Performance management vs. performance appraisal: What’s the difference?

By: Eileen Haggerty

What’s the difference between performance management and performance appraisal? We’ve had many clients ask us this question, and for good reason—the two terms sound very similar. However, they mean different things, so let’s clear it up here.

What is performance management?

Performance management encompasses how an employee is managed throughout his or her life cycle as part of the company. Performance management begins in the orientation and onboarding period, continues throughout the employee’s tenure, and involves the continuous feedback between employee and manager, colleagues, etc.

Learn how to successfully navigate your employees’ tenures, from hiring to retirement to everything in between.

What is a performance appraisal?

Performance appraisal, on the other hand, is one important piece of the performance management process. An appraisal is an easily identifiable, tangible evaluation that engages a staff member and provides immediate feedback.

For HR managers, appraisals are must-do items which should be protected at all costs. It’s easy for managers and employees to push appraisals off, but it’s important to deliver feedback to your employees. No matter how much they think they don’t need an appraisal, they do; we see over and over again that employee engagement is a touchstone for employee retention, and an appraisal is an important aspect of engagement.

Best Practices For Performance Appraisals

• Performance appraisals (also called evaluations) should happen and be documented at least once a year. The more frequent the appraisal, the better. Ideally, they should be held quarterly.
• HR professionals say that nothing in a performance appraisal should be a surprise, because managers should be delivering information continuously as part of their performance management.
• Performance appraisals should be documented. This is important because if a difficult situation arises, you have documentation surrounding it, which can support your decisions. Done correctly, that documentation can help your case in front of an attorney if need be.
• Documenting performance management may seem overwhelming, but it can (and should) be done both formally (the evaluation) and informally (as notes from conversations).

Appraisals + Ongoing Management = A Winning Combination

Ultimately, it’s not “performance management vs. performance appraisal”—it should be a combination of the two. When a manager stays on top of employees’ performance via performance appraisals, gives feedback frequently, and formally and informally discusses issues with his or her team members, that’s excellent employee performance management. Used together with regular appraisals, it creates a management strategy that works for the good of both the company and employees.