We regularly find managers confused with talent management software. What’s the difference between performance appraisal, performance review, and performance management? In lots of cases the terms are, very unhelpfully, used interchangeably; however there are some very specific differences.
The greatest difference is between performance management and the other terms. Performance management is an ongoing process that should take place all year round. It is a set of activities as opposed to a single event, and performance appraisals/reviews are part of that annual cycle. Simply, performance management includes objective setting, development and training actions, one to ones, career discussion, and appraisal/performance review.
Performance review and performance appraisal, meanwhile, are generally considered to be interchangeable. However there are some differences in how they are commonly used in the UK. Performance review is more commonly used in the Public and Not For Profit sectors. Certainly in the NHS, the term PDR or PDP (Performance and Development Review or Process) is well known.
When you look at what each of these activities focus on, it is easy to see their similarities. Both performance appraisals and performance reviews tend to be a snapshot in time, generally focusing backwards on the previous year’s successes and challenges. In fact, that backward focus is where much of the criticism of the annual appraisal or performance review is aimed: the once yearly conversation really doesn’t work within today’s fast moving society.
However, there is a difference. Performance reviews tend to have a development bias while appraisals focus more on achievement of objectives – in reality we need to balance both, which is something the marketing jargon doesn’t usually explain! Within the annual cycle we should set objectives at the start of the year and then development should follow to support the achievement of these objectives. Development needs, therefore, should be discussed early enough in the annual cycle to allow employees to go on training courses, or whatever form of development their manager feels will be most beneficial. This will allow staff to deliver their best straight away, rather than at the end of the year when a course may be seen as a reward or worse, a token gesture. Strategically this should be seen as one synergistic performance management cycle that is aligned with the aspirations and goals of the organisation.
Whichever terminology you use, the main thing to remember is that it should all be about quality dialogue. We advocate the term performance management because it encompasses all of the different conversations that should take place on an ongoing basis for managers to get the best out of their staff. This includes performance appraisal, but remember it is not the be all and end all!
We have lots of supporting information on this topic, why not download our FREE white paper on making performance management simple below, which help to explain the whole process in detail.
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