The Differences between Performance Management and Performance Appraisal - Case Study Example

The Differences between Performance Management and Performance Appraisal Name Professor Institution Course Date The Difference between Performance Management and Performance Appraisal The word “performance” has been popular in business and management arena over the decades. Its popular is attributed to the fact that companies actually competes in terms of performance. The most popular research on performance has been performance and performance appraisal due to their great influence on organization competitive advantage (Toppo & Prusty 2012, p.1) Even though these terms are sometimes used synonymously, they are actually different. Therefore, this essay will describe and discuss the difference between performance management and performance appraisal. In addition, the essay will discuss the characteristics of an unsuccessful versus a successful performance management. Briscoe and Claus (2008, p. 107) defined performance management as the systems whereby an organization set task objectives, set performance standards, allocate and appraise work, offer performance feedback, set training needs and offer rewards. Similarly, Armstrong (2006, p.63) described performance management as the practice whereby employees and managers collaborate in planning, monitoring and reviewing the employee’s task goals and general contribution to an organization. On the other hand, Toppo & Prusty (2012, p.1) defined performance appraisal as the systematic assessment of individuals with reference to their performance on a particular task and their potential for the growth. Obisi (2011, p.93) defined performance appraisal as a measurement of the input a member of an organization contributes towards the realization of organizational goals. The effort an individual puts in the job could be excess of or below the expectation of the manager. Performance management and performance appraisal have been regarded as one of the topical issues which have dominated the research in management in the 21st century. Many theorists claim that between the performance management and performance appraisal, the later was the first to be created by many companies. Performance appraisal is regarded as oldest and the most widespread practice among the two (Tripathi 2006, p.26). While focusing on performance appraisal, several managers considered human capital as the only factor for performance. However, researches in human resource management have shown that organizational performance is not only contributed by human capital but also labour and employee relations. Management experts believe that employees’ relationship with employer determines the performance of the organization. Several literatures has documented the challenges the companies face with their emphasis on performance appraisals, a situation which has made some management theorists to recommend for the elimination of approach so as to focus on performance appraisal (Akinbowale & Lourens 2013, p. 21). As a result, numerous firms have moved from performance appraisal of the employees to performance management. From this shift, it is clear that there are differences between performance management and performance appraisal. The differences in these two factors are in terms of approach, focus, alignment, methodology and advantages and disadvantages. Toppo and Prusty (2012, p. 5) argued that performance appraisal is narrowly focusing on evaluating the level of achievement of an employee whereby supervisors play a key role in reviewing employee’s past performance without asking for active involvement of such staff. On the other hand, Toppo and Prusty (2012, p. 5) claimed that performance management often focuses on planning ahead as opposed to focusing backward, the emphasis is on continuing dialogue rather than ratings. In other words, performance management is done in real-time perspective and is engrained on the daily work of an employee. Pareek and Rao (2006, p. 56) opined that the managers have realized that it is vital to concentrate on the planning and the management of performance as opposed to just appraising performance. While many thought that performance appraisal is just traditional approach of measuring the employee’s performance and that the two have no differences, the truth is that performance management is more than performance appraisal. Toppo and Prusty (2012, p. 3) posited that the competitive nature of business market which is fast growing has compelled several companies to change from the performance appraisal which is reactive in nature to performance management which is the proactive in order to improve productivity and the organizational performance. Due to such competition, companies need to be proactive to solve future challenges as opposed to reacting to the past challenges. DeNisi and Pritchard (2006, p. 256) claimed that this can only achieved by performance management as opposed to performance appraisal which focuses on the past. The difference between performance management and performance appraisal also emerges in terms of approach. The Performance Appraisal regarded as an exposition journey within an employee’s