Importance and Value of Performance Appraisal

Importance and Value of Performance Appraisal

Importance and Value of Performance Appraisal

Performance appraisal provides important and useful information for the assessment of employee’s skill, knowledge, ability, and overall job performance. It is the systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development.

The following are the points which indicate the importance of performance appraisal in an organization:

  1. Performance appraisal helps supervisors to assess the work performance of their subordinates.
  2. It helps to assess the training and development needs of employees.
  3. It provides grounds for employees to correct their mistakes, and it also provides proper guidance and criticism for employee’s development.
  4. It provides a reward for better performance.
  5. It helps to improve the communication system of the organization
  6. It evaluates whether human resource programs being implemented in the organization have been effective.
  7. It helps to prepare pay structure for each employee working in the organization.
  8. It helps to review the potentiality of employees so that their future capability is anticipated.

An effective appraisal may not only eliminate behavior and work-quality problems, it can motivate an employee to contribute more. Accurate and current appraisal data regarding certain employees helps the management in making decisions for future employment. Without the knowledge of who is capable of being promoted, demoted, transferred, laid off or terminated, management cannot make employment plans for the future.

More precisely, performance appraisal can be defined as a systematic evaluation of an employee’s current, or past performance as well as future potentials by supervisors or those familiar with his/her performance. It defines an employee’s job-related behaviors and outcomes which help reward, motivate and empower employees at work. It also helps to identify future potentialities of an individual.


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