Essential of a good appraisal system: a sound appraisal system should completely with the following:

1. Reliability and validity: the system should be both valid and reliable. The validity of the ratings is the degrees of which they are truly indicate of the intrinsic merit of employees. The reliability of ratings is the consistency with which the ratings are made, either by different rates, or by one rate of different times. Both validity and reliability results from objective data bases. Appraisal system should provide consistent, reliable and valid information and data, which can be used to define the organization - even in the legal challenges.

2. Job relatedness: the evaluators should focus attention on the Job related behaviour and performance of the employees. In order to focus attention on behaviour under the employee's control, rates must become familiar with the observed behaviour. It is also necessary to prepare a checklist so as to obtain and review job performance related information. Ratings should be tied up with actual performance of units under the rates control. The information generated through evaluation should be tailored to the needs of the organization, performance requirements and norms of behaviour. Multiple criteria should be used for appraisal and appraisal should be done periodically rather than once a year.

3. Standardization: well defined performance factors and criteria should be developed. Appraisal forms, procedures, administration of technique, ratings etc, should be standardized as appraisal decisions affect all employees of the group. It will help to ensure uniformity and comparison of ratings. The appraisal techniques should measure what they are supposed to measure. They should be easy to administer and economical is used.

4. Practical viability: the techniques should be practically viable to administer, possible viable to administer, possible to implement and economical to undertake continuously. They must have support of all of the line people who administer them. If the line people think it is too theoretical, too ambitious, too unrealistic or they ivory tower staff consultants who have to comprehension of the demands on time of the line operators have foisted it on them, they will recent it.

5. Training to appraise: the evaluators or appraiser should be provided adequate training in evaluating the performance of the employees without any bias. Evaluators should also be given training in the philosophy and techniques of appraisal. They should be provided with knowledge and skills in documenting appraisals. Conducting post appraisal interviews, rating errors etc. Familiarity with ratings errors can prove ratter's performance and this may inject the needed confidence in appraisers to look into performance ratings more objectively.

6. Open communication: the system should be open and participative. Not only should it provide feedback to the employees on their performance. It should also involve them in the goal setting process. This helps in planning performance better. The employees should actively participate in managing performance and in the ongoing process of the evaluation. The superior should play the role of coach and counsellor. The overall purpose of appraisals should be developmental rather than judgement.