past working year in which managers or supervisors involuntarily judge the performance of employee (Toppo & Prusty 2012, p. 5). On the contrary, performance management roots for a relationship where a manager or a supervisor acts as a coach to an employee and adds to the growth of the staff. In this context, the manager or a supervisor takes the responsibility of a mentor or a coach. Armstrong (2006, p. 72) postulated that while performance management is often influenced by the idea of relationship dubbed, “management by the agreement”, the performance appraisal on the contrary is carried out on the basis of “management by the command”. The difference in these two factors has also been presented in terms of alignment. Quite frequently, the yearly appraisal is the performance on staff anniversary that does not correspond with any definite performance phase (Toppo & Prusty 2012, p. 5). The situation makes it almost impractical to align staff goals with the firm’s strategic objectives because they are modified or released. If the employees’ appraisals are carried out annually on the date of anniversary, it is simply feasible to align only 50 percent of employees with future goals. DeNisi and Pritchard (2006, p. 257) argued that since the expectations are changed or modified as the performance management is introduced, many organization moves to defined period which implies that performance evaluation are carried out half yearly or quarterly and allows the manager to focus his efforts to the goals which require to be performed based on strategic plans. According to Snell and Bohlander (2007, p. 48) performance appraisal is a practice, classically carried by a manager to the subordinate, developed to assist the employees recognize their responsibilities, expectations, objectives and performance. In addition, the two scholars described performance management as a practice of building the work environment whereby individuals can maximize their potential (Snell and Bohlander 2007, p. 48). Performance management entails a complete work system which starts when the job role is first defined. Therefore, performance appraisal is seen as a means by which managers store some periodic goal to his staffs, removes the anticipated role and clarify the performance achievement by their real performance with set standard. On the contrary, Colville and Millner (2011, p. 36) pointed out that performance management allows building to working environment where employees can operate to achieve the desired goal. Building such environment entails recruiting the best employees, defining job roles, motivating staff, good remuneration and creating a good rapport with them. As opposed to performance appraisal which can give a chance to less qualified employees to work then evaluating their ability later, performance management is strict on recruiting and insist of strategic human resource planning (Darwish & Singh 2013, 676). It means performance management put more emphasis during recruitment by matching job requirement and qualities of candidate. In that case, performance appraisal is not much needed as the recruited candidate already have what is needed to perform to the market expectation. However, Toppo and Prusty (2012, p. 5) opined that it should be noted the performance appraisal is a component of performance management. The Characteristics of an Unsuccessful Versus a Successful Performance Management As stated earlier, Briscoe and Claus (2008, p. 107) described performance management as systems whereby an organization set task objectives, set performance standards, allocate and appraise work, offer performance feedback, set training needs and offer rewards. From the definition, it means it is an approach to management which contains several processes. The success of the Performance Management therefore depend on job description, nature or objective setting, communication (feedback) and nature of training among others. Pollitt (2005, p. 25) claimed that for a performance management to be successful the components must be done on a systematic way and employees also need to be satisfied and feel value addition in their daily work. Proper definition of job role is one strong characteristic of successful performance management. In fact, performance management often starts with definition of job roles (Toppo & Prusty 2012, p.3). Defining jobs roles is a key factor for effective human resource management which ensures the organization gets the right people for the job. Job analysis helpful in defining job roles as tasks, responsibilities and correlations to some other jobs are determined. Similarly, personal qualities are also determined. Stone (2013, p. 31) claimed that the research has found out that many people usually apply for the job that matches their qualities and capabilities. A company which has employees with skills which matches their job requirements or roles has the successful or effective performance management system. In many cases companies create job roles in line with markets needs so as to increase performance (Stone 2013, p.32). Unsuccessful performance management is, however characterized by lack of or improperly defined job roles. The situation