Performance Management vs. Measurement: Difference And Best Practices

Measuring performance is necessary to run a successful business, but it's only one piece of the puzzle. You'll need much more than measuring performance to achieve your goals and drive meaningful change. 

You'll also need to manage performance effectively. 

Obviously, performance management and performance measurement are both concerned with the performance of employees. In other words, their output, contributions, and value to the organization. 

But is the difference between performance measurement vs. performance management obvious to your leaders? 

The former is concerned with quantifying performance, while the latter is concerned with improving it. Effective performance management relies on guidance from data, while performance measurement is of little value by itself.

In this article, we'll show that performance measurement and performance management aren't so much two different concepts as they are two parts of a larger whole. 

If you want your company to run like a well-oiled machine, you need both of these parts working together for optimal results. So, discover how you can use both to drive success for your organization.

📏 What is performance measurement?

Simply put, performance measurement quantitatively or qualitatively assesses an individual, team, or organization's performance against predetermined goals or objectives.

In some cases, this is easier than others (i.e., comparing sales totals versus the work of a graphic artist). Still, in any case, a performance measurement system gives you objective data about a worker's abilities and contributions. 

➡️ Learn more about measuring employee performance.

📈 What is performance management?

Performance management is a comprehensive approach to managing employee performance. It encompasses a range of activities, including: 

• Setting goals.
• Providing employees with the resources and support they need to succeed. One example of support is performance coaching. 
• Giving and collecting feedback. 
• Recognizing employee results and progress.  
• Aligning individual performance with organizational goals.
• Fostering a culture of continuous improvement. 

Performance management is an ongoing process that involves regular communication between managers and employees to set goals, track progress, and provide feedback on performance. 

The best way to see this whole process in action is through our performance management case studies. 

🔍 For example, Adobe showcases the power of aligning managers and employees and sharing constant feedback. 

So, while performance measurement is fundamental, management mustn't stop at this stage.

Obtaining performance data is only the first step. 

What you do with that data is what really matters.

For example, measuring that Salesperson A had $500,000 in sales Q1 and Salesperson B had only $250,000 doesn't benefit the company or those employees. Instead, that information needs to be taken and acted upon to boost Salesperson B's performance closer to Salesperson A.

You can achieve this result by: 

• Letting Salesperson B shadow Salesperson A to enable learning in the flow of work. 
• Ensure a fairer distribution of clients. 
• Identifying opportunities for improvement for Salesperson B and assigning additional training to address those areas.

Knowing your employees is one thing. Managing them is another.

Don't confuse performance reviews with performance management

Employee appraisals are the perfect place to communicate performance measurements and collaborate about performance management, but they are not inherently the same. 

For example, a review that merely includes the numbers (performance measurement) is not managing the results. 

Performance management is the step that follows after collecting all complex data. Managing performance means using these employee insights to develop a plan for improving future performance through goals and training (performance management).

💡 Check out the complete comparison of performance appraisal vs. performance management.

🆚 The difference and importance of performance measurement and performance management

"When it comes to boosting productivity, performance management is a broader and more meaningful concept than simple performance measurement." Arie Halachmi, Performance measurement is only one way of managing performance.

Some companies think they manage performance when they aren't following through. They believe that employees will be motivated to find solutions independently by measuring performance through various metrics and presenting those findings in company performance evaluations or public rankings.

While this isn't entirely untrue, it is an incomplete idea. 

Firstly, not all employees will be motivated by the results. 

For example, those at the top of the list won't feel motivated to improve, while those at the bottom might feel hopeless even to try.

This isn't just a question of motivation either. 

Some employees don't know how to improve. They come to work daily and do their best, only for their performance metrics to be middling. In these cases, it is the job of people leaders to identify and assist these employees so they can improve. 

For some, this might look like additional training. 

For others, it might be changing their workflow. 

For a few, the solution might even be that their current role isn't an ideal fit. Instead, they might flourish with another task or in another department due to personal ability and interest. 

Again, performance management should involve employees and people leaders working together to improve the numbers. 

The result is a win-win situation for both the employees and the company. It will enhance employee satisfaction, produce better work, and instill a culture of individual growth and value.

💡 How can you move away from performance measurement to performance management?

Performance measurement is the foundation of employee skill growth. 

If you are measuring performance but not managing it, that's still a good start.

The next step is to take the data you have measured and use it! 

Situations will vary since managing a salesperson's numbers differs significantly from boosting an assembly line worker's output. Still, in either case, you must measure performance to know where to direct your efforts.

💪 Like most aspects of business, your performance management system will improve and evolve over time. So don't feel you need the perfect plan to get started.

As Winston Churchill once said, "Perfection is the enemy of progress." In other words, if you feel intimidated about creating the perfect performance management process for your organization, you never will. 

The important thing is to start utilizing your performance measurement data for the betterment of your company and go from there. 

Don't be afraid to ask for feedback and stakeholder input to fine-tune the system. Job performance management is an ongoing process.

🧠 Learn how to foster a knowledge-sharing culture in your organization.

Encouraging feedback from those whose individual performance is being measured and managed will help them feel like they are part of the process, instilling a culture of transparency and learning. 

For more assistance, consider performance management software to help you centralize, optimize, and automate your process.

✅ Examples of performance measurement and performance management

Now that you understand the theory behind performance measurement and performance management and how they are two sides of the same coin, here are some concrete examples that show these concepts in action.

Salespeople

We will keep this brief as this example was touched on earlier. 

Performance measurement

• Salesperson A had $500,000 in sales in Q1.
• Salesperson B had $250,000 in sales in Q1.

Performance management

• Sit down with both salespeople to share tips and tactics.
• Give easier clients to Salesperson B, and let Salesperson A handle tougher accounts.
• Provide additional training to Salesperson B (and Salesperson A, if desired).
• Ask clients to review their respective salesperson and analyze that feedback.
• Observe and offer suggestions to both salespeople on how they can improve.

As you can see, the goal in this example is not only to try to get Salesperson B caught up to Salesperson A. Instead, both can benefit from developmental processes. 

Salesperson A takes on additional responsibility and challenges in the first and second examples. Note that this may also provide an opportunity for a well-deserved raise. 

If these efforts lead to Salesperson B closing half of the gap, increasing their sales to $375,000 in Q2, the effort put forth in the above examples was well worth it!

➡️ Discover the 11 best ways to establish high-performance management in your company.

Production workers

In this example, we will look at production workers. Examples of this type of employee include assembly line technicians, forklift operators, or general laborers. 

These types of employees primarily focus on accomplishing simple tasks efficiently, such as a task on an assembly line, loading/offloading trucks, or other repetitive tasks.

The primary measure of their performance is completed tasks in a set amount of time.

Performance measurement

• Employee A unloaded an average of 3.5 trucks an hour.
• Employee B unloaded an average of 3 trucks an hour.
• Employee C unloaded an average of 2 trucks an hour.

Performance management

1. Schedule a performance review to discuss these numbers.

• Ask if Employee C has any ideas for increasing efficiency.

2. Ask each employee to provide a written procedure for unloading trucks.

• Compare these procedures to see if there are any notable differences.

3. Randomly observe each employee's process looking for the pros and cons of each.

• Offer Employee C additional training to boost confidence and skill.
• Consider "pitting" Employees A and B against one other for some healthy competition!

As you can see, quantifying performance opens up many possibilities for strengthening employee output. 

You should use this data to recognize the efforts and abilities of top performers and offer assistance to low performers.

In some cases, say there is an Employee D in the example above who averages only one truck an hour. This metric may suggest that this individual isn't a good fit for a position. 

If a transfer to another role is possible, great. Otherwise, the decision may be to let this employee go. 

While this can be tough, consider that the employee will likely be better off with a different job in the long run, and the company is also likely better off with a replacement.

Knowledge workers

The performance and productivity of knowledge workers can be more challenging to quantify. Examples of employees in these categories include managers, artists, and consultants. While some aspects of their work may be quantifiable, such as projects completed or milestones reached, their work is often more focused on quality and talent.

Performance measurement

• Manager A hit all target numbers and received mixed 360 performance reviews.
• Manager B accomplished only 75% of organizational goals but received positive 360 performance reviews.

Performance management

• Identify which review categories Manager A struggled with.
• Identify which goals Manager B failed to accomplish and by how much.
• Compare how the above two examples could be related.
• Ask Manager A how they might improve any low review scores.
• Ask Manager B what went wrong with the goals they missed.
• Use the above data to create suggestions for each manager.

The above measurements are slightly vaguer, which led to slightly more vague management options. 

Here is a concrete example that could happen in theory.

Your qualitative data from performance reviews revealed some key facts:

• Manager A is a tougher manager with higher expectations for subordinates, demanding results to achieve company goals. 
• Manager B is easygoing, which subordinates like (hence higher review scores), but his team often misses key target numbers for the company.

It is then up to People operations, stakeholders, and C-suite managers which management style is preferred, if both are acceptable, or if your managers should strive to strike a balance between the two.

 📚 Explore nine leadership training topics to include in your leadership development program.

➡️ Manage employee performance with Zavvy

Zavvy has tools and training that can help you measure and manage employee performance. 

So no matter your current process, we can help you improve it or build a performance management system from the ground up.

We have a multitude of software solutions that people operations departments use to streamline everything from performance reviews to performance management to training. 

Just let us know what areas you want to improve, or we can look at your operation and suggest solutions to make your employees happier and more effective:

• 🔁 (360) Performance reviews
• 📖 Learning Management System (LMS)
• 🧮 Skills matrix
• 🌱 Talent development 

These are just a few of the solutions we offer to enable a high-performance organization.

To learn more, schedule a demo today!