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Pick The Best: Performance Management vs Performance Appraisals

A company requires more than just machinery and more workforce to succeed. There are many processes conducted regularly that make an organization better. The same can be said for Performance Management, which develops every employee individually.  

However, it is often confused with performance appraisals. Is it a difference between them? Well, there are several!  

But, if you are not familiar with both of them, no need to worry. This article will tell you everything you need to know about performance management and performance appraisals, along with the differences between them.   

Performance Management vs. Performance Appraisals – A Detailed Guide  

What is Performance Management?  

The process of tracking every employee’s performance is known as performance management. However, there is a lot more to it. It develops an organization by working on its workers which are directly aligned with hr performance management.

Whether it is about fulfilling needs, clarifying company goals, setting objectives, increasing productivity, or conducting performance management training sessions, everything is a part of performance management.   

For the process of performance management, performance management tools and software are commonly preferred. These applications are practical and efficient for both regular and remote companies.   

In short, performance management directly benefits the organization by focusing on all minor and significant employee activities.   

What is Performance Appraisal?  

The regular view of an employee’s contribution to the company is called “performance appraisal”. Usually, organizations conduct this annually to review their workers individually. Therefore, it is also commonly referred to as performance review or performance evaluation.   

That is because it evaluates an employee’s skills, growth, and achievements in the company. This assessment is based on feedback and performance records.   

Unlike performance management, it is a schematic process with several steps. To measure performance appraisals, managers should set certain expectations or standards for every employee to meet. And the output is usually produced on paper.  

Why Do Companies Need Both Performance Management and Performance Appraisal?  

Now that we know what performance management is and appraisal let’s see why they are essential.  

The primary purpose of having both processes in your company is to develop your employees. By focusing on and improving your workforce, your organization can go places.   

Both of them enhance employee retention and communication among the company. When their connection with the hierarchy and other workers is strong, your organization automatically prospers.   

In short, both Performance Management and Performance Appraisal improve a company’s core by fulfilling the needs and evaluating its workers.    

Differences Between Performance Management and Performance Appraisal? 

Performance Management focuses on increasing employee performance and productivity. Performance Appraisal evaluates employee performance and has does not focus on productivity alone. 
Performance Management is dynamic as it involves communication between employees and managers.  Performance Appraisals are not very clear in communication as they have a linear approach. All the discussion takes place after the process is done.  
Performance Management sets organizational goals, vision, and mission.  Performance Appraisals only look at the yearly employee’s performance and give feedback accordingly 
Performance Management considers both the present and future.  Performance Appraisal is conducted by considering the immediate past. 
Performance Management is strategized and evaluated to produce better results in the future. Performance Appraisal is retrospective as it considers only past events and situations to produce results. 
Performance Management is a continuous process by reviewing employee performance constantly. Performance Appraisal is done only once or twice a year. 
Performance Management is concerned about the growth of employees as it benefits the organization. Performance Appraisal is rigid as it is only concerned with generating an employee’s last performance and has nothing to do with the worker or organizational growth.  
A performance Management system is the most effective way to carry out this process. Performance Appraisals are usually conducted on document form. 
Performance Management software is flexible in terms of working and contains various tools. There is only a couple of ways to carry out Performance Appraisal as it is done manually. 


This guide has covered everything from performance management and performance appraisal to their importance in a company.   

Whether it is about performance management software or the yearly performance appraisal process, we have mentioned the significant differences between the two.   

After going through this article, you can easily distinguish the two and implement them effectively in your organization. 

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Written by Emily Helen Arnold

Emily Helen Arnold is a content writer at Teamflect. She is obsessed with organizational behavior studies and loves writing/thinking about how a carefully designed people strategy can transform a company.

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