allows even several unqualified people to apply hence complicating selection and hiring. Successful performance management is characterized by effective communication and feedback. Management theorists claim that prior to adopting the performance management strategy in an organization, it is critical for a manager to communicate its goals to all staff who would be affected (Toppo & Prusty 2012, p. 4). An effective communication needs to articulate the job description and goals clearly. In addition, the staff needs to understand the alignment between the performance management and the general organization strategy. The performance management is often communicated during the recruitment by informing them the objectives of the organization. In this way, the employees know the kind of performance is expected of them. Feedback is another characteristic of performance management which is highly needed in the organization. Toppo & Prusty (2012, p.1) postulated that feedback shows employees whether they have attained the set objectives and areas they need to adjust. Unsuccessful performance management is one without proper communication to the employees. If the performance management is not communicated to employees, they are likely to lack vision and not know whether they are performing as expected (Akinbowale & Lourens 2013, p. 21). If not communicated, performance management might not be supported by some employees hence may not be successful. Furthermore, Fryer, Antony and Ogden (2009, p. 479) claimed that successful performance management is characterized by proper training. Performance management also comprise of performance appraisal which is the evaluation of individual in reference to a particular task. However, if the result shows some expectations are not met, training is always recommended. The research has shown that such training aims at improving how such task is carried out to enhance the overall performance (Toppo & Prusty 2012, p. 2). In conclusion, the essay has established that performance management operates the holistic viewpoint of matching the objectives of an organization with staff’s performance. The essay also found that performance management is more of employees’ development and seeks to offer them continuous feedback about their jobs hence motivating them to fulfill the required performance standards. This is different from performance appraisal that is carried out once, twice or thrice yearly. Due to its importance in human resource management and competition, several organizations have since moved from performance appraisal to performance management. The reason for this is also attributed to the fact that performance management comprise of every organization process which decide how well the staffs, groups and the organization will perform. Such processes consist of strategic HR planning, strategic recruitment, training and compensation among others. The essay has also differentiated the characteristics of successful performance management from unsuccessful one, and found out the differences lies in definition of job role, communication and training. References Akinbowale, M.A & Lourens, M.E 2013, ‘Role of Performance Appraisal Policy and Its Effects on Employee Performance’, European Journal of Business and Social Sciences, Vol. 2, No.7, pp. 19 – 26. Armstrong, M 2006, Human Resource Management Practice, Kogan Page Ltd, Philadelphia. Briscoe, D.B & Claus, L.M.2008, Employee performance management: policies and practices in multinational enterprises. In: Budwah, P.W. and Denisi, A. (eds). Performance management systems: a global perspective, Routledge, Abingdon. Colville K & Millner D 2011, ‘Embedding performance management: understanding the enablers for change’, Strategic HR Review, Vol. 10, No. 1, pp.35-40. Darwish, T.K & Singh, S 2013, ‘Does strategic human resource involvement and devolvement enhance organizational performance?’ International Journal of Manpower Vol.34, No.6, pp.674-692. DeNisi A & Pritchard R 2006, ‘Performance Appraisal, Performance Management and Improving Individual Performance: A Motivational Framework’, Management and Organization Review, Vol. 2, Issue 2, pp. 253-277. Fryer, K, Antony, J & Ogden, S 2009, ‘Performance Management in the Public Sector’, International Journal of Public Sector Management, Vol.22, No.6, pp. 478-498. Obisi, C 2011, ‘Employee performance appraisal and its implication for individual and organizational growth’, Australian Journal of Business and Management, Vol.1, No.9, pp.92-97. Pareek, U & Rao, T.V 2006, Designing and Managing Human Resource System, Oxford and IBH Publishing Co. Pvt. Ltd. Pollitt, C 2005, ‘Performance Management in Practice: A Comparative Study of Executive Agencies’, Journal of Public Administration Research and Theory, Vol.16, pp.25- 44. Snell, S & Bohlander, G 2007, Human Resource Management, Thomson South-Western. Stone, R.J 2013, Human Resource Management, 4th ed, John Wiley & Sons Australia. Ltd. Toppo, L & Prusty, T 2012, ‘From Performance Appraisal to Performance Management’, IOSR Journal of Business and Management, Vol.3, No.5, pp. 01-06. Tripathi, P.C 2006, Human Resource Development, Sultan Chand & Sons Educational Publishers. Read More