The Difference between Performance Management and Performance Evaluation

Marlon Mai January 29, 2015 3 mins read

1.A Vital Tool

Performance management and performance evaluation are different things, but many companies fail to see this difference, concentrating their efforts on the evaluation part only. So much so that some companies have specially set up performance evaluation teams, which carry out daily, weekly and monthly target evaluations and then give out grades and apply punishment and reward. Such an approach can lead to staff attaching excessive importance to meeting their own performance targets and neglecting team work, which can affect the stability of the team. Performance management, on the other hand, is a tool which raises the performance of the whole group, as well as of the individuals.

2.Strategy comes first

What happens in many cases is that when a company stubbornly insists on carrying out a performance evaluation without having clearly defined their strategy first, things quickly crumble while evaluation scores rise. Quality control experts from the US have formulated what is known as a PDCA Cycle. P stands for Planning, the need to work out a performance plan, D stands for Do – communicating performance results and receiving tutorship, C represents Check – performance evaluation and feedback, while A stands for Action – improving performance based on the diagnosis made. The reason that P comes before D, is that if your Planning is not clearly defined, anything that comes afterwards is a waste of the company’s manpower and resources. A good strategy must be easy to understand and at the same time be a motivator for staff. It must also give clear directions for staff on where to apply their efforts, achieving a win-win situation for both the company and the staff.

3.The Structure of the Organization is the Scaffolding for the Performance

If you want to build a high-performance team, you must first find the right people, who will together form the right team for the job. The team is the foundation and the scaffolding on which the performance of the company depends. We do not believe that a high ranking trouble-shooter manager, parachuted special-forces style into a company can solve absolutely any problem. A company, as it grows, must rely on its own people when there are performance-related issued that need to be taken care of, but, admittedly, a “parachuted in” trouble-shooter can objectively identify and solve problems.

4.The Importance of Feedback

First of all, feedback must be honest, and the manager responsible must be courageous in making decisions. Company culture can only be fostered if there is honest performance feedback. Only if feedback is rigorous can a company install and nurture in their staff the importance of attention to detail and of taking full account for their own words and actions. Secondly, you must be brave when giving feedback, this is a problem of rank and position - the manager responsible for a company’s performance assessment ultimately cares that the targets are met, and his or her way should be followed. There must be no beating about the bush, especially when dealing with employees who need to improve their performance. A simple principle of performance evaluation is that it must not come as a surprise to the employees. However, in actual fact, many companies only carry out performance evaluation twice a year, thus missing out on opportunities to improve and make things change. Only timely, specific, on-the-spot feedback can make performance feedback worthwhile, allowing the company to get to the root of the problem.

5.Sharing the profits to maintain motivation

If a company is doing well it means further investment and greater profits, but it also means that there are promises to honour, that the profits must be shared with the staff (as bonuses, for example). Moreover, outstanding employees, potential managerial material, can be picked out, which is an important part of the end result of performance evaluation. High performance score for a team means higher expectations for the future, and new, higher, performance targets, thus starting a new cycle of performance management and improvement.

Marlon Mai's picture
Managing Director | Finance & Accounting, IT, Sales & Marketing Recruitment
mmai@morganmckinley.com