Performance Management vs Performance Appraisal

performance management vs appraisal

As the year end draws to a close, many HR leaders around the world are scrambling to get the employees within their organisation to complete their annual performance appraisal. For many managers, it’s that time of the year where they dread the most. Form filing, meeting their staff for review, and the occasional heated exchange between them and their staff over the ratings.

Performance Appraisal

Why is Performance Appraisal becoming a chore for many managers? In some cases, there are managers that simply fill up the ratings for their employee without going through the review session with them. Likewise for many employees, they go into these reviews with a defensive mind- set that brings little benefits to everyone.

Is it time for organisations to relook at the way performance appraisal is done within their company?

There are many organisations that are starting to implement Performance Management process in place of the traditional Performance Appraisal system. The key differences are:

Performance Management

  • On-going Process
  • Forward Looking (Future)
  • Long Term
  • Unlimited possibilities
  • Strategic
  • Joint process through dialogue

Performance Appraisal

  • One Time Event
  • Backward Looking (Past)
  • Short Term
  • Limited Outcome
  • Tactical
  • Top down approach

Performance Management

In other words, performance management is a process that starts with setting goals and performance targets for the individual. It also includes personal development planning, periodical reviews, talent management, ongoing performance coaching and the final performance review. As such, there should not be any surprises during the year end performance appraisal or review.

performance appraisal bell curve

Many of us are familiar with the Bell Curve Performance Appraisal model.   For the top 10-15% of high performers, they are very self-motivated and will continuously outperform their peers. For this group of performers, managers would typically recognise or reward these high achievers with incentives and promotions.

For the 70-80% mainstream performers, performance management can be effectively employed to get the best out of these group of employees. Many managers tend to neglect this important group that forms the bulk of the organisation. If managers takes the effort to coach these individuals from where they are currently, and helping them move a step up their performance ladder, there would be significant improvement to the overall business results and motivation for the staff.

Performance Standards

As for the low performers, many leaders tend to shy away from having a productive session with these employees. Either they do not want to confront some of these aggressive employees who feel they deserve better, or they simply do not have the skills and courage to deal with the situation.   We can broadly categorise these low performers into 3 areas; namely Competence, Compliance and Character.

A significant portion of low performers fall under the Competence category, where they lack the knowledge, skills and experience to perform the job. Managers can work with the employees to design training plans to upskill these workers or to assign co-workers to mentor them.


For the Compliance category, these employees tend to flout organisations policies and rules. Perhaps they have worked in other organisations where they have been conditioned to act and behave in certain ways that are not in line with the current organisation. For example, a maverick sales representative that have been used to closing deals in his own ways may find the current organisation process too cumbersome that he is seen as flouting all the policies and business ethics of the organisation. The manager could have a fruitful conversation with these employees by creating awareness in them and the resulting implications of their actions.

The most challenging group falls under the Character category. These employees are usually seen as having negative attitude towards their work, the inability to work with fellow colleagues or having some personal beliefs or assumptions that impedes their personal performance. The manager needs to have the courage to have that difficult coaching conversation that involves challenging their beliefs and assumptions. Short of doing that, it is unlikely that employee is ever going to get out of that bottom part of the bell curve.

character attitude

As the baby boomers generation moves into retirement age and a younger cohort of workers enter into the workforce, organisation would have to rethink of the ways they engage with the newer generation. The millennials expects their organisation and managers to engage them regularly. They want to see how their individual contribution are affecting the overall corporate social responsibility (CSR), and would only be motivated to stay on if there is a continuous personal development and career progression plan in place.

Performance coaching is a great skill to acquire for managers to engage throughout the performance management process. Whether it’s a 10 minutes conversation or a more structured performance review conversation, coaching skills have enabled many managers to have a fruitful conversation with their employees. No longer do these managers dread that year-end review anymore.

What are your thoughts?

Laurence Tan – ICF Certified Leadership Coach & Entrepreneur

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