In considering the nature of performance management and performance appraisal it is primarily needed for managers and supervisors to appreciate how these two aspects are related yet, should not be seen synonymously. In fairly simple terms performance based pay can be seen as a holistic process which aims to bring together a number of aspects, including appraisal. Thus, performance management may be thought of as being more strategic in its intent to achieve high levels of organizational performance. By contrast, performance appraisal is best seen as “being more operationally focused, with a focus on individual employee’s short- to medium-term performance and development” (CIPD, 2005a). Consequently, to fully contextualize the notion of performance appraisal it is important to locate it within wider issues concerned with performance management systems which may have an organizational, team or individual focus. Armstrong (2001: 469) suggests that performance based management has a number of aims:
Performance management is about getting better results from the organization, teams and individuals by understanding and managing performance within an agreed framework of planned goals, standards and competing requirements. It is a process for establishing shared understanding about what is to be achieved, and an approach to managing and developing people in a way which increases the probability that it will be achieved in the short and long term. It is owned and driven by management.
Clearly, then, organizations are always seeking improvements in their performance and these can be sustained by either development-type initiatives or more evaluative or even punitive measures, potentially encompassing aspects of discipline. In that sense performance management and performance appraisal can arguably be seen to again reflect to some degree the notions of ‘hard’ and ‘soft’ HRM. For example, the harder approaches would point to the need for organizations and managers to seek control over their employees; on the other hand softer approaches would point to the role of PMS in establishing greater commitment and developing careers. Recognizing the above discussion this article will aim to consider the question of what options are open to an organization seeking to improve the performance of its employees. Recent research undertaken by the CIPD provides a snapshot of a number of features of performance management, as outlined in Table 8.1.Clearly one of the most important aspects of enhancing performance is performance appraisal, which is a critical element of performance management and a key feature of organizational life. As Bach (2005: 289) notes, “performance appraisals have become far more than just an annual ritual and are viewed as a key lever to enhance organizational performance”. Performance appraisal is defined by Heery and Noon (2001: 7) as “the process of evaluating the performance and assessing”.
Table 8.1 Features of performance management
Feature Percentage Individual annual appraisal 65 Objective setting and review 62 Personal development plans 62 Career management and/or succession planning 37 Coaching and/or mentoring 36 Competence assessment 31 Performance related pay 31 Self-appraisal 30 Twice yearly/biannual...