- 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:
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)
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