INTRODUCTION Performance appraisal is a systematic evaluation of present potential capabilities of personnel and employees by their superiors, superior’s superior or a professional from outside. It is a process of estimating or judging the value, excellent qualities or status of a person or thing. It is a process of collecting, analyzing and evaluating data relative to job behavior and results of individuals. The appraisal system is organised on the principle of goals and management by objectives. Management decisions on performance utilise several integrated inputs: goals and plans, job evaluation, performance evaluation, and individual history. It connotes a two-dimensional concept - at one end, the goals set by the authority and at the other end, the performance achieved by the individual or any given group. Performance appraisal can be either formal or informal. Usage of former systems schedule regular sessions in which to discuss an employee’s performance. Informal appraisals are unplanned, often just chance statements made in passing about an employee’s performance. Most organisations use a formal appraisal system. Some organisations use more than one appraisal system for different types of employees or for different appraisal purposes. Organisations need to measure employee performance to determine whether acceptable standards of performance are being maintained. The six primary criteria on which the value of performance may be assessed are: quality, quantity, timelineness, cost effectiveness, need for supervision, and interpersonal impact. If appraisals indicate that employees are not performing at acceptable levels, steps can be taken to simplify jobs, train, and motivate workers, or dismiss them, depending upon the reasons for poor performance.