The latest mantra being followed by organizations across the world is - "Get paid according to what you contribute". Organizations are paying more attention to performance management and specially to individual performance. So, if the process of performance appraisal is properly structured, it will help employees understand their roles, responsibilities, enable them to align their individual performance with the organizational goals and also help review their performance. This article focuses on the importance of performance appraisal in achieving organizational success.

In recent years, the term `performance appraisal' is considered as an important aspect of developmental function by various organizations. Performance appraisal is the process of collecting, analyzing and evaluating data related to the job behavior and the results of the individual employee. The focus of performance appraisal is measuring the actual performance of the employee and also the future impact of the employee's career. It explains what an employee does exactly, as it is the heart of personal management and reflects the management's interest in the progress of the employees, besides also focusing on how performance appraisal is turning towards career development depending on the discussions with the superiors. It is considered as the taking into consideration the past performance of the employees and the process of paying attention to improvement of the future performance of the employees. It is essential as it measures the performance of the employees and the organization to monitor the progress towards the organizational goals. Therefore, it is a process of systemic evaluation of the present potential capabilities of personnel and employee by their superiors.

People differ in their abilities and attitudes so there is always some difference between the quality and quantity of the same work done by two different individuals.Therefore, performance appraisal is necessary to understand the employee's individual abilities, competencies, relative worth, and merit for the organization. Performance appraisal is practiced in 90% of the organization worldwide.

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