12 Synopis

Learning Objectives

After completing this session, you will be able to:

  • define performance appraisal.
  • describe different approaches to performance appraisals.

is a series of structured processes to appraise employee performance in an organization. Appraisal of employee performance helps the organization to take important decisions related to reward, recognition, growth and development. Another concept which is integrated with performance appraisal is potential appraisal. Potential appraisal is a process to understand and assess employees’ abilities to take up more and higher-level roles and responsibilities.

Students on completion of the topic should have understanding about – objectives and processes involved in performance appraisal, modern approach to performance appraisal, pitfalls in performance appraisal that need to be taken care of and performance appraisal as tool for potential appraisal and comparison between the two.


Evaluating employees current and past performance of employee against the defined performance standards.


Use of performance appraisal in organizations

Identifying training and development needs of employees.

Financial rewards and recognition.

Objectives of performance appraisal


  • Graphic Rating Scale – Example; 1 to 5 rating scale.
  • Critical incident
  • Ranking methods
  • Behavioral Anchored Rating Scale(BARS)
  • 360 Degree
  • Team Appraisal
  • Balanced Score Card


  • Primacy effect
  • Central tendency effect.
  • Stereotyping.
  • Perceptual set
  • fundamental attribution error.


Potential appraisal is a process of assessing competencies and capabilities of employees for taking of larger and bigger roles and responsibilities.

Along with performance appraisal, organizations also make use of various tools such as Assessment Center to carry out potential appraisal.

  • AC DC is an assessment process where combination of multiple assessment tools and techniques are used by multiple and trained assessors to assess competencies of people/candidates. The assessors observe, record, classify the behaviors during assessment process and then evaluate the competencies.
  • It is used for following
    • Identify high potential employees.
    • Identify development needs
    • To assess and recruit, particularly at senior levels.
  • Though it is accurate, but it is time taking and expensive.


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Human Resource Management by Icfai Business School is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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