Appraisal vs Performance Management

There is a major difference between typical appraisals and actual performance management.

Appraisal vs Performance Management

Most organisations have some type of employee appraisal or review system and are experiencing the shortcomings of manual Appraisal systems. In talking about Employee Performance Management, the question we are asked most often is “what is the difference between Appraisal systems and Performance Management”
Following is a process diagram that provides a graphical view of the major differences between the two processes:

Appraisal Predominant in Australia

Several studies have been conducted in Australia that indicates that the predominant method of assessing employees in Australia is Appraisal. Professor Alan Nankervis of Curtain University conducted a study of 992 Australian organisations in 2004 (note 1). One of the outcomes was that only 2.4% of organisations reviewed their employees against Objectives, the remaining 97.5 were a mix of some type of appraisal.

Note 1: Performance Management: A seven Country Study, Alan Nankervis, Curtain University, 2004.

Relationship between appraisal and organisational Performance Managers are typically very poor at managing retention. If they knew how, the problem would not exist. The issue for HR is why are Line Management poor at managing employee retention?

In our view, Appraisal adds little value to the performance of an organisation and in some situations may actually be detrimental to organisations who wish to move towards Performance Management. This is because line managers who have been conducting Appraisals have also seen little if any impact on departmental or team performance as a consequence of conducting these appraisals. It must however be pointed out that even if appraisals don’t contribute to organisational performance, there is a contribution to employee satisfaction because they are at least reviewed as opposed to no review at all.

Following is a detailed breakdown of the elements that make up both the Appraisal and Performance Management process.

Traditional Appraisal Systems

Definition

Appraisal systems were the precursor to today’s Performance Management. Appraisal systems are:

  1. Typically based on a review of how a person completed their job for the prior year
  2. Sometimes a pay review
  3. Sometimes a review for bonuses
  4. Sometimes an assessment of the employee for promotion
  5. Typically conducted annually or less frequently
  6. ‍Typically paper based where HR is the custodian of the information. Otherwise, they are conducted less formally and without any documentation
Typical Outcomes from Annual Appraisals

Annual appraisals or reviews are viewed by the staff and management as a difficult and painful process. The annual appraisal is usually:

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