 2011)

Also performance appraisal only focuses on the past performance and its done normally twice a year on the other hand performance management “is a continuous function in the sense that it is done in an on-going fashion to ensure that the employees discharge their capabilities in such a way that targets are achieved in real-time basis. Hence it is often said that performance management is continuous in purpose whereas performance appraisal is occasional in purpose.” 4 (Aaron 2011)

If we start talking about methodology there are a few differences performance appraisal is more of a formal structure while performance Management has a more flexible and casual nature.

Know that we know what they mean we can talk more about performance Management. To achieve greater organizational success an organization needs a strong performance management, that process organizations put in to measure and reward the abilities of their workforce to achieve their goals. Improving morale, creating loyalty and increasing overall productivity in your employees through performance management is the key to your company outperforming the competition? Performance management not only ensures that the employees do their job but they do it the right way

After reading about performance management I came across a lot of steps to make an effective one, the following are the 5 steps that I agree will make a successful PM plan.

1. Planning your Business workload; set the organizations goals strait where do managers want to take the organization, what tasks need to be done and how. For example “Have you ever tried to drive somewhere without proper directions?

This almost always turns out to be a frustrating experience. Sure, if you stop and ask enough people you may eventually reach your target destination, but think of all the wasted energy, time, and resources needed to accomplish your goal. Let's take this concept and move it to the realm of managing a business. Does it make sense to expect your employees to reach a goal or strategic objective without providing them a road map of where they are headed? “ (Josh Greenberg 2011)

Employees need to be involves in this process, by this they improve the morale, helps managers make sure they are no gaps in the communication process, and gives employees a clear idea of what is expected from them.

2. Monitoring business and individual performance: managers need to watch carefully the work of their employees to make sure it is done on time and the right way and see how well employees are able to function. It is also useful to keep track not only of the tasks already done but also the ones to come.

3. Individual and team performance development; involve employees to keep and upgrade standards, develop new skills, teach new procedures. It may also mean to give new responsibilities to those employees that deserve them, the ones that show they have outgrown their old ones.

4. Rating individual performance; Evaluate the employee performance address in which areas the employee needs to grow but do not forget the ones where he has already excel. It’s telling the employee where he/she is standing.

5. Rewarding great performance; this may seem like the least important but it is actually one of the most important ones, when a manager rewards their employees for their hard work it helps keeping them motivated and happy. When an employee is happy they usually keep performing at a high level (Martin Haworth)

In order not to have an unsuccessful performance management, it is important to make sure that the process is well understood; managers and employees need to understand the process and its use. There might even be a training to use the system “it’s not just using the tool but using it properly.” So develop a good process and make sure everyone’ uses it.

The plan must be relevant and “strategic and be part of the fabric of the organization…. Employees need to be able to see how working their plan will make both them and their organization more successful. In order to do that, the plan must link, at least in part, to organizational, departmental and job specific mission and planning. Other elements must enable the success of the individual.” 5 (Erik Britten, 2011) so make the plan meaningful and useful to the employee and the organization.

Lets remember that performance management is an everyday activity, “If plans are developed and aligned properly, employees and managers should be able to link what they are doing almost daily to something in their plan. Managers need to connect those dots frequently in group or individual meetings.” 5 (Erik Britten, 2011) these is why it’s important to make performance management an ongoing activity.

Mistake usually happen when something is not a 100% understood so lets remember to use a meaningful and useful plan for the employee and the organization, develop a good process and make sure everybody uses it and not do it twice or tree times a year but everyday, to avoid some mistakes.

The biggest error that can happen is that not to manage performance, it is easy to come with excuses not to do so but it is a risky move. The most common excuses are: “my staff don’t want to be performance managed,” “ not enough time,” “It’s easier to ignore underperformers and move them on to someone else to manage, ” “It’s not worth the effort and does not pay off.”

The list can go on and on but all these are wrong. As we have learned before performance management “The effective management of performance is a primary managerial responsibility and has significant impact on employee performance and retention.” All employees expect feedback, “Ignored underperformance rarely goes away and it gets increasingly harder to tackle.” 6 (Government of South Australia)

Other errors include improper documentation or preparation. Fix the mistake by being prepare, use your time more effectively. The employee may assume the manager does not know what is going on or that she simply doesn't care enough to prepare.

Not knowing employees, get to know your employees and the quality of their work, managers need to listen, and not expect their employee to know everything and exactly how he wants the task done.

Accepting excuses, don’t give a chance of a poor performance in an organization. Find a solution and establish an action plan to avoid the problems in the future.

Avoiding the tough issues, It’s hard for an employee to correct their problems without any help. It’s hard to give “bad” feedback but it is really worth it if not the problems or when the work gets harder it will be all-wrong. There is a saying in my country that says “el que no habla trabaja doble” It basically says that the one that doesn’t speak or doesn’t address its problems works double.

Not following through, “Most of the time and effort spent in planning for and conducting an effective interview is lost if you don't follow through with the actions/plans discussed in the evaluation”. 7 (HRN performance solutions)

Not giving the proper feedback, “critical aspects of managing an individual’s performance are daily interactions and feedback. Performance that is not actively managed is nonetheless influenced by default. Failure to provide feedback means employees are unaware of whether their performance is acceptable and valued and can be a major disincentive to stay with the organisation. Furthermore, failure to manage negative performance can have harmful consequences on the morale of the rest of the work team” 6 (Government of South Australia)

Listen to employees feedback, do not ignore the employees comments, if the manager does not agree he can tell them why and then they can discuses it, but ignoring a comment can be very damaging, it can even lead to an employee not to participate in meeting or share their ideas.

Overemphasizing Good Performance, “compliments quickly become meaningless if they aren't specific and substantive. They can also give an employee the false impression that you are completely pleased with everything he does. Be honest and direct.” 7 (HRN performance solutions)

“The Halo Effect, “Allowing one highly favourable (or unfavourable) employee behaviour or characteristic to affect judgment about the entire appraisal ignores other employee strengths and weaknesses.” 7(HRN performance solutions)

Performance Management is a method by which a business Owner can ensure that his or her business is constantly growing and achieving at the level they desire, its important to do it no matter what, it will help achieve the employee and organization goals. With a good plan in performance management creates an engaged and aligned workforce. Without one, your organization could lose more than just time and money – you could lose knowledge, employees and, in the end, your competitive edge. 8 (Josh Greenberg)

1. US Department of the interior “Performance Appraisal Handbook” 2004 2. Human Resources at UC Berkeley “Concepts & Definitions” 3. Business dictionary “Performance Appraisal” 4. Aaron 2011 Difference between Performance Management and Performance Appraisal 5. Erik Britten, 2011
“Performance Management Best Practices: What are your 3 tips for managing employee performance?” 6. Goverment of South Australia “Managing People, Managing Performance” page 17 7. HRN performance Solutions, 2012, “15 Common Errors Managers Make When Appraising Employees” 8. The Key to Successful Performance Objectives By Josh Greenberg

Other Sources:
- Cleland David, Munsey Wallace. 1967 “Who Works with whom?” Harvard Business 84 - Goldman, Marshal and Conner Alice, “Businessmen Appraise East-West Trade”.1966. Harvard Buisness Review page 6 -Barrett Rowena “Factors affecting Perseptions of workplaces Industrial Relations Climate” International Journal of Emplyment Studies, volumen 3 number 2 october 1995 page 77 - - Martin Haworth Performance Management - Five Easy Steps To Success -

Updated: Apr 12, 2021
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Performance Management and Performance Appraisal. (2017, Mar 23). Retrieved from

Performance Management and Performance Appraisal essay
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