Difference between Potential Appraisal and Performance Appraisal

Learn about the key differences between Potential Appraisal and Performance Appraisal.

Potential appraisal helps to identify the hidden talents and potential of the individuals. Identifying the potential talent facilitates in preparing the individuals for higher responsibilities and positions in the future.

Performance appraisal is a part of career development. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals.

Difference between Potential Appraisal and Performance Appraisal

Difference between Potential Appraisal and Performance Appraisal

Performance appraisal is a part of career development. Organizations across the world today follow the mantra, ‘get paid commensurate to your contribution’. In organizations, the focus of performance management signifies finding ways and means to enhance an individual’s performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals.

Performance appraisal, similar to career development, leads to the recognition of the work done by the employees through rewards, appreciation etc. Performance appraisal system establishes the link between an organization and the employees’ personal career goals.

Potential appraisal helps to identify the hidden talents and potential of the individuals. Identifying the potential talent facilitates in preparing the individuals for higher responsibilities and positions in the future. Thus, identifying potential is the initial step of succession planning. The performance appraisal process in itself is developmental in nature.

Performance appraisal is also closely linked to other HR processes—facilitates identifying the training and development needs, decision-making regarding promotions or otherwise (demotions), reviewing the compensation, etc. A feedback based on the appraisal report communicated in a posi­tive manner can go a long way to motivate the employees. It can also help the employee to identify his career development plans.

On the basis of the evaluation, employees can develop their career goals, achieve new levels of competencies, and map their career progression. Performance appraisal encourages employees to reinforce their strengths and overcome their weaknesses. At this stage, the employers need to understand the categories and indicators of potential.

Difference between Potential Appraisal and Performance Appraisal

Potential appraisal helps to identify what can happen in future so that it can be guided and directed towards the achievement of individual and organizational growth and goals. Therefore, potential should be included as a part of the Performance appraisal in organizations.

1. Potential Appraisal is forward looking process whether performance appraisal is backward looking process.

2. Good or worse assessment results of performance appraisal may not be a good factor for potential appraisal.

3. Current performance of an employee could show evidence somewhere whether he/she is flexible for new working conditions.

A good potential appraisal system provides opportunities continuously for the employee to know his strengths and weaknesses. These are done through periodic counseling and guidance sessions by either the personnel department or the managers concerned. This should enable the employee to develop realistic self- perceptions and plan his own career and development.