What is performance appraisal and why is it used?

• A. A casual chat about workload with no formal record.
• B. A formal assessment of an employee's performance to inform pay, promotion, development, and succession decisions.
• C. A one-time test of skills.
• D. A measure of customer satisfaction with an employee.

Answer: (B)

Performance appraisal is a formal, systematic process for assessing an employee's job performance over a period, producing a documented assessment. It informs decisions about pay, promotions, development needs, and succession planning, helping both the employee and the organization understand what’s working well and what to improve. This is different from a casual chat about workload, which isn’t formal and isn’t recorded, and from a one-time skills test, which captures only a snapshot rather than ongoing performance. It isn’t simply measuring customer satisfaction with an employee, though feedback from customers can be one part of performance inputs. The main use is to provide structured feedback, set development targets, identify training needs, and guide rewards and career progression decisions.