What is the Difference Between Performance Management and Performance Appraisal

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What is the difference between performance management
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I. Contents of getting what is the difference between
performance management and performance appraisal
Although human resources purists point out the numerous distinctions between the two, in
practice, performance appraisal and evaluation are used interchangeably. Both refer to a process
by which your employer reviews how well you've done your job and possibly determines any
increases in salary or benefits you'll receive as a result. In strict terms, however, an evaluation
generally precedes an appraisal.
The Cart Before the Horse
In the "Encyclopedia of Business," second edition, the selection titled "Employee Evaluation and
Performance Appraisals" groups both terms together, noting that in some cases, evaluation is one
step in a performance appraisal, which in turn is a broader part of an organization's performance
management system. In an evaluation, a person intimately aware of an employee's work -- such
as a supervisor, manager or peer -- provides feedback on measures such as work quality,
punctuality and job skills. In the strictest sense, performance appraisals attempt to assess the
overall value of an employee's work in terms of contribution to business objectives.

According the Society for Human Resource Management (SHRM), performance appraisals are
the tail end of a long chain of business procedures. They start with your business's strategic plan,
which lays out goals for the company to reach through a set of strategies. These strategies are
fulfilled by individual business units, which heavily determines how individual job tasks and
requirements are defined. These looming goals and strategies also play a role in setting the skills
and core competencies each employee must have to successfully complete her job and contribute
to meet the strategic goals.
These factors, in theory, form objective measures on which to evaluate an employee's actual
performance. Performance consists of behaviors as well as results. In the end, individual
components of the appraisal are weighted by a pre-determined scheme. For example, conducting
work tasks might be more important than "organizational citizenship" qualities like being a team
An evaluation can occur outside the context of determining an annual pay increase. Ideally,
informal employee evaluation is an on-going process in which an employee receives routine
feedback on how he's doing. Logistically speaking, performance appraisals and evaluations are
time-consuming, costly and conducted by subjective human beings. That's why in practice,
evaluation and appraisal look alike. In an evaluation form template offered by HR World, a
leading online human resources community, an evaluation measures topics such job skills,
quantity and quality of work, work habits, communication, initiative, judgment and leadership.
Evaluations sometimes take into account goals set between the employee and his supervisor, as
well as an employee's self-evaluation.
The Downside
Talk to any group of human resources and business leaders and you're likely to hear many
opinions about the fairness, accuracy and usefulness of performance appraisals and employee
evaluations. A 2010 "Wall Street Journal" article said that everyone "hates" performance
appraisals and likened them to rotten milk. Among the criticisms are that they're tied to a date on
the calendar, rather than need, and that few people get to say what they really think. The process
also drives home the illusion that the boss's opinion is the key to an employee's pay raise and
career progress.
But evaluations and appraisals can also be litigation risk factors. Employee management experts
speaking in "Indiana Court Times" question whether employers should do them at all, and a legal
expert for SHRM says as faulty as they are, evaluations and appraisals are often used against
employers in court cases.

III. Performance appraisal methods

1. Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage – It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages – It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales
statements of effective and ineffective behaviors
determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages – helps overcome rating
errors. Disadvantages – Suffers from distortions
inherent in most rating techniques.

3. Rating Scale

Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages – Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages – Rater’s biases

4. Checklist method
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages – economy, ease of administration, limited
training required, standardization. Disadvantages – Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
Limitations of Ranking Method
The “whole man” is compared with another
“whole man” in this method. In practice, it is very difficult
to compare individuals possessing various individual
This method speaks only of the position where an
employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method

The approach is focused on certain critical behaviors of
employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages – Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages – Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

III. Other topics related to What is the difference between
performance management and performance appraisal (pdf, doc
file download)
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