Employee performance appraisals are considered necessary in order to provide information about performance rankings. This information assists in making decisions regarding salary fixation, promotion, confirmation, transfer, and demotion. Apart from this information, employee performance appraisals provide feedback regarding the level of achievement and behavior of employees. This information helps to assess the performance of the employees, rectify performance deficiencies, and set new standards of work if required. Employee performance appraisals play a crucial role in providing information that helps to counsel employees. The information helps to identify deficiency in employees regarding skill and knowledge, determine training and developmental needs, recommend means for employee growth, and give suggestions for correcting placement. Furthermore, employee performance appraisals avoid grievances and punitive activities.
Performance appraisals aim at building and maintaining a satisfactory level of performance. They also aim at contributing to employee growth and improvement through training and management development programs. One of its purposes is to help the superiors have a good understanding about their subordinates. They also play a major role in guiding employees to job changes with the help of constant ranking. Another objective of employee performance appraisals is to facilitate fair and equitable compensation based on performance and to facilitate testing and validating selection tests. It also provides information for taking decisions concerning layoff and retrenchment and suggesting change in employee behavior, if required.
Organizations have to decide the content to be appraised before the program is accepted. Normally, the content to be appraised is determined on the basis of job analysis. The content to be appraised may vary with the purpose of assessment, type of assessment, and position of employees. Properly conduct performance appraisals let employees know how well they are performing and also consider impact the employee's future level of effort and task direction. Performance evaluation is an organized description of an employee's job-relevant strengths and weaknesses. Appraisals are mostly arranged periodically according to a specific plan.