Armstrong (2006a, p. 496) defines performance management as a planned process and identifies agreement, measurement, feedback, positive reinforcement and dialogue as its key elements. The process focuses on the future and integrates values, behaviors, and inputs which help to enable an employee or manager achieve clearly enunciated goals. This process is beyond simply evaluating outcomes.Lawler (2008, p. 10) characterizes it as a systemic process and emphasizes multiple meetings with employees to review skill and knowledge development. It is consciously referred to as a process rather than a system (Armstrong 2006b, p. 144), as it is dynamic in nature and continues year round. Each organization adapts the process according to its own needs, environment, and complexity of work and creates a localized system. The process is also meant to be flexible and can adjust to changing organizational requirements and stay aligned with them. The performance management process entails a two-way communication between the employee and the manager with dialogue and agreement on performance and development objectives. This ensures active participation of the employee in his or her own development and that all measures necessary to enable the employee to perform well are taken at the right time. As performance and development issues are to be regularly discussed, the process is managed by line managers themselves rather than HR.In contrast, a performance appraisal system is typically a once in a year activity where objectives are set at the beginning of the year and outcomes are assessed at the end to gauge the employee’s performance. Even though some organizations increase the frequency of appraisals to more than once a year, there is no in-built adaptability to changing requirements. Appraisals also inherently have a one-way information flow where, at the time of appraisal, the manager informs the employees how well they performed retrospectively.
Performance Management Cycle