Appraising the performance of individuals, group and organizations is a common practice of all societies. While in some instances the appraisal processes are structured and formally sanctioned, in other instances they are an informal and integral part of daily activities. Corporate performance management has sometimes been referred to as the Achilles heel of managerial staffing, but it is probably a major key to managing itself. It is the basis for determining who is promotable to a higher position. It is also important to management development, because if a managers strengths and weaknesses are not known, it is difficult to determine whether development efforts are aimed in the right direction.

Appraisal is, or should be, an integral part of a system of managing. Knowing how well a manager plans, organizes, staffs, leads and controls is really the only way to ensure that those occupying managerial positions are actually managing effectively. Effective performance appraisal should also recognize the legitimate desire of employees for progress in their professions. One way to integrate organizational demands and individual needs is through career management that can be a part of corporate performance management.

Performance appraisal is a method of evaluating the behavior of employees in the workplace, normally including both the quantitative and qualitative aspects of job performance. Performance here refers to the degree of accomplishment of the tasks that make up an individuals job. It indicates how well an individual is fulfilling the job demands. Often the term is confused with effort, which means performance is always measured in terms of results. A student, for example, may exert a great deal of effort while preparing for the examination but may manage to get a poor grade. In this case the effort expended is high but performance is low. In order to find out whether an employee is worthy of continued employment or not, and if so, whether he should receive a bonus, a pay raise or a promotion, his performance needs to be evaluated from time to time.