A talented and skilled workforce is the lifeblood of every organization. As the need for talent escalates, companies are quickly learning the importance of having the right performance systems. Performance appraisal and performance management are often seen as two different approaches regarding the management of staff in an organization. Although their processes differ, they are not considered contradictory. Performance Management (PM) is a goal-oriented process directed toward ensuring that organizational processes are in place to maximize the productivity of employees, teams, and ultimately, the organization (Continuously) (Pearson,2015). Performance appraisal (PA) on the other hand, (sometimes referred to as a performance review), is the systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development (Annually, see Figure One for comparison). Organizations should utilize both performance appraisals and performance management. This because the major focus of HR practices is on the management of talent by implementing programs which evaluate and improve on the competencies of the employees. This analysis will support the fact that the annual procedure of performance appraisal is not completely different; but a key component in the continuous process that is performance management.
Both schemes involve setting performance targets, reviewing whether they have been achieved and preparing means for enabling employees to meet them. In addition, both systems set clear expectations on what is expected of an employee, sets guidelines on what comprises of successful job performance, and aims to identify the barriers towards effective performance. The key difference between performance management and performance appraisal lies in the application. Performance appraisal is a limited function that evaluates past performance, usually once or twice a year (Gluck, 2016). This makes it a distinct staff activity that does not interfere with an employee’s daily work. Performance management, is an ongoing proactive method for managing staff performance, and to ensure that employees achieve the set target on a real-time basis. It is a line activity which remains fixed in an employee’s daily schedule. The variances (highlighted in Table 1) between PA and PM help cover all bases required to establish effective employee performance management schemes. Some benefits of PA which are not achieved by PM include: motivating employees (through bonuses, perks ,etc), the length of assessments helps build relationships between staff of all levels, and reiterates that the staff member is important to the organization. To expand on the last point, staff may not consider the PM process as meaningful and believe that management are doing it, “because they have to”, not because they care. As PA occurs annually, staff will gain the feeling that higher up do appreciate their efforts to take the time to sit down and talk about how they are going. The impact of this interaction between supervisors and subordinates should not be underestimated. This covers the various gaps that need to be addressed, that PM cannot fulfill on its regular basis without having a negative effect on daily performance. It is these differences that demonstrates that PA helps achieve the goal of PM by detecting and correcting the performance inequalities that the daily PM process does not consider
Even though many organizations consider either one of the processes be conducted. They must work towards a management cycle where judgement is not the sole focus— ongoing support and improvement should be just as important. It is evident that in order for an organization to manage the performance of its staff to operate at their highest levels, both must be implemented in the business’s structure as one. The regular process of PM will allow businesses to achieve the bulk of its growth in organizational performance by achieving strategic goals. The annual use of PA will establish healthy relationships between staff and their managers. The positive impact on each employee will be multiplied and as a result, performance as a whole, will increase.