Performance appraisal system requires constant innovation and revitalization. If the appraisal system has to serve the organizational purpose, organizations must learn how to treat people as people and not as statistical data. Multiple resources and methods of assessment and feedback should be encouraged in organizations. This case study provides the background and description of performance appraisal system and its different methods; further it gives a detailed insight into the new performance appraisal system of ONGC.

The dictionary meaning of the verb "to appraise" is "to fix a price for" or "to value an object or thing." The term `performance appraisal' is concerned with the process of valuing a person's worth to an organization, with a view to increasing it. Hence, most appraisal systems are linked to reward systems as well as employee development systems. The commitment of the management and acceptance by the employee determine the success of an appraisal system in any organization.

In a broader sense, the practice of appraisal is a very ancient art. Performance appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether the salary or the wage of an individual employee was justified or not. It was felt that a cut in pay, or a raise, should provide the only required impetus for an employee to either improve or continue to perform well.

Performance appraisal may be defined as a structured formal interaction between a subordinate and a supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identify weaknesses and strengths as well as opportunities for improvement and skills development.

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