Most organizations have some type of employee appraisal system, and many are experiencing the shortcomings of manual

staff evaluation systems. Often the distinction between performance management and performance appraisal is not clearly understood. Performance Management is used to ensure that employees' activities and outcomes are congruent with the organizations objectives and entails specifying those activities and outcomes that will result in the firm successfully implementing the strategy (Noe et al. 2000, p.55). Performance management approach reflects several things: Total Quality: Total quality management concepts advocated by management experts like W. Edwards Deming. Deming argued that an employees performance is more a function of things like training, communication, tools and supervision than of his or her own motivation. Performance managements emphasis on the integrated nature of goal setting, appraisal and development reflects this assumption. Appraisal issues: Traditional performance appraisals are often not just useless but tense and counterproductive. Strategic focus: Performance management recognizes that in todays glob ally competitive environment, every employees competencies and efforts must focus on helping the company achieve its strategic goals. So, an effective Performance Management process establishes the groundwork for excellence by:

Linking individual employee objectives with the organizations mission and strategic plans. The employee has a clear concept on how they contribute to the achievement the overall business objective, Focusing on setting clear performance objectives and expectations through the use of results, actions and behaviors, Defining clear development plans as part of the process, and Conducting regular discussions throughout the performance cycle which include such things as coaching, mentoring, feedback and assessment.

Appraisals regularly record an assessment of an employee's performance, potential and development needs. Performance appraisal is a procedure that involves few steps: 1) Setting work standards. 2) Evaluating an employees current or past performance relative to his or her performance standards. 3) Providing feedback to the employee with the aim of motivating him or her to eliminate performance deficiencies or to continue to perform. Performance Management shifts the focus away from just an annual event to an on-going process. Figure 2.1 is a process diagram that provides a graphical view of the major differences between the two processes.

Figure 2.1 - Graphical view of the difference between Performance Appraisal and Management www.peoplestreme.com Some major distinction can be drawn among performance appraisal and performance management system: Performance management, measured by quantitative method, emphasizes on integrating organizational, team and individual activities where performance appraisal which is measured by both

quantitative and qualitative method, emphasizes on individual objectives. Performance management does not have direct link to rewards whereas performance appraisal ids often linked to pay. Performance management is owned by line management where human resource department own performance appraisal. Performance management is future focused but performance appraisal is focused on past performance.

In short, performance appraisal is used in shorter term and performance management is much broader which include performance appraisal. So, it can be said that performance appraisal is a component of performance management.