Performance Appraisal is being practiced in 90% of the organisations worldwide. Self-appraisal and potential appraisal also form a part of the performance appraisal processes.

Typically, Performance Appraisal is aimed at:
To review the performance of the employees over a given period of time.
To judge the gap between the actual and the desired performance.

  • To help the management in exercising organizational control.
  • To diagnose the training and development needs of the future.
  • Provide information to assist in the HR decisions like promotions, transfers etc.
  • Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.
  • To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.
  • To reduce the grievances of the employees.
  • Helps to strengthen the relationship and communication between superior – subordinates and management – employees.

According to a recent survey, the percentage of organisations (out of the total organisations surveyed i.e. 50) using performance appraisal for the various purposes are as shown in the diagram below:

Know the Performance Appraisal Process

The most significant reasons of using Performance appraisal are:

  • Making payroll and compensation decisions – 80%
  • Training and development needs – 71%
  • Identifying the gaps in desired and actual performance and its cause – 76%
  • Deciding future goals and course of action – 42%
  • Promotions, demotions and transfers – 49%
  • Other purposes – 6% (including job analysis and providing superior support, assistance and counseling)