For any business it is important that all its resources are performing at higher performance with maximum efficiency. Every business small or large must have limited resources, hence they have to utilize their resources in a way that they can achieve maximum productivity and profitability. The performance management is also necessary for the business as it enables them to align all human resources, assets and strategies with the organizational goal and vision. Every business function and every operational tasks is dependent on the employees, if the employees are performing well they will produce better result hence the efficiency of each and every business process is dependent on the employee’s performance. Business in Dubai and all around the UAE are rapidly adopting performance management systems and tools. There are several reasons why businesses acquire a performance management or performance appraisal systems.
For any business or organization it is crucial to monitor and rectify problems and challenges that employees are facing in order to boost their performance. This will help businesses to obtain employee trust and loyalty which in return also increase performance. Furthermore the performance and progress should be in a direction to achieve something. All businesses and organizations always set their future goals, vision and mission. The enterprise’s performance is optimized and increased to achieve those high-level goals. In this blog we will cover performance management and performance appraisal and their importance.
What is Performance Management System?
A performance management system is a tool that facilitates performance management process. The performance management process is basically a set of all the efforts and activities a business do in order to keep its employees on track and aligned with the organizational goals. The main objective of doing performance management is that the employees and all other resources remain aligned with the high-level organization goal. The performance management process encourages employees to perform well and perform in the right direction so the high-level organizational goals can be achieved. The performance management process and system also enable managers and supervisors to engage with the employees and encourage them to work better.
What is Performance Appraisal System?
The performance appraisal system or process is a very simple process it measures the performance of the employee. Where performance management system provides a roadmap to achieve the organizational goals the performance appraisal system is used to measure the progress of each individual employees. The performance appraisal system is only used to measure the performance of the employees as per their progress towards the set goals and objectives. The performance appraisal keep records of the performances of the individual employees which can be used by the HR department as well. Basically the performance appraisal system tells business about how productive an employee is. This way businesses can easily identify the highly performing employees and reward them and businesses can also easily identify the employees who have become liability.
Difference between Performance Management and Performance Appraisal
The performance management and the performance appraisal both are used for employee performance however there are basic difference between the two methodologies. Here is a list of some fundamental differences between performance management and performance appraisal systems:
- Performance management help and encourage employees to improve their performance, while the performance appraisal only evaluate the performance
- Performance management evaluate an employee on the bases of past, present and future, however, the performance appraisal just measures the performance in the immediate past
- Performance management increase employee engagement and evaluate the relationship between employee and the employer, however, performance appraisal is individualistic
- Performance management continuously monitor employees, evolve strategies and focusing on employee development, whereas, the performance appraisal focuses only on the results
- Performance management includes one-on-one sessions and discussions, hence it is very dynamic. The performance appraisal have a top-down approach and is very linear
- Performance management always encourage employee development and help facing challenges in present and future however the performance appraisal focuses only past performance
- Performance management offer real-time reviews and continuous feedback however, performance appraisal only offers feedback once or twice in a performance period (usually 1 year)
- Performance management is better future equipped and easy-to-scale however, the performance appraisal is usually focused on the past performance of the employees
It is clear now that the performance management system and performance appraisal systems are designed and used for completely different purposes although both are covering employee performance management.
Why a Business Should Use Both Performance Management and Performance Appraisal?
The performance management is a continuous process which keeps monitoring the employees and their progress in real-time. This provides the management an added advantage of allowing them to quickly set course or make adjustments if any employee deviates from their set path. This advantage is not available in the appraisal method. However, the performance appraisal process can accurately measure the actual contribution or value of the efforts of the employees towards the high-level organizational goal and objective. That is why it is important to use both systems in parallel. Businesses use performance appraisal system to generate performance data for HR. The performance appraisal will provide accurate employee performance to the HR on the bases of this performance the HR can plan bonuses, awards, promotions, demotions, transfers, training program and much more.
The performance management system on the other hand provides a comprehensive strategic and tactical data which not only measure the employee performance but also help businesses and organizations to set goals, build strategies to achieve those goals, make plans, and assign individual and team goals as per the requirements. The performance management system also helps businesses in communicating those goals and objectives with the employees and also guide them how they could and should perform in order to achieve their individual and high-level goals and objectives. The performance management system can also generate data which can help businesses in understanding their resources, technical skills, and capabilities of each individual employee. This will help businesses in future and it will enable them to make more realistic and practically sound decisions.
