Performance appraisal is to review and evaluate the performance of individual on the job. It is the process of measuring the improvement of employee performance. Employees set goals and explore job growth to strive for at the next appraisal review.

Performance improvement
Performance review system manages employee review process to align goals with company objectives and track the individual employee's progress. By providing feedback to the employees, employees can understand their contribution to the company's success, increase employee productivity and performance. During the performance review, the employee can clarify expectations with their manager on the areas for improvement, and in turn their contribution for company success.

Training and Development
Performance appraisal is a tool to determine necessary steps to help employee in improving their skills and competencies they need to acquire to make a greater contribution to the company. Skills and development on personality, attitude, and behavior of the employee is necessary for the career development to pave their way to a successful and stable career. As a result of this, they also increase their chances of promotion and reduce the chance of layoffs.

Promotion and motivation
Performance appraisal provides employees with recognition for their work efforts over the year. In turn, reward, encouragement, and compensation are given to employees accordingly.

A good performance appraisal system works towards the performance of the individual, and the overall organizational ambitions and goals.