An employee performance appraisal is necessary for providing information with regard to performance ratings. This information helps in the decision making process that concern confirmation, demotion, promotion, salary fixation and transfer. Other than this information, an employee performance appraisal also gives feedback information about the degree of achievement as well as behavior of an employee. It helps evaluate an employee's performance, correct deficiencies in performance and implement new work standards whenever necessary.

An employee performance appraisal plays an important role in supplying information that may provide counseling to an employee when required as well. This way, both the employer and employee will be able to spot deficiencies with regard to an employee's skills and knowledge as well as to identify the appropriate training and developmental requisites, suggest measures that encourage employee growth and productivity and recommend ways to correcting placement. Moreover, an employee performance appraisal can help avoid untoward activities and grievances that may arise at work.

Ideally, an employee performance appraisal is geared towards establishing and keeping up with a satisfactory level of work performance. It also aims at promoting growth and productivity among employees by means of training and development programs. One of the major purposes of an employee performance appraisal is to help superiors understand their subordinates better. It also plays an important role in directing employees to work changes with constant ratings. Another important objective of an employee performance appraisal is to ensure fair and just remuneration that is performance-based as well as aid in the selection process. In addition, it supplies information for making decisions that concern retrenchment and layoff and in dealing with employee behavior, when necessary.

An organization has to decide which content to appraise prior to accepting the program. The content to be appraised is normally determined based on the analysis of the job. It may vary according to the purpose and type of the appraisal and the position an employee. A properly conducted performance appraisal informs an employee how well s/he is doing and also enables significant influence on the superior's level and direction of effort and task in the future. Simply put, an employee performance appraisal is an organized account of an employee's strengths and weaknesses related to work. Usually, most employee performance appraisals are arranged according to a certain plan.

An employee has to be periodically monitored and evaluated to make sure that the management is well aware of how s/he is performing and to see if improvements have to be suggested, if needed. Normally, an employee will do his or her best efforts to perform the assigned task if s/he is monitored and subject to appraisal, thus motivating him/her to do better at work.

When conducting a performance appraisal, the employee must be familiar with how the appraisal is going to be done. A qualified person is appointed to conduct the appraisal, in which it is done a fair manner. It has to be noted that an employee performance appraisal should help both the employee and the employer understand each other in a way that it directs an employee to always put his/her best foot forward to ensure that the business achieves its goals in a well-put and accelerated manner.