Meaning: - Performance appraisal is a process of evaluating work performance of employees. The purpose of appraisal is to individual and organizational effectiveness.

Definition: - “Performance appraisal is the systematic description of an employee’s job relevant strengths and weakness"

  Defined be …………… (Wayne Cascio)


1.       Performance Feedback: - Performance appraisal provides performance feedback to the employees. Employees can come to know about their job related strength and weaknesses. Such feedback enables the employees to correct their weaknesses and improve on their strength.

2.       Training and Development: - Performance appraisal information may be used to determine whether an employee or a group of employees requires additional training and development. Deficiencies in performance may be attributable to inadequate knowledge or skills. Accordingly, the organization may decide to provide additional training to the employees.

3.       Motivation: - Performance appraisal facilitates motivation of the employees. The high performing employees are given higher ratings in Performance appraisal. They may be rewarded with monetary and non-monetary incentives.

4.       Promotion: - Performance appraisal gives management a means of identifying employees for promotion. Past appraisal together with other background data enables management to select persons for promotion more intelligently.

5.       Transfers: - Performance appraisal is useful in effecting transfer decisions of employees. Effective transfer of employees is possible through the reports of Performance appraisal.

6.       Human Resource Planning: - The appraisal process aids in human resource planning. Accurate appraisal data regarding employees may provide management with important information to base decisions for future employment. Without the knowledge of who is capable of being promoted, transferred and terminated; management is at a severe disadvantage with respect to framing various future employment plans.

7.       Management-Labour Relations: - Performance appraisal helps to maintain good labour relations between the management and the labour. This is because Performance appraisal creates an healthy atmosphere in the organization. The effective employees are motivated to perform more effectively and the ineffective employees are encouraged to do away with their weakness or limitations.

8.       Documentary Evidence: - Performance appraisal reports can be used as important documentary evidence in case of disciplinary action taken against some ineffective employees. This is especially true in case of unionized organization.

9.       Effective Communication: - Appraisal interviews and reports can be effective means of communication to the employee and can result in improved performance.

10.    Career Development: - Performance appraisal enables managers to coach, counsel and assists employees in their career development.