Directorate of distance education master of business administration

Lesson 9 - Performance And Potential Appraisal
Lesson Outline
 
 
ӹ Objectives of performance 
 
ӹ Methods of performance appraisal 
 
ӹ Modern methods of appraisal 
 
ӹ Potential appraisal 
Learning Objectives  
After reading this lesson you should be able to  
 
ӹ Appreciate the need for performance appraisal 
 
ӹ Understand the steps involved in performance appraisal 
methods 
 
ӹ Know the intricacies of potential appraisal 
Introduction 
Appraisal is the evaluation of worker, quality or merit.  In the 
organizational context, performance appraisal is a systematic evaluation 
of personnel by superiors or others familiar with their performance.  
Performance appraisal is also described as merit rating in which one 
individual is marked as better or worse in comparison to others.  The 
basic purpose of merit rating is to ascertain an employee’s eligibility for 
promotion.  However performance appraisal would be used to decide 
training and development, salary increase, transfer and discharge C. 
Heyel defines, “performance appraisal is the process of evaluating 
the performance and qualifications of the employee in terms of the 
requirements of the job for which he is employed, for the purposes of 
administration including placement, selection for promotion, providing 
financial rewards and other actions which require differential treatment 
among the members of a group as distinguished from actions affecting 
all members equally”.  Beach has defined, “performance appraisal is 
the systematic evaluation of the individual with regard to his or her 
performance on the job and his potential for development. 

---

126
Performance appraisal is a systematic and objective way of judging 
the relative worth or ability of an employee in performing his job.  It 
emphasizes on two aspects; systematic and objective. All performances 
are to be evaluated in the same manner, utilizing the same approaches. 
This would facilitate appraisal of different persons comparable.  This 
makes it systematic, as such an appraisal is taken periodically according 
to plan; it is not left to chance.  This makes the system objective.  Both 
those who rate and who are rated should know the system of performance 
appraisal and trained.  Human bias and prejudices are set aside, and so 
objective is in this respect also.