Performance appraisal is a structured process that evaluates an employee's job performance and contributions to an organization. It identifies employee strengths and weaknesses to guide improvement and determine outcomes like rewards, promotions, and training. Several methods are used for performance appraisal, including critical incident files, rating scales, behavioral anchored rating scales, ranking, management by objectives, and narrative evaluations. Regular performance appraisals help align employee and company goals, improve competence, and increase motivation, which benefits both individuals and the organization.