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Performance appraisal is defined as one of the most important human resources practice in a company for management (Naeem, Jamal, & Riaz, 2017). It is a systematic way that the organization to observe the performance level that an employee is performing their job. According to (Kadiresan, Selamat, Selladurai, Charles , & Mohamed, 2015), performance appraisal also refer as a tool to manage and enhancing their employees’ performance, the effectiveness and the efficiency of an employees. Furthermore, we also can defined the performance appraisal as an evaluation process that to judge on the level of the employee’s job performance that assigned in a quantitative score. (James, 2013)
Other than that, performance appraisal also can defined as a system that can evaluate and review an individual or team’s job performance (Liza, 2012). Then, the performance appraisal evaluate by the employees’ supervisor. The definition also state that the data of performance appraisal can be used in various human resources functional areas, which is recruitment and selection, compensation program, internal employee relation and human resources planning and many more.
Then, for the appraisal period, different company will have different choice. Most of the company will examine their performance evaluation either once or twice a year. According to (Kenneth, 2017), the performance appraisal process can be divided in 7 steps, first, management will set the specific objectives and the job expectation to all employees, means that the manager will evaluate the performance based on the standard. Then, second step is to be start to observing the performance and provide feedback on the particular task or activities that they participate. For the third step is to collect the information that from different sources, for instance, from personal observation, the oral reports, written report and also about the statistical report of the employees. After collect the information, management department start to organize and analyse the data in order to assign the performance score for each of the employees. Then, for fifth step is compare the actual result and the standard that set by manager, and the manager will discuss the result with the employees. After that, sixth step, in this stage, based on the result, the manager will know the strength and weakness of each of the employees, and the manager will planning an individual plan for the employees to improve in their future performance. Then, the seventh step is manager can use the appraisal result for administrative purpose, for example, for those employees that have good result in performance appraisal, the company can increase the salary or give promotion. For the employees that having weakness for their job, manager will provide training or coaching to those employees.
As we can know that, performance appraisal is one of the formal organizational event and structured, we not only can lead the company to getting success in the future, and it also helps to improve the personal performance capabilities and also team performance. (Agyare, Ge, Mensah, Aidoo, & Ansah, 2016). Asamoah (2012), further describe that there include four activities that can execute in an organization, which is define what is performance appraisal and should be, second is the organization can evaluate and measuring about their performance, then giving feedback information to individual that involve in this event and last is can share or providing any information that useful to other company that use the same system.
Besides that, there are different appraisal techniques that can choose by the company. The techniques we can divide into two different categories, there are traditional methods and modern method. Manager can choose the techniques based on its company purpose. The traditional methods which include ranking, trait scale, critical incident, narrative and criteria based (James, 2013). Then, for modern method, it include 360 degree appraisal, work planning and review, management by objective (MBO) and peer review. But, different company have different objective and organizational goals, so some of the company will combined different performance appraisal techniques to evaluate their employees (James, 2013).
Furthermore, other research state the good performance appraisal system that can lead to more efficiency employees, increase the productivity of the employees and will brings more benefit towards company. (Neha & Himanshu, 2004) founded that there is very important that the fairness and transparent of performance appraisal system that can affect the organizational commitment of an employee. For example, if the employees feels that the performance appraisal is fair, they tend to have high commitment towards company. This means that a good performance appraisal system can create loyalty and belongingness of the employees in their organization.
According to (Zachary, 2010), performance appraisal can bring benefit to employees, manager and also the organization. For employees, because purpose of the performance appraisal is to improve the performance in future, so it is very important that can let employees know about their performance when compare with the standard that set by the manager. Not only that, it can also be a motivation to the employees, from there they will focus on their weakness and try to improve their individual career development (Flaniken, 2009). For those employees who score high marks or have positive feedback, they are be more motivated and tend to have more good performance in workplace (Naeem et al, 2017). So, they feel are value and feel as a part in the company. Performance appraisal not only can motive employees, it also can help to reduce the turnover intention.
Furthermore, the performance appraisal also can benefit to manager. Through the performance appraisal, it can improve the relationship between the manager and employees, this is because the manager need to discuss with the employees about the result of the evaluation, so it can increase communication between them, and manager also can share the objective of organization with the employees and can increase the trust between the employer and employees. Other than that, the manager also can closely observe and manage their employees (Flaniken, 2009). According to Vimala et al., (2015), the advantages of performance appraisal can help the manager to understand employee’s feeling toward company, beliefs and development areas with regard to organizational goals. In addition, performance appraisal also known as can help the organization to improve their organization decision which include the reward system, promotion, layoffs and transfer.
As time goes by, the performance appraisal help to improve the performance of the employees at the same time also improve the overall organizational performance.

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