Performance appraisals can be used to improve individual performance and to meet the goals of the organization. Appraisal procedures should be formative, summative, and diagnostic in nature and should focus on assessing the effectiveness of the individual in performing specific, job-related tasks. Designed properly, appraisal systems can promote positive attitudes toward performance evaluation and integrate the interests of the individual with those of the organization.

Additional advantages of the appraisal process are mutual goal setting, professional development, and the freedom to be creative and innovative within a system that promotes continuous improvement. The most important purpose of performance appraisal is to enhance job performance. As a part of a valid and reliable instrument, the objective criteria should serve as a diagnostic tool to assist leaders in maximizing the potential of employees. Evaluation can be conducted out of obligation or policy, or it can be conducted with the goal of improving people.