A good quality performance management system help businesses and organizations to achieve their long term strategic and financial goals. When the performance management system and the appraisal systems both are used combined the effectiveness and results will be improved significantly. Here are some benefits of using employee performance management system and appraisal system:
- Improve Communication between Employee and Management
- Convey Goals and Objectives more Effectively
- Communicate the Performance Requirements/Needs and Expectation more Effectively
- Enable Employees to Evaluate themselves and Provide Feedback about their Individual Goals and Plan of Action to achieve those Goals
- Aligning Employees and Resources with the High-Level Organizational Goals and Objectives
- Improve Communication all across the Organization and Improve Relationship between Employees and their Managers
- Real-time and Continuous Feedback Makes it Easier for Employees to Communicate with the Management
- Help Management to Monitor the Performance of the Entire Business or Organization
- Enable Management to Swiftly Take Actions to Rectify Problems and Help Employee Facing their Challenges
- Increase Employee Engagement, Gain Employee Trust, and Increase Employee Retention
These are some of the most obvious benefits of combining the performance management system and appraisal system.
The performance management and performance appraisal systems when used together can fix drawbacks and gaps of each other. For example:
- The performance management system can increase the communication and fill the communication gap which usually occurs in performance appraisal management
- The performance appraisal doesn’t clearly communicates the high-level organization whereas the performance management system clearly communicates individual and high-level organizational goals as well as it also include employees in planning and strategy building processes which increase employee engagement
- The performance appraisal process worries employees, as the appraisal is done only once or twice the year, and that is the reason most of the employees doesn’t show trust on the appraisal process. However, the performance management process includes regular and continuous employee reviews. Which not only gain employee’s trust and reduce their anxiety but it also help improving the communication between the employee and the manager.
- The performance appraisal methods emphasize on increasing the performance and doesn’t clearly communicate how the employee should improve their performance or what is expected from them in the future. On top of that most of the time the communication is very low. The performance management process clearly communicates the goals and objectives, both individual and high-level goals and objectives are defined. The employees are provided with the guidance on how to achieve their objectives and how to improve the performance.
- The performance management is continuous and it can collect all the details about the employees and their performance. This data can be made available for the management at any time. However, in performance appraisal methods the evaluation is done once or twice in a year.
- The performance appraisal method lacks the employee personal development strategy. However, the performance management focuses a lot on employee’s personal development program to ensure the business always have the required workforce. The personal development program can increase employee engagement and it also help increasing loyalty. However, if the employees feel there is no scope for their personal development then they will leave.
- The performance appraisal methods doesn’t help much in increasing employee engagements, gaining employee trust and improving employee retention. However, the performance management methods boost employee engagement and help building a sense of belonging and connection with the business. This also make employees happy and satisfied and it also increase employee retention.
The performance management and performance appraisal both are tools to boost business’s performance. If the employees and other resources start working at their true potential the productivity and profitability increases. That is why both system are important and when used combined can have additional benefits as well.
Conclusion
For any business in Dubai or anywhere else in UAE achieving the high-level organizational goals is a key to success. Businesses use various methods and tools to improve the employee performance. The employee performance is crucial if a business wants to achieve their high-level goals and objectives. The employee performance can be improved by communicating them the goals clearly, assigning them the objectives & tasks, and monitoring them to understand if they are going in the right direction. The performance management and appraisal ensures that the goals and objectives are established and communicated clearly and there is a monitoring mechanism in place which can immediately highlight if an employee is deviating from their set path and allow the managers to take timely actions to reset course.
The performance management also help businesses in evaluating employees and understanding their true potential, skills and capabilities. This help HR in several functions and also provide intelligence data for employee personal development and reward schemes. In short the performance management and performance appraisals are absolutely necessary for a business and its long term growth. RSI Concepts is a leading name in developing and designing performance management systems and tools, if you need any help in your business’s performance management or if you want to learn more about the topic, please feel free to contact us through our Contact Us page or leave a comment in the comment box below and we will get in touch with you soon.
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