With the increased recognition of problems that permeate many company appraisal schemes, there has been a shift of emphasis from performance appraisal to performance management, majorly. Employers have now focused on the role of performance appraisal within a broader organizational context in which appraisal is only one part, albeit the key component, of a more systematic process of performance management. The key areas for this development have been the more competitive environment in which firms operate. This has placed a kind of premium on firms’ ability to measure and improve the performance of their staff. This pressure has not been confined to the private sector; gradually it has also affected the public sector as well.
Restructuring within the organizations, with an emphasis on decentralized decision making and greater responsibilities placed on line managers for staff management, and employee empowerment has lent itself to the use of performance management systems seeking to align individual and corporate objectives.