It is well established fact that people differ in their abilities and aptitudes. These differences are natural to a great extent and cannot be eliminated completely by giving them education and training. There will always be some differences in the quality and quantity of work done by different employees. Therefore, it is necessary for the management to know these differences so that it may develop certain programmes in the organizations for those employees who possess better potentials so that they may be developed to accept the challenges of higher jobs or wrong placement of employees may also be rectified. The individual employees may also like to know his capabilities in terms of his performance on the job qualitatively & quantitatively in comparison to his fellow employee so that he may improve upon it.
No firm has a choice as to whether or not it should appraise its personnel and their performances but the choice lies between the systematic unsystematic or the casual approach of evaluating the man is by any means a new development. The technique of appraising the man is by superiors or others is widely known as ‘Merit Rating’. It is also something, termed as ‘Employee Appraisal’, ‘Personnel Appraisal’ and ‘Personnel Performance Evaluation’
