Square Pegs and Round Holes: Ruminations on the Relationship Between Performance Appraisal and Performance Management

Models of comprehensive Performance Management systems include both employee development and evaluative components. The Organizational Behavior Management discipline focuses almost exclusively on the developmental component, while the Industrial and Organizational Psychology discipline is focused on use of performance appraisals. Performance appraisals have several well-documented shortcomings. Despite those limitations, an examination of Performance Management models suggests that they often include an appraisal component. However, there is little consensus on how Performance Management should incorporate appraisals. The authors argue that performance data should be an output of a Performance Management process, not as an input or starting-point for developmental activities. This emphasizes goal-setting, feedback, and coaching throughout the year, and performance data are aggregated to provide enough information about performance to facilitate administrative decision-making when needed. An optimal performance management system that serves both the developmental and administrative functions can be created by carefully combining the approaches of both disciplines.