The system of rewards. The approach to

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The evaluative purpose has a historical dimension and is concerned primarily with looking back at how employees have actually performed over given time period, compared with required standards of performance. The developmental purpose is concerned with the identification of employee’s training and development needs.

Appraisal Methods


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Feedback:It serves as a feedback to the employee. It tells him what he can do to improve his present performance and go up the “organisational ladder”. The appraisal thus facilitates self-development. It also makes the employee aware of his key performance areas. 2.

Compensation Decisions:It provides inputs to system of rewards. The approach to compensation is at the heart of the idea that raises should be given for merit rather than for seniority. 3. Data Base:It provides a valid database for personal decisions concerning placements, pay, promotion, transfer etc. Appraisal also makes the employee aware of his key performance areas. Permanent performance appraisal records of employees help management to do planning without relying upon personal knowledge of supervisors who may be shifted. 4. Personal Development:Performance appraisal can help reveal the causes of good and poor employee performance.

Through discussions with individual employees, a line manager can find out why they perform as they do and what steps can be initiated to improve their performance. 5. Training and Development Programme:By identifying the strengths and weaknesses of an employee, appraisal serves as a guide for formulating a suitable training and development programme to improve his quality of performance in his present work. It can also inform employees about their progress and tell them what skills they need to develop to become eligible for pay rises and/or promotions. 6. Promotion Decisions:It can serve as a useful basis for job change or promotion.

By establishing whether the worker can contribute still more in a different or a higher job. It helps in his suitable promotion and placement. If relevant work aspects are measured properly, it helps in minimising feelings of frustration of those who are not promoted. 7. Personal Development:Performance appraisal can help reveal the causes of good and poor employee performance.

It thus helps the employee to overcome his weaknesses and improve his strengths so as to enable him to achieve the desired performance. 8. Improves Supervision:The existence of a regular appraisal system tends to make the supervisors more observant of their subordinates because they know that they will be expected periodically to fill out rating forms and would be called upon to justify their estimates. This improves supervision.

Performance appraisal helps to gauge comparative worth of employees. Appraising employee performance is, thus, useful for compensation, placement and training and development purposes. In the words of M.

W. Cummings, “the overall objective of performance appraisal is to improve the efficiency of enterprise by attempting to mobilise the best possible efforts from individuals employed in it. Such appraisals achieve our objectives including the salary reviews, the development and training of individuals, planning job rotation and assists promotions”. The information can also be used for grievance handling and keeping the record. It helps in improving the quality of supervision and bettering the employee-employer relationship.


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