Advantages of Performance Appraisal

Advantages of Performance Appraisal

Performance appraisal is a method of assessment of employee’s performance and propounds strategies for further employee’s growth. The supervisor evaluates the job performance of employees over a specific period of time. An employee’s performance is evaluated based upon his achievement of the targets and plans and also on factors that the employer has formulated for their work performance. Performance appraisal has to be done on merit basis without any errors and biases.


  1. Performance appraisal helps to formulate compensation package, wage structure and salaries through proper track of records of performance of employees.

  2. It helps in identification of strength and weakness of employees and also places employees in right job.

  3. It helps to analyze the potential of employees and helps in growth and development of employees.

  4. It provides feedback about employee’s performance as employees would be eager in knowing the status of the work done.

  5. It helps in formulation of training programs based on the evaluation of performance of the employees.

  6. Performance appraisal is beneficial for giving promotion to employees and persons who are not working efficiently can be dismissed.

  7. Bonus, incentive, salary perks, fringe benefits, allowances has a great impact on performance appraisal of employees.

  8. It helps the employers to know about the performance of each employee and skills and abilities of the employees.

  9. It encourages motivation among the employees and develops spirit of work.

  10. Through performance appraisal, the employees would be able to build confidence and trust on them and also this confidence motivates them to put extra mile to reap success.

  11. It builds a friendly relationship between employees and the supervisors.

  12. It also helps to improve the performance of employees from their last assessment.

  13. It plays a vital role in career planning and career development of individual employees.

  14. It helps the management to decide about the rewards and transfers for the employees.

  15. It helps the supervisors to understand as to which employees, coaching and counseling is essential.

  16. It provides a robust planning and frame decisions for the upcoming year.

  17. It acts as a vital role for explaining the company’s expectations towards the employee and also provides opportunity for the employees to discuss the issues.

  18. Corrective actions can be taken for the employees who commit mistakes in their job.

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