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Performance appraisal is a systematic and periodic process that helps managers to assess their employees' job performance and productivity in relation to already established individual and organizational objectives and goals.
The main features that make the performance appraisal essential are as follows;
Performance Feedback
Training and Development Decisions
Validation of Selection Process
Promotion Decisions
Transfers
Termination Decisions
Rewards and Benefits
Performance appraisal benefits the company as well as employees. It increases understanding between management and employees, increases job satisfaction and improves employees' sense of loyalty toward the company. Performance appraisal helps employees to understand that how their role in the organization contributes to the company's overall success, therefore increases employee's morale. All of these result as higher productivity among employees, which improves organizational productivity.
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