What is the primary purpose of performance appraisal?

The primary purpose of performance appraisal is to systematically evaluate employee performance and progress. This process provides a structured approach to assessing how well employees are meeting their job requirements, accomplishing their goals, and contributing to the organization as a whole. Through performance appraisals, management can identify strengths and areas for improvement, set clear expectations, and foster professional development for employees. It serves as a crucial tool for aligning individual performance with the organization's objectives and can help in making informed decisions regarding promotions, training needs, and succession planning.

While determining employee salary, assessing financial impact, and conducting team-building activities may be related to employee performance, they are not the primary focus of performance appraisals. Instead, those activities can be seen as outcomes or extensions of the appraisal process but do not encapsulate its main purpose, which is centered on evaluation and development.