Performance Appraisal is important because-
i. Organisations need to asses level of performance articulated specifically, both quantitatively and qualitatively, in terms of goals, targets, behaviour, etc.
ii. It improve work allocation and productivity of the team
iii. It helps in deciding organisational objectives and targets
iv It identifies strong and weak points of personnel and aids remedial measures for perceived weaknesses through need based training.
Performance appraisal serves the three- fold purpose of monitoring, evaluation, and control. It has nothing to do with setting the organisational objectives, which are decided by the top management based on the competitive strategy and market.