Is Performance Management the Same as Performance Appraisal?

What is Performance Appraisal?

Performance Appraisal refers to a reasoned evaluation of an individual's performance against predetermined criteria. On the other hand, performance management refers to managing an organization's human resources. While performance appraisal is an annual activity, performance management is a continual process that does not end.

Performance appraisal is described as a manager's evaluation of employees in which the management examines the employee's total contribution to the company. It is a systematic and logical evaluation undertaken yearly by the business to determine an employee's ability to execute a duty. It assists in identifying employees who do their duties well and those who do not and the reasons for the latter. It assists in analyzing an individual's skills and capacities for future development, hence increasing employee productivity.

Performance appraisal is a systematic method of assessing employee performance in which actual performance is compared to predefined criteria. The performance appraisal is recorded. Following that, the employee is given an evaluation of their performance during the year to identify areas for improvement. Additionally, employees want to know their status within the company after a certain time.

What is Performance Management?

Performance management is an ongoing process involving planning, monitoring, and evaluation of an employee's goals and overall contribution to the business. Performance management's primary objective is to motivate and enhance employees' efficiency and effectiveness.

Employees and managers alike engage in this process by creating targets, evaluating performance or progress, offering training and feedback to employees regularly to help them better, developing development programs for employees, and rewarding them for their accomplishments.

Both the employee and the company benefit from this procedure since it enables them to align the employee's combined objectives with the organization's ultimate goal while considering the individual's performance. Thus, the parties' aims became apparent, which aided in the achievement of the organization's overall goals and the growth and development of the employee as well.

Difference Between Performance Appraisal and Performance Management

There are some significant distinctions between performance appraisal and performance management. They are as follows −

Employees vs Organization

Performance appraisal is the systematic method of assessing employees' performance and potential for future growth and development. Whereas, Performance Management refers to the entire process of managing an organization's human resources.

Qualitative vs Quantitative

Performance management has a qualitative and quantitative approach as it involves ratings and continuous feedback.

Performance appraisal on the other hand, has a quantitative approach towards an employee’s performance. There is minimal scope for constant feedback. Usually, ratings are the only concluding measurement that is used for performance appraisal.

Process vs System

While performance appraisal is a process, performance management is a system.

Clarity vs Lack of Transparency

In performance management, rules are clearly defined for the employees. There is an informed discussion about the goals and objectives of the organization in the process of employee management.

The objectives of the organization are not communicated to the employees in appraisals at times. There is a lack of transparency when it comes to performance appraisals.

Flexible vs Rigid

While performance appraisal is rigid, performance management is flexible.

Strategy vs Efficiency

Performance appraisal is an operational technique for increasing staff efficiency. In contrast, performance management is a strategic tool.

HR vs Managers

Performance appraisal is handled by the organization's human resources department, whereas managers are accountable for performance management.

Present Learning vs Future Expectation

Corrections are made retroactively in performance appraisal. Performance management, on the other hand, is forward-looking.

Occasional vs Continues

While performance appraisal is a one-time or occasional event, performance management is a continuous practice.


As a result, we categorically state that performance appraisal and performance management are two distinct concepts. However, they cannot be considered contradictory since performance appraisal is a performance management component. In this sense, performance management is a broad word that encompasses many phases.

Updated on: 29-Apr-2022


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