The nature of performance appraisal and its effectiveness depend on how human resources are viewed and treated in the organization. Every employee spends a major part of his work-life with the organization. Sometimes, they even spend as much as 80%. On an average, executives of an average organization are bound to spend at least 60% of their time in work. To make the work-life enjoyable, one must have some understanding of human nature and the need to understand individual performance. Here, we start with restatement of the need for the performance appraisal system, identifying all possible objectives of the appraisal system which can serve and drive the system to achieve the objectives of the organization. The study is limited to technical and nontechnical executives working with a Bangalore-based public sector unit.

After an individual is selected, trained and finally placed in an organization, the next question is: "How effective is the individual on the job?" Such a question continues to arise as long as the individual serves the organization. This implies that every individual in an organization is appraised for his performance, which is called performance appraisal. All employees would want to know their level of performance, whether they have done a good job or not. Performance evaluation is a method by which to measure an employee's performance and let him or her know how they are doing. There is a distinction between backward-looking performance evaluations (history) and forward-looking performance appraisals (ones that look to the future as well as the past and present).

A performance appraisal can be made confidentially or openly. A confidential appraisal system is one where the appraisee (one who is appraised) does not get to know about his performance since nothing is made known to him but action is taken if his performance has deteriorated.

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