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Effect of Performance Appraisal on Employee Capability and Organizational Performance: A Study of Employees Working in Different Companies in Solan District of Himachal Pradesh.

Main Intention of performance appraisal system is to find out what an employee are contributing towards organizational objectives. Performance appraisal is very important for the employee, as they come to know about the work areas which he/she is lacking in and has to do improvement on the same. Employees come to know about the expectation of organization from him. The evaluation of employees is done on the basis of some predicated criteria and if gaps are found in the employee’s performance the superior in the organization will know and decide which employee in the organization requires training. This study comprehensively evaluated the impact of performance appraisal on employee capability and organizational performance. Results based on a sample of nearly one twenty companies employees working in different companies in Solan district of Himachal Pradesh. After analyzing the results it was found that performance appraisal has positive impact on employee capability and organizational performance. Further it provides suggestions for the managers to understand the importance of timely appraisal system of the employees working capability, which helps in the timely achievement of organizational objectives.