The Need and Importance of Performance Appraisal

Understanding performance appraisal needs and importance

The Need and Importance of Performance Appraisal
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The performance appraisal is the process of comparing an employee's performance with already established standards and providing them the feedback about their performance so that they can easily improve their performance.

Performance appraisal may be defined as an evaluation made by the employer or the top management. The purpose of implementing or carrying out performance appraisal activity is to judge the overall performance of the employees in the business organization. It is by means of this activity that the aspects, whether the employee has essentially required skills, knowledge and attitude to perform the current tasks or the assignments to be given in the future, are to be determined periodically. Moreover, it is through the process the capacity of the employees to grow and develop in course of time is to be assessed. In this way, performance appraisal programme provides factual information to be used as a basis to make differentiation between efficient and inefficient employees in the business organization.

Apropos of what needs to be done and how it should be done to attain the predetermined objectives, a range of some necessary characteristics in the employees is a must at organizational level so that the end results must be as has been planned or intended.

The characteristics that in the main, should exist are:-

  • Employee must have requisite skills for the job with minimum or required qualification.
  • He must have the right attitude to perform what has been instructed or planned or to do what has been expected of him to do.
  • He is supposed to contribute his part to the total organizational objectives in an effective and efficient manner.

Other qualities, that is to say, loyalty to the company and maintaining integrity at all times- integrity in the sense, he mustn’t turn away from doing right things, but follow with due diligence even though he is not watched.

As such, it should be apparent that the performance appraisal is not to be made only on the basis of good academic accomplishments, but it is, in addition to what an employee has possessed academically, on the basis of overall performance considering his qualification and abilities and other required qualities.

For these characteristics to be evaluated in the right perspective, the performance appraisal is very much needed in the business organization.

Performance appraisal activity to be carried out smoothly in a business organization, various methods that lead to make inferences and predictions, are adopted that, in turn, would be useful to bring a conclusive evidence to the overall performance of the employees. And the sole purpose of any method is to make observation thoroughly about the performance of the employees and other elated factors so as to let them know where they stand and advise them how they need to improve their performance.

They are also to be notified for their weak areas in which they need to put extra efforts to achieve a satisfactory level of performance or for which they are to be trained. The process of performance appraisal also includes determining promotion for those who deserve and the transfer in case it is to benefit both, the employee as well as the organization.

It is necessary for a business organization to carry out the activity of performance appraisal periodically as it entails twofold beneficial effect. To a business it does help to grow strengthening total organizational competencies and creating effectiveness and efficiency. To the employees, making them realize their full potential, it becomes a source to motivate them to do their jobs in the best way.


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It has been a practice of many employers to maximize the employees potential and value.

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