Explain the difference between performance management and performance appraisal. Why is the distinction important?

Question

What will be an ideal response?

Answer 1

Performance management is a kind of compass, one that indicates a person's actual direction as well as a person's desired direction. Like a compass, the job of the manager is to indicate where that person is now, and to help focus attention and effort on the desired direction. Unfortunately, the concept of performance management means something very specific, and much too narrow, to many managers. They tend to equate it with performance appraisal, an administrative exercise they typically do once a year to identify and discuss job-relevant strengths and weaknesses of individuals or work teams. This is a mistake. There are solid organizational payoffs for implementing strong performance-management systems, as a recent study found. Organizations with such systems are 51 percent more likely to out-perform their competitors on financial measures, and 41 percent more likely to out-perform their competitors on nonfinancial measures. Obviously, if performance management were easy to do, more firms would do it. One of the reasons it is difficult to execute well throughout an entire organization is that performance management demands daily, not annual, attention from every manager. It is part of a continuous process of improvement over time. Performance appraisal is a necessary, but far from sufficient, part of performance management.