Performance appraisals, also called performance evaluations, can provide many positive results to individual employees and to companies as a whole.
In the case of individual employees, the performance appraisal process should be a learning process. Through the setting of goals and the evaluation of the degree to which they have achieved those goals, employees are able to become better acquainted with company policies and expectations. Performance appraisals provide opportunities for individual discussions concerning the work atmosphere, questions regarding situations arising from the employment relationship, and may lead to increased wages in recognition of outstanding appraisals.
Companies can use the performance appraisal process to examine in detail the kinds of work it requires of its employees, the ways in which those jobs can be most efficiently combined and completed, and the needs of employees to do the work. Companies may use appraisal results to realign work assignments, to reduce or increase the size of the labor pool, or to recognize superior productivity or reassess unsatisfactory output levels. As all of these may impact profitability for the company, all of these would be seen as positive information.