Performance appraisal is essential for a firm that need manage its human resources effectively in order to reduce costs and maximize profits. Firms that want to maintain high morale will also ensure that their employees feel appreciated and motivated .The number of organizations using performance appraisals as a managerial tool necessary for facilitating the performance levels
necessary to achieve the company’s mission
and strategies is on the increase. Many companies are just now realizing what an effective tool a performance appraisal can be. They have begun to emphasize the correct use of performance appraisals in their organizations for the betterment of the company. Employees are likely to be motivated to achieve such recognition. But the firm must have devices for ensuring accurate measurement that employees have confidence in and which allow the firm to make fair judgments regarding their use and future needs of human